JUST as you think the client is going to sign on the dotted line, they drop a bombshell. Will you lower your fees? Great. Smashing. Super… just what I didn’t want to hear…
I’m sure that most of us have been having more of these conversations, than we would like, due to the tight economic conditions we have all been working in over the last few years. From personal experience, I know it can feel like a massive blow or even personal rejection – and then you get that sinking feeling that you need to have some tough conversations and get into time consuming negotiation.
Let’s take the emotion out of the situation and think rationally what is actually going on for your potential client. If they are asking you to drop your fees, there is normally one of three things happening: • They don’t have the budget • They don’t understand the value which you will bring • They are trying it on.
Let’s take the first one, ‘they don’t have the budget’. This could be a real ‘we don’t have the budget’ (and somewhere along the line, we didn’t pre-qualify this sales lead well enough), or an ‘our cash flow is preventing us at this very moment’, or an excuse because we don’t get the value you are bringing, so which is it? Only by exploring more with the potential client will you find out the real reason.
Many clients don’t understand actually what value you are bringing to their company with your specialist skills. And let’s be honest, sometimes we focus far too much on selling the features of our service rather than highlighting the value of our service to the client.
Very occasionally, you will get a client who tries it on. Normally this type of client, when reminded about your expertise and the value you bring to the work, will back down. Sometimes, you come across what I call a ‘PITA’ (pain in the arse) client – the type which expects platinum service for a cut down bargain basement fee. If your instincts are telling you that this will become a PITA client, then walk away before you sign up… Once a rate is set, it’s very difficult to negotiate up at some point in the future. Have you ever managed this? So what’s the solution?
There is always the walk away option. In the heat of the moment and the pressure we are under to bring in new clients, we often forget that it is not worth taking on unprofitable work.
The alternative option is to renegotiate the total package price and what you will do for the client. With a bit of lateral thinking you can normally bring the total price down to nearer to where the client needs it to be, without lowering your hourly rate. So, you don’t cut your fees, and the client gets a lower price for the whole package. Win win. What are your tips for when a client asks you to lower your fees?
Heather Townsend is the author of ‘The Financial Times Guide To Business Networking’, and specialises in working with Accountants. Heather regularly blogs at Partnership Potential, and Joined Up Networking.
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