This is the answer my boss gave me many years ago when we were discussing a potential new client and I said something like “I don’t see how we can get them to come to us as they are paying so little at the moment”. The immediate response was “If everything is based on cost we’d all be driving a Wartburg” for those of you too young to remember the Wartburg it was a two stroke car from the old Eastern Europe built like a tank, it drove like one as well and frankly it only had one saving grace, if you can call it that and that was it was dirt cheap but still no one ever bought them.
As ever my boss was totally correct price cannot be the sole driver in any transaction, obviously it is of importance but when looking to acquire new clients we cannot let it dominate the proceedings and we cannot allow ourselves to reduce prices because a potential client queries the costs.
If we have a rate per job or a costing based on hourly rates then we should stick with those rates else we are on the slipper slope to ultimate problems as we try to complete work at a rate that is manifestly insufficient and that can only lead to arguments with clients as we seek to charge more or worse still to corners being cut as we try to complete the work quicker.
If a client wants to buy a Wartburg despite all our best endeavours to explain why they shouldn’t then send them to the Wartburg garage and leave them to it which worked for my old boss and has worked for me and will work for you as well.