You're pretty proud of yourself! After all, only four months ago you came up with idea of opening your own business - "Jenni's Interior Design" Your friends have always said you were gifted when it came to arranging furniture and picking out colors, and you love to do it, so you decided it was time to get serious.
You went to a few "Starting Your Own Business" seminars, picked out a name and registered it, had your nephew build a great website, printed up some business cards, got a second phone line, and took out an ad in local paper - "Are Your Walls and Furniture as Stagnant as Pond Scum? You Don't Need to Break Bank for a Fresh Look, You Just Need a Makeover!"
Then you crossed your fingers and waited. Day one, no calls. Day two, no calls. Day three - phone rings! Success! Your heart is pounding as you pick up phone. The conversation goes something like this:
"Hi! This is Jenni with Jenni's Interior Design, how can I help you?"
"Hi, my name is Celia, I saw your ad in paper. What do you charge for your makeovers?"
"Well, my rate is $25 per half-hour for consultations or $100 per room to redesign entire room. If we decide on new furniture or paint, that is your cost of course"
"Hmm, I have a lot of rooms I'm thinking about changing. Can you come over for a free consultation just to see what I have? If I do more than one room, can I get a discount?"
"Umm… sure, that's fine. If we do more than one room I can do a discount too, no problem"
Hold on. Maybe Jenni hasn't given away farm yet, but she's on her way. When Jenni hangs up phone she's going to realize a few things:
1. She is committed to spending her time and gas money to visit Celia. 2. She has no agreement or commitment from Celia 3. She indicted that some of her time is "free" time. 4. She let Celia know her price could be bargained down.
The problem here isn't that Jenni was caught off guard, problem is that she instinctually began to doubt herself and her prices. You can't blame Jenni, after all, this is her first potential customer and while she's talking on phone she's probably thinking "Gee, am I really worth $25 per half-hour? I do this for my friends for free. I don't know if I'm really qualified to charge that kind of money"
The potentially bigger problem is Jenni pretty much threw her pricing structure out window when questioned. There is nothing wrong with bartering and making deals, but it shouldn't be your standard business practice. Without a doubt, if Celia likes Jenni's work and recommends her to a friend, Celia will be sure to brag about great deal she negotiated as well. Now, Jenni is probably stuck with this "free consultation with a discount" policy for any referral customers. Jenni is setting herself up to run all over town free of charge, give good advice, and potentially not make a dime.