Small Businesses and Entrepreneurs - What to Do When a Client Wants to Back Out of an Agreement
What do you do when a client tells you they want to cancel the contract? Here are a few ideas that can help you if you are faced with a client who wants to back out of a project.
1. Remind the client why they wanted to hire you in the first place.
People buy on emotion and justify with logic. You need to rekindle the emotion that made them want to hire you in the first place.
2. Offer to do the work, at a lower price, if you remove one or more of the deliverables.
For example, you might do the job at 20 percent off if they agree that you'll do 3 of the 4 things originally promised. You do less work and get paid less. That's a fair exchange and it might fit into their budget. Please note: Never offer to do the same amount of work for less money. That type of client will always ask you to do more and more and pay you less and less.
3. Renegotiate the entire deal.
Maybe their needs changed dramatically and they need a different kind of service. Maybe they didn't realize you offer that service. Show them that you can help them and they will re-open talks.
4. Re-examine your fees.
In this age of economic uncertainty, you might find that your fees are out of line with what the market will bear. There are many wise people who say "never lower your fees," even in tough times. You'll have to decide which tactic works best for you.
5. Decide when and where to give discounts as a giveback.
For example, if you don't have to travel, that saves you time and energy. You might decide to give a "hometown discount" when you jump into your car instead of get on a plane. You might give a discount if they offer to buy more of your services than originally planned. This way, you get more work and more money without having to invest any more into marketing expenses and time. You might consider a discount if they offer to promote you via advertisements in their newsletters or to their mailing lists. Only you can decide if this exchange is worth the trade. I'm just putting the idea on the table.
6. When you send your contract, be sure to include two items:
1. A non-refundable down payment to hold the date or the job; and
2. A clause that explains what happens if the client cancels the contract.
I've seen too many people get burned because they didn't have a cancellation clause in the contract -- myself included! I learned this lesson the hard way.
This list is far from definitive. What ideas do you have for consultants whose clients want to cancel agreements? If you follow some of these ideas, you'll win back more business and make more money.
By Daniel Janal
Image© Sinan Isakovic