You Can't Back Down When Your Back Is Against the Wall

Off the Wall: A Column by Alan Weiss, Contributing Editor

One of the most consistent questions I'm asked even when coaching successful entrepreneurs is, "What do I say when they want a reduction in fee?"

What you say is complex and arcane, so you may want to stop here to get a pen and paper, or open your laptop. Ready?

You say, "No."

Our tendency to be vulnerable when a buyer (or much worse, a non-buyer) unabashedly asks for a fee reduction is based on a poverty mentality. We remember when we didn't have much business and still feel that we need to take any business we can get, on any terms.

Let me tell you something: abandoning poor business and lousy terms is a win, not a loss.

Who in Their Right Mind Does This?

When a prospect has said to me, "How about reducing your fee for us?" I respond with, "Do you do that for your customers, simply take less profit because a customer asks?" If the response is "No," then I ask, "Then why should I do it for you?"

If the response is "Yes," then I explain, "Well, if you do that, then you really need me more than ever, because you need to stop doing that."

Can you vaguely imagine, without the aid of controlled substances, asking your attorney to simply charge less than his or her normal fees? Or your physician to operate for less? Or the courts to accept less for your speeding ticket? Or a restaurant to accept less for an entrée?

I know there is an entire cadre of connivers out there always trying to get something for nothing or sneak into the better seats, but those aren't the people I expect to be doing business with.

The reasons, in addition to a poverty mentality, that we even entertain a request for a lower fee, include:

Poor self-esteem: who am I to ask for this much?

No clear sense of value.

Allowing a third party to intervene (e.g., a speaker's bureau).

The mistaken belief that something is better than nothing.

The promise of fantasies, such as "exposure," and "business down the road."

Believe me, that's not the Yellow Brick Road.

Hey, Whose Side Are You On?

Recently, a woman asked for my reaction to a speaker's bureau that wanted to book her at a client she had spoken for two years ago. Not only did they not want to apply her contemporary, higher fees, but they wanted the same fee as two years ago, that travel be included, and that the bureau's commission would remain the same.

Whose side is the bureau on? Aren't they supposed to be marketing the speaker and trying to get higher fees in return for the commission the speaker has to pay? This applies to any third party with a financial interest, including the "brokers" and "agents" in the consulting business. But many of them just cave in to low level client people who are concerned about protecting their budgets and wouldn't understand value if it bit them on the nose. The third parties just want their placement fees, and have their own poverty mentality (since most of them are order takers, and not very good marketers).

Here's what determines a high fee and justifiable resistance to lower it:

A great relationship with a true economic buyer who can find the money to pay for value and appreciate ROI. This is virtually never a human resources or training person.

Providing options, so that the buyer can choose the appropriate investment and return for him or her. ("I really love option 3, but might not have the budget." "That's okay, that's why we have option 2!")

A strong brand and reputation. There just aren't many people with your talent and track record.

A strong pipeline, so that you don't have to accept just any piece of business.

Refusal to work with intermediaries who are parasitic and just want a piece of your action without actively promoting you.

The pride and willingness to walk away from an unfair deal.

Hard to Believe…

I've actually heard people say, "My prospects are having hard times, so I don't feel comfortable charging more than I absolutely have to." Well, why not just go into charity work? Those prospects are paying for their mortgage, payrolls, heating, insurance, and so on.

Money is never a resource issue, it's a priority issue. You have to demonstrate enough value to a real buyer so that you become the priority. Put your back against the wall on these values. You can't back down from there.

Alan Weiss, Ph.D., is a contributing editor to RainToday.com and has been cited by the New York Post as "one of the most highly respected independent consultants in the country." His clients have included The Federal Reserve Bank, Hewlett-Packard, Mercedes, JP Morgan Chase and over 200 similar world-class organizations. He has written 25 books which appear in 7 languages. He conducts a global mentoring program. You can reach him via his web site: www.summitconsulting.com or his blog: www.contrarianconsulting.com.

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