Why You Should Not Discount Your Fees

Source: Rain Today

Charles Green is author of Trust-Based Selling and co-author (with David Maister and Robert Galford) of The Trusted Advisor. He based this article on the analysis of discounting in Rain Today’s Fees and Pricing Benchmark Report: Consulting Industry 2008.

Green says clients’ objections to your prices belie their real attitudes. What are they really saying?

• Clients usually misjudge the value of your time and the time it will take you to complete the engagement. What they are really expressing is ignorance. You should try to educate them.
• The client may have a budget. It is probably the budget, not your price, that should be corrected. Discounting lets the client off the hook.
• Competing offers may be lower, perhaps because a competitor has low-balled (and will increase the price next year). Or the competitor’s proposal may not include the same services as yours. First, point out that your costs and those of the competitor are probably the same—which implies the competitor is disingenuous. Second, compare the two proposals in detail. You may find you can match the price by eliminating certain services not offered in the competing proposal. A more likely outcome is that the client will become aware that your proposal offers more value.
• Clients are not always rational. They may suspect they are not getting the best deal available. If you come down in price, you are confirming their suspicions and you will never have a fair relationship with them.

When confronted with price objections, try to get beyond the ostensible reasons for the objections and have open discussions with the client.

For the complete article, click here and see May 7, 2008, How Bad Thinking Can Lead You to Discount Your Prices.

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