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Handling clients who ask for lower rates December 15, 2008

Posted by Jill (@bonnjill) in Business practices.
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The number one question most translators have, whether they are new to the field or have been translating for a while and are looking to add new clients, is how to handle clients who ask for lower rates. I stumbled on this discussion on Translatorscafe a while ago and wanted to share it with you all. I agree with the woman who originally cross-posted it from the ATA Interpreters Division. She strongly recommends that all freelancers read and follow its advice, especially those new to the field. I couldn’t agree more. Even though it was originally written for dentists, this advice is universal and invaluable.

Editorial
by Jim Du Molin

Negotiating Fees with Patients

“Doctor, your fees for this treatment plan seem awfully high to me. I called Dr. Slipshod’s office down the block and they said they could do it for a lot less.”

For many doctors, this statement leads to the ultimate test of self-confidence. When a patient questions your fees, you may feel that they are questioning your personal and professional integrity, your technical competence, and/or the value of your services.

You have invested years of education and financial sacrifice to master your craft. Yet, invariably, you continue to encounter patients who question your right to be adequately compensated.

In addition, the patient is making you feel that you are overpriced for the market place and can’t compete. You worry about losing the time you’ve invested in preparing the treatment plan, if the patient goes to another practice that’s willing to cut fees to compete.

While all of these thoughts and emotions may come to mind, the reality of the situation may be entirely different. In reality, the patient is setting the stage to negotiate.

The patient is saying that in her opinion, your fees “seem awfully high.” The reality is that the patient hasn’t the slightest clue of what it costs you to provide the treatment. Her only justification for her statement is that she called Dr. Slipshod’s office for a comparative bid. Did Dr. Slipshod perform a complete exam and prepare a treatment plan over the phone?

When a patient makes this type of statement, she is really making her opening move to negotiate a lower fee. She is “bottom fishing” for the best deal.

You have several choices at this point.

Cave in and cut your fee.

Become irate and lose the patient to Dr. Slipshod.

Play the game, understanding that the stake is the patient’s personal health care.

The first thing you must understand is that choice number one is never acceptable. Cutting your fee is cutting your throat. It is tantamount to telling the patient that your craftsmanship is overpriced and your fees are negotiable.

On top of that insult, you are adding injury to the basic economics of managing your practice. It costs money to deliver quality health care. Inadequate compensation can only lead to a reduction in qualified support staff, the use of lesser materials, and reliance on inadequate or obsolete equipment.

Choice number two is a lose/lose situation for both you and the patient. You become angry because you feel the patient has attacked your personal and professional value. Rather than deal with the negotiating ploy, you send the patient to Dr. Slipshod for what could possibly be inferior treatment. This reaction denigrates you and embarrasses the patient.

Even worse, you have lost the patient and the patient’s health care may have suffered. Again, an unacceptable alternative.

Your final choice is to play the game, understanding that you and the patient are really negotiating on the quality of the patient’s health care. You must structure the negotiation so that both you and the patient can win. Remember that in the psychology of negotiating, the person who blinks first often loses. With that in mind, let’s replay the dialogue:

Patient: “Doctor, your fees for this treatment plan seem awfully high to me. I called Dr. Slipshod’s office down the block and they said they could do it for a lot less.”
Doctor: “Mrs. Bottomfisher, we are very proud of our fees.”

At this point the doctor must be absolutely silent. What you have just said is that you feel good about your fees and that they are correctly calculated. At this point, eighty percent of the patients will stop negotiating and accept treatment.

The worst case is that the patient asks: “What do you mean by that?”

Your reply is, “Our fees are based on the quality of the materials we use and our experience in performing this treatment.” And don’t say another word.

It is rare that a patient will persist in questioning your fees after this statement. The implication to the patient is that if you want your treatment performed with lesser quality materials or by a less experienced doctor, you are welcome to go elsewhere. In any case, you have made the statement in such a way as to reinforce your personal and professional integrity without embarrassing the patient.

If Mrs. Bottomfisher persists in arguing about fees, the question now becomes: is this the type of person you want in your practice? Assuming you offer a full range of payment alternatives to make the treatment plan affordable, the persistent bickering over fees indicates the patient places a higher value on money than health care. In this case, you end the conversation with this statement:

“Mrs. Bottomfisher, we appreciate your concern over the cost of your treatment plan. If you like, we’ll be happy to send your x-rays down to Dr. Slipshod’s office.”

This statement tells the patient the negotiation is over and that you are confident in your position. It should always be followed by, “If for any reason you would like to return to our practice, please don’t hesitate to call us. We’ll be glad to have you back.”

The final statement graciously leaves your door open to the return of the patient. Plus, there is a good chance that she will return within a year, after having thought about the possibility that she is receiving poor materials or inexperienced treatment at Dr. Slipshod’s office.

