You’re talking to a prospect. The work seems like fun and it’s something you know you’re good at. The buyer then says “So how much?” or “What’s your rate?” The dreaded ballpark price question can cause the most experienced freelancer or agency owner to feel anxiety. Luckily, there’s a way to answer it.
If this is a situation that makes you sweat, don’t worry. You’re not alone. Almost all freelancers and agencies struggle with “pricing at gunpoint,” as I like to call it.
Figuring out what price to give in a situation like the one described above might seem like a near-impossible task. However, once you know what factors are at play, setting a ballpark price will seem less like guesswork and luck.
The Unfairness of Demanding a Ballpark Price in a Standing Meeting
First of all, asking for a ballpark price prematurely isn’t always fair. Buyers know this. They also know how this seemingly innocuous question will rattle many sellers. They use it as a power play knowing full and well that whatever you say can and will be used against you.
Regardless of how many loopholes you attach, a stated ballpark price can be seen as a promise. At the same time, a ballpark price is impossible to give unless you understand what the client values and have been able to communicate what the client is getting in return. As any seasoned salesperson will tell you, it’s imperative to demonstrate value before stating a price.
It’s not a great situation to find yourself in. Even so, this does happen. There are two things you can do:
- Ask to get back with a ballpark price.
- Come prepared.
I favor coming prepared for these meetings. Even so, sometimes it’s not possible. Let’s look briefly at these two options.
How to Ask to Get Back With a Price
It could be that the meeting request came out of the blue. Or that you were not informed in advance that the buyer would be looking for a price. In those cases, it’s entirely reasonable to ask to get back with a price.
Some buyers will try and play hardball and pretend to be offended for having to wait. Such behaviors are significant and I’d consider them a red flag. Think twice before going ahead with clients that show manipulative behavior even if they claim “it’s just business.”
When you ask to get back with a ballpark price, always promise when and keep it. “I’ll get back to you with a price within 24 hours” is fine. However, “Let me get back to you on that…” doesn’t send the right signals. It’s your job to manage expectations and the sooner you get started, the better.
When you do get back with a ballpark price, it’s important that you provide context. Don’t just send an email with a number. Ideally, meet in person or over video call to present it. That way you will be able to read the situation and address questions on the spot.
The ballpark price should be accompanied by a description of the work to be done in a way that emphasizes the benefits the buyer will enjoy. A full proposal might not be necessary, however. Depending on the situation, a tiered price could be suitable.
6 Questions to Help You Come Prepared to Buyer Meetings
It’s not always possible to come prepared. But a little bit of preparedness goes a long way. If you experience that you often face questions from buyers that you cannot answer on the spot, preparing more could help.
Preparing for a buyer meeting can be relatively simple. Simply answering the following questions before the meeting could make a big difference:
- Who is this person I am meeting?
- What is this person expecting from the meeting?
- Which questions might they have?
- What information will I need to answer those questions?
- If prices will be mentioned, what price should I give and why?
- What actions will I have to make as a result of this meeting?
Googling the company and finding the person whom you’re meeting on LinkedIn will help you find answers to many of the questions above. Jot down some notes to bring to the meeting. Also, write down some questions. Having insightful questions will likely make the buyer look at you even more favorably.
What About the Ballpark Price?
Returning readers of this blog know that we’ve written extensively about value-based prices and price-setting. All that applies to ballpark prices too.
In case you’re curious, I recommend our most recent series on setting value-based prices. These should be read in order: bundling work before pricing it, how to influence a buyer’s price-sensitivity, calculating value-based prices and finally how to use value contexts to be able to charge more.
Now, arriving at a value-based ballpark price at gunpoint is a tall order for most people. That’s why thinking about it ahead of the meeting of time helps. You won’t have to juggle the numbers on the spot.
Even if you have to come up with a ballpark price at gunpoint, there are ways to estimate faster. COCOPAVA is one I’ve used myself.
Making Ballpark Price Estimates Using the COCOPAVA Method
If you’re short on time, ballpark estimates can be made quickly by considering some known factors. I’ve decided to call these four factors COCOPAVA (for lack of a better acronym):
Let’s have a sip of Cocopava.
Co: Consultant’s Level of Competence or Expertise
How competent you are at what the client is looking for.
Competence means you deliver more, faster and at a higher quality. You’re also less likely to screw up and cause damage. As a competent consultant will also be able to answer the client’s questions, hence boosting their knowledge too in the process. Competence can be proven by references and testimonials.
