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Well at the start you have to refer to colour theory and psychology.
but from my experience some clients just want what they want, so here you have two ways:
A-
1- help the client understand the right thing for him.
2- make it clear why the logo is a representation of he's view and how people see his work
B-
1- if you love your work and you believe in the work just say i am sorry but i can't be apart of something like this
2- if your working for a agency ask your creative director.
i hope this answer your question
Well i actually combine between the two.I like referring to color theory and psychology in a way that would serve the client's wish and reach the targeted market/customers and deliver the message, and of course i have to go back to the client's taste until reaching the best results.
Design a logo is not about taste - even when in real situations seems to be measured in that way - Is about achieving a specific goal, modeling an idea in the customer's mind based on a selection of attributes that must represent the company/service/product. The design of a logo will be the result of creating those intangible concepts into something visual. Therefore colours and the morphology of the logo can't be something impulsive or based on likes or dislikes, in stead will be considering psychology principles and even more, semiotic analysis in order to deliver the best concept as possible.
Actually I do both, usually the client leave the color suggestions to me and I use the color theory as a reference but sometimes the client have some color or theme that he wants to see in his brand, so I gave him the option proposing my options with the presentation leaving the choice to him
I basically use colors, which will go with their industry/ products etc. Some customer will fully left it upon you. Few customers are there, they come with some specific color of their choice. There are also some customer who strictly want to use their zodiac luck color.
Sometime i use color theory and psychology according to my choice but if customer insist that his / her demanding colors should be used then i create logo according to their choice.
Usually in very first cut, I prefer to color theory and psychology then leave onto the client shoulders.
As you know, client is always right. :-)
Its good ask, however logo stands for a business / service both are consumable, so customer / people are main target of every logo, and logo designers must given their signature on it.