Why Someone Worth $20 Million Might Still Tell You You're Too Expensive

0:01Douglas Whitmore:Hello, this is Mark Satterfield, and welcome to the Velvet Rope Playbook. Tonight's chapter, Why Someone Worth$20 Million Might Still Tell You That You're Too Expensive. Douglas Whitmore could afford it. There was never any question about that. Douglas was 63, had sold his industrial packaging company six years earlier, and now divided his time between a house outside of Philadelphia and another in Naples, Florida. He played golf three mornings a week, collected American paintings from the first half of the 20th century, and had recently spent considerably more on renovating his wine cellar than most people spend on a new car.

0:42Douglas Whitmore:Depending on the market and which of his business interests were behaving themselves, Douglas was worth somewhere north of$20 million. Which is why Peter Langston was more than a little surprised when Douglas looked at his proposal and said, That's awfully expensive. Peter restored and brokered vintage automobiles, not just old cars, the sort of cars that arrived at concourse events and enclosed trailers and occasionally have names like Bugatti, Duesenberg, and Packard attached to them. Peter had been doing this for 27 years. He knew which restorations increased the value of a car and which ones merely increased the invoices.

1:22Douglas Whitmore:He He knew the specialists you called when everyone else had given up, and he had an uncanny ability to look at supposedly pristine automobile and find the$80 ,000 problem hiding underneath the paint. Douglas had recently acquired a 1950s European sports car and was considering having Peter oversee a substantial restoration. The proposal was for$85 ,000 in professional fees, excluding the actual restoration work. Douglas certainly had the money. He just didn't want to give it to Peter. There's an important distinction. One of the most persistent ideas about affluent marketing is that wealthy people are somehow less concerned about price.

2:06Douglas Whitmore:Sometimes they are. Frequently, they aren't. I've known extremely wealthy people who will spend$30 ,000 on a watch and then become irritated over a$40 charge on a hotel bill. This isn't necessarily inconsistency. It's because wealth and willingness to pay are two entirely different things. Net worth tells you what someone can spend. It tells you almost nothing about what they believe something is worth. And that's where Peter had gone wrong. He knew Douglas could afford his fee, so he assumed the price wouldn't be much of an issue. But Douglas wasn't comparing$85 ,000 to his$20 million net worth.

2:48Douglas Whitmore:He was comparing$85 ,000 to what he believed Peter's involvement was worth. That's a very different calculation. So we looked at Peter's proposal. It was beautifully produced. It explained the scope of the project, the various stages of restoration, and everything Peter would oversee. There was only one problem. It made Peter sound like a project manager. an extraordinarily expensive project manager. What it didn't explain is what Peter actually knew. Peter could identify restoration shops that did spectacular cosmetic work, but routinely created mechanical problems that showed up two years later.

3:29Douglas Whitmore:He knew which original components were worth preserving, even when replacing them would be cheaper. He knew when a restoration was approaching the point where another$100 ,000 worth of work might add only$25 ,000 to the value of the car. And because he'd been in the collector car world for almost three decades, he could sometimes prevent an owner from making a decision that would permanently diminish the providence and therefore the value of an important automobile. None of that was really in the proposal. Douglas saw$85 ,000 for someone to coordinate a restoration. Peter saw 27 years of judgment that could potentially prevent several six-figure mistakes.

4:12Douglas Whitmore:Peter assumed Douglas understood the difference. He didn't. And that brings us to a principle that matters enormously if you sell expensive services to wealthy people.

4:23Peter Langston:Affordability does not create value. Your prospect's ability to write the check doesn't relieve you of the responsibility to make a compelling case for why they should. In fact, wealthy buyers can sometimes be harder on this point. Many of them became wealthy precisely because they're good at evaluating value. They've negotiated deals. They've hired expensive professionals. They've watched people attempt to separate them from their money simply because they have plenty of it. They aren't necessarily looking for the cheapest option, but they genuinely don't enjoy feeling that they're being charged a premium without understanding what the premium buys them.

5:05Peter Langston:This is why I become nervous when someone tells me my clients can afford it. That's nice, but it's not enough. The more useful question is, can they explain to themselves why you are worth it? Notice I didn't say whether you can explain it. Can they? If your fee is$25 ,000 and someone else charges$10 ,000, what does your prospect believe they're getting for the additional$15 ,000? If your engagement costs$100 ,000, what becomes more likely because they hired you? What expensive problem might they avoid? What opportunity might they recognize that someone else would miss? What do you know after 20 years that somebody who's been doing it for five simply doesn't know yet.

5:54Peter Langston:That's where premium pricing becomes defensible. Not because you tell people you're premium, not because your website uses elegant pictures, and certainly not because your prospect happens to own three houses. Price resistance is frequently a messaging problem disguised as a money problem. When someone says that's too expensive, what they may actually be saying is, I don't yet see enough difference between what you're charging and what I think I'm getting. Those are very different objections. If they really don't have the money, there's not much marketing can do about that. But if they have the money and don't yet see the value, there's something you may be able to fix.

6:38Peter Langston:Peter eventually changed the way he talked about his role. He stopped emphasizing everything he would do during the restoration and started explaining the decisions he would help the owner make. He showed examples of minor restoration decisions that had dramatically affected resale value. He talked about the mistakes he'd seen collectors make when they hired a restoration shop without someone representing the owner's financial interests. In other words, he stopped selling oversight. He started selling judgment. And$85 ,000 for project management, that sounded expensive. $85 ,000 for judgment that could protect a seven figure automobile suddenly sounded rather different.

7:23Peter Langston:And that's a useful exercise for your own business. If an affluent prospect tells you you're too expensive, resist the temptation to immediately defend the price. Instead, ask yourself, what aren't they seeing? What value is obvious to you because you've been doing this for 20 years, but invisible to someone encountering you for the first time. Because wealthy people don't buy things simply because they can afford them. They buy when the value of having something feels greater than the value of keeping the money. Your job is to make that difference unmistakable. And look, if you'd like more ideas for attracting, persuading, and converting affluent clients, go visit Visit GetWealthyClients.com.

8:10Peter Langston:You'll find my books, my programs, and resources there, along with information about how you can work with me personally. That's GetWealthyClients.com. And one last thing. If you're enjoying the Velvet Roke playbook, make sure you subscribe so we can stay in touch and you don't miss the next episode. And if you know someone who's very good at what they do but could be doing a better job attracting affluent clients, pass this episode along to them. You don't need to make a big production out of it. Just say, thought you might find this useful. That's how most good ideas and most good introductions tend to travel.

8:46Peter Langston:This is Mark Satterfield. I hope you enjoyed this chapter of the Velvet Roke playbook. I'll be back at you soon with something new. Bye for now.