In developing financial strategies for our consulting clients we are often asked, “What should my fees be?”

Our answer is invariably, “Whatever you feel confident in charging.” There is essentially no limit to what you can charge for your services. (We will discuss the issues surrounding insurance companies and your fees in my next editorial.)

The basic premise is that you are confident that your fees are representative of the quality of the materials you use and your experience in performing the treatment.

The key word is confident. Any lack of confidence or hesitation will be detected by the patient and exploited in the negotiation.

One of the most successful doctors we know accepts no insurance and requires all fees be paid in full prior to beginning treatment. The cost to a patient for a single gold crown ranges from $950 to $1,250.

He presents his treatment plan by saying, “My fee for performing this treatment is $950. I will attach a copy of the lab bill detailing the materials and their preparation cost to your bill.” His case acceptance level is in the 90% range.

Patients immediately perceive that this doctor knows his worth. I must also add that every stage of the patient’s interaction with the doctor’s staff, facility and post-treatment care are of the very highest quality. This high level of quality supports the 90% acceptance level and reinforces the sense of value the patient perceives in the doctor’s capability to deliver the treatment.

The best confidence-builder to help you feel comfortable with your fees is very simple. Just remember that quality treatment must be supported by commensurate fees.

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Comments»

1. Peter Quinn - December 15, 2008

Hi. I am a long time reader. I wanted to say that I like your blog and the layout.

Peter Quinn

2. Kevin Lossner - December 15, 2008

This line of argumentation is so obviously relevant for us that it needs no further comment.

3. Freelancer - December 16, 2008

Agree with the post completely, but… Yes, there’s always a “but…”.

What happens in the times of economic recession? The rates are already dropping, and the number of clients (and work) is dwindling.
We need a strategy and argumentation for such times – which we are already facing. What I’m currently facing is a choice: either lower the rates, or lose majority of work. To be honest, I’m thinking about a career change….

4. Melissa - December 17, 2008

In response to ‘Freelancer,’ this is not my experience at all (‘… rates are already dropping …’). Despite the economic downturn, this has by far been my best year – yes, even the past 6 months. Perhaps it has to do with the area of specialization – or even the language combinations – that a translator offers.

Personally, I choose not to ‘justify’ my rates at all. I have developed rates that I feel reflect the market (specialization, languages), my qualifications and my own financial needs. They are certainly too high for some customers, and perfectly acceptable to others. The only thing that I choose to do in terms of ‘justification’ is to offer a brief test translation (I know, I know, very controversial topic among translators!). Occasionally, I do have requests to lower my rates for a specific project, and if I like the project and the team, I may do so. But for a new, untested client, I simply will not lower my rates.

Now it’s time to enjoy the holidays – see you all in 2009!

5. jillsommer - December 17, 2008

Melissa, I couldn’t agree with you more. I have had a good year as well, exceeding last year by just a couple thousand dollars but it’s better than dropping by a couple thousand dollars. I don’t justify my rates either and simply don’t work with agencies that don’t appreciate me (by paying the rates I ask for).

Stick to your guns, Freelancer. I promise there are lots of good agencies and direct clients out there who appreciate what we do and are willing to pay well for it.

Happy holidays, everyone!

6. Ramon - February 22, 2009

I don’t agree with Freelancer at all.

Yes, I’m noticing some slowdown, but if you have less clients, and on top of that you reduce your rates, how are you going to eat in the first place? Are the bills getting any cheaper? And when things start moving again, will your customers not go away because you suddenly start raising your rates faster than inflation? Or are your going to maintain those low rates forever?

In my particular case, I am not exactly cheap – but I maintain a loyal circle of clients because they know that I provide quality and go that extra mile if necessary to meet a deadline or provide some extra service. And the *only* discount I make is for high-volume clients, not because it gets cheaper to translate but because it incentivates them to get back with more work if they want to maintain that discount (my discount has a time limit).

So I stick with my rates, recession or not. The “cheap” agencies will be the first to go, they will not survive the crunch because they’ve cut prices so much that they will no longer cover costs. But the ones providing quality, and charging for it, will survive as long as they pay for such quality, because the customers NEED quality for certain things.

Two months ago, I received a request to translate a publicity catalog. I was told I was “too expensive”. So I told him that I estimated that the cost for the preparation of the catalog would be around 7000-8000€ (I found out later it was in the 9k€ range), and my translation was only 1.5k€. Since he had spent so much money on a quality document, why was he thinking that he should spend less on quality in another language? However, if he really thought I was too expensive, I pointed him to some translator websites where he could find some alternatives. To cut the story short: He came back after one month, after spending 900€ on a totally worthless translation, and paid without hesitation my rate.

Yes, times might be getting tougher, but cutting rates is not the solution. Better stick to your rates, and provide quality work.


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