Co: Your Confidence and How You Carry Yourself
How confidently you can ask for the price.
You have to believe in yourself as well as the price. Lack of confidence is what keeps most freelancers back from asking for more. A nervous demeanor doesn’t convey the competent confidence that helps clients relax. Your manners will indirectly affect how the client feels. The more composed you are, the less nervous they will be and the better they will feel about what you’re saying.
Pa: The Severity of the Pain Being Removed or Problem Solved
How annoying, painful and expensive the problem you are solving is.
Small companies’ problems aren’t very expensive. That’s why they can’t pay you much regardless of how much it hurts. But as organizations grow, many problems grow exponentially so the same problem can be worth a lot more to another client. This is why we say “price the customer.” A bigger pain brings a higher price.
Va: Perceived Value of Your Offering
How the client perceives the value of what you’re offering.
This is the gut feeling the client has after meeting you and looking at what you do. There’s actually a lot you can do to boost your perceived value, including becoming conscious of how you speak, write and even what clothes you wear. Needless to say, make sure you have a fantastic website too. All of these things send signals that are more important than most people believe.
Strive to develop exceptional customer relationships skills. Be professional, empathetic and polite and as helpful as you possibly can. If you can help the client right now – do it, don’t postpone.
Combining COCOPAVA Ballpark Price Factors to Arrive at an Estimate
By rating these factors and combining them, we have a rough formula for thinking about value-based ballpark estimates.
1. How high is your competence?
What is your competence when it comes to solving this problem? Remember the old adage “if you think hiring a professional is expensive, try hiring an amateur.” Unskilled people can cause more damage than good. You could be that unskilled. Make a sober judgment of your own abilities.
2. How confident are you that you can deliver?
How sure are you that you will succeed? Recall that confidence also dictates whether you can look the buyer in the eye and deliver your price without any hesitation. A low score here means being totally unsure, while a high means an absolute, Harvey Specter level of confidence.
3. What is the severity of the buyer’s pain?
How severe is this problem that the buyer needs see solved? How much of a headache does it seem to be? If in doubt, guess. A low score means it’s actually not a problem at all, not even a nuisance. A high score means it’s their house on fire.
4. How much value can you deliver?
How much value are you providing? Are you delivering more or less than the other options the buyer has at her disposal? A low score means you’re delivering less. That could either be because you’re less experienced or cannot project a lot of value. A score on the higher end means you’re the hottest consultant or agency in town with buyers lining up to buy from you.
5. Finally, Estimate the Going Market Rate
End by determining a market rate for solving this kind of problem. Let’s say it’s a fixed price of $10,000 to make it easy. If you’re billing hours, consider an average hourly rate in your industry.
6. Calculate a Rough Rate Using Our Ballpark Price Spreadsheet
Finally, adjust the market rate using the factors above. I’ve prepared a spreadsheet with some factors and weighing. I suggest you edit it to your liking.
To use it:
- Click the link to the sheet.
- Log in with a Google account if you aren’t logged in already.
- Make a copy of the sheet by clicking
File - Make a copy…
- In column F, enter a ranking: 1-5 for each of the factors. Columns C, D and E contain instructions.
- See the result in F7.
- You can tweak the weighing and factors in column G and H (hidden).
I want to stress that this isn’t a pricing model or even a tool to bring into the field. It’s not meant to be exact. It’s a way to think about ballpark prices and pricing that helps answer tricky questions about prices and rates by weighing factors that go into setting a price.
Not all factors are equally important, which the sheet takes into account. Buyer pain is the strongest driver of price, for example. However, the sheet is rather limited in that it doesn’t factor in weighing as a function of the factor value.
For example, competence isn’t wildly important (in my experience) unless you’re truly incompetent. For the sheet to be accurate, scores on competence should have more influence than average or high scores. It doesn’t work that way right now. Feel free to improve the sheet and share it with me.
Conclusion: Buyers Asking for a Ballpark Price Can Be Mean, But That Doesn’t Mean You Have to Stand Tongue-tied
Buyers throw all kinds of curveballs to steer the sales situation. Professional buyers are sometimes taught to unnerve sellers in order to get a better deal. Asking for a ballpark price early is a typical psychological tactic. By preparing, and being able to make some quick arithmetic, you will be able to give an answer which you can defend and won’t regret later.