The Downside of Lowering Your Prices to Attract in New Clients

With client’s purse strings tightening, and the pressure this puts on winning new business, we’ve noticed an increasing number of agencies considering dropping their prices to get their foot in the door with a new client. 


We get it – times are tough and securing new clients can feel like an uphill battle, however, it is not a strategy we would recommend for these reasons:

It’s Hard to Go Back

Starting at a lower price sets a precedent that often makes it difficult to increase your prices later down the line as the client now has lower expectations of your value. It can also foster distrust with your clients, they will wonder why you are having to increase your prices – if you could afford it at the lower price then why are you charging more now? What kind of extortionate margins are you making from the increased rates?

This leads to our next question – Can you afford it? There is a reason your prices are set where they are; You need to ensure you are covering all your costs; direct costs, salaries and overheads while still generating a profit. Money coming in is only good if you have enough to cover everything that is expected to go out, otherwise, you will find yourself struggling with cashflow – It’s simple maths. Sure, the initial influx of clients is great, but if you’re not covering your costs and generating a decent profit, you’re setting yourself up for financial woes in the not-so-distant future.


Quality Compromise

The elephant in the room is that it often leads to compromises in quality in order to maintain profit margins. This may be less time spent on projects, a drop in service quality, or both. This can have several negative consequences; Clients might notice the decrease in quality leading to headaches down the line, including lost clients or complaints. It may also affect the pride you have in your own work – It can be frustrating knowing you are not providing your normal standard of work. Sacrificing quality for short-term gains can be a slippery slope. 


Brand image 

A combination of this drop in quality and the lower price may also have unintended consequences on your brand’s image as well. Client’s might start to associate your services with being on the cheaper end of the market, questioning the value of the work you do. Even though you know this may not be the case or fair, it’s the reality of what happens when you price yourself cheaper than your competition. 


It’s a tricky game – attracting new clients is crucial, but not at the expense of tarnishing your image or risking cashflow issues. The truth is that clients still have money to spend on the things they value. You may find yourself and your business better off focusing on the quality and value you deliver – with the added benefit of having a client base that appreciates the work you do!