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Step 1: what are they really asking for?
A couple of weeks ago, a partner in a large London City firm we have been working intensively with, recounted a discussion with a client about a small job he had been asked to do by the client relationship partner. The conversation with the client went something like this; “How much will this cost?” “You are looking at £2,000 to £4,000”. “You’ve got to be joking, that much!” “Okay, if you don’t like that, how about a fixed fee of £5,000?” “That sounds good, let’s go with that”.
What on earth just happened? If £2,000 to £4,000 was unacceptably high, why was £5,000 going to do the trick? Answer, quantum was largely irrelevant, it was the certainty that was the issue – in this case anyway. Perfect diagnosis equals optimal outcome, but this is rare. 99% would have recoiled from the clients’ abrupt response and instinctively yanked the discount lever or otherwise compromised, ceding substantial margin and still not addressing the clients’ real (but unarticulated) requirement.
When any client asks you to “cut your fees,” you want to make sure you’re hearing what they’re asking for. I’d begin any response to such a question by asking what they hope to accomplish. Remember that if their answer is “more controlled or predictable cost,” the method by which to accomplish that may not be by cutting fees, but rather by examining how the work, matter over matter, might be better priced, staffed, processed or delivered.
These sorts of conversations between a client and a firm are often characterised by a level of comprehension dissonance, where the client thinks it is saying one thing, but the firm hears something else. That is usually because one or both sides aren’t listening properly, or aren’t asking the right questions or may be less than articulate, or less than specific, or may force what they’re hearing into a set of responses that is limited by their own experience and price conversation capability.
Take time to explore and understand what the client is actually asking for or looking to accomplish. Then, think about a variety of ways that you could respond, beyond “the discount.”
Step 2: know your costs and your worth; wh
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