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Million Dollar Consulting® Mindset
From Alan Weiss

Volume 4 Number 4
April 2014

Welcome to the fourth year of Million Dollar Consulting Mindset. Our mission is to spark new thinking and ideas for creating a thriving business and rewarding life. As always, I'm happy to answer questions if you send them to me and specify they're for MDCM.

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Sensitive Fee Environments

Normally I address fee issues as matters of establishing value with the buyer, so that fees are seen as part of return on investment. However, there are environments in which fee is an inescapable "elephant in the room," and must be dealt with continually.

Those environments might include government, charities, non-profits, very small businesses (family -owned), and so on. In any case, fee is raised as a continuing issue because of rigid purchasing regulations, a true lack of money to invest, fear of being "blamed" for an expenditure, a "poverty mentality," etc.

So, if you can't use value as an offensive weapon (and you usually can at least 90% of the time), here are some defensive positions that might be helpful.

  1. Ask about budget firmly. If budget is an issue, then let's see how big an issue it is. Ask what parameters you must stay within. If they are evasive about this, just state firmly: "Look, you can't tell me that your organization can't afford to spend much on this project and also tell me that you're uncertain about what that amount is! Are we talking $10,000, $100,000, or $500,000? If you can't answer that, then let's talk to the person who can."

  2. Be prepared to cite a fee. Simply state that your strategy approaches (or coaching or whatever) are $15,000, $25,000, and $50,000, depending on your involvement and the duration. If they say even the first is far too much, move on. If they ask you to explain the differences, move forward.

  3. Put the onus for compromise on them. If the contact comes back to you with "We've decided that we can go ahead if we pay no more than we did two years ago, which is $30,000 less than your proposal," then you reply with, "Well, that's a positive start, reinforcing that this work is needed here. What do you propose we do to reconcile the difference in investment required?"

  4. Consider non-monetary compensation. At least some part of your fee must be in cash, but you might want to argue for the following: recording your session on video and/or audio; being introduced to the executive directors of trade associations with which the client has relationships; free advertising in the client's publications if appropriate; service in-kind (e.g., vacation travel or financial planning); personal introductions to people in the business community.

  5. Provide options.This works beautifully with any size business. The decision makers will have the option to choose the least expensive approach, if they wish, and you will ensure that the least expensive approach is still a "good deal" as far as you're concerned. Never provide "take it or leave it" alternatives to prospects who are sensitive about expenditures. They will almost always "leave it" or try to negotiate downwards.

  6. Consider abandoning that market. This isn't technically a defensive tactic, but it is a fine business strategy. No matter how effective you are parrying spending concerns in these environments, the fact is that there isn't a great deal of money to be had. The "sweat equity" involved in trying to close a $50,000 piece of business is no different from that of a $15,000 piece of business, so why not pursue the bigger fish? Not only will you make more money, but the wear and tear on you psychologically will be far, far less.

These skills and tactics should not be used more than 10% of the time, or you're either in the wrong markets or you're not focusing on value in the right markets.

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© Alan Weiss 2013. All rights reserved.
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Million Dollar Consulting® Mindset

Volume 4 Number 4

For more issues of Million Dollar Consulting® Mindset, click the link below.

Alan Weiss on Consulting
A guided journey with "the rock star of consulting"

Alan Interviewed by:

  • Chad Barr,
  • Linda Henman, PhD, and
  • Aviv Shahar

The Writing on the Wall

A monthly video series hosted by Alan Weiss and featuring Koufax the Wonder Dog, addressing topics of global importance, professional importance, or whatever has distracted or irritated Alan at the moment.