I was asked a question the other day about how to deal with clients objecting to your fee when you unveil it as a part of your pitch. The answer I gave was-
‘Make sure that you can show how your fee is based on the value that you’ll deliver, not the cost of your inputs’
If you can’t do that then you can’t justify the fee whatever it is. Once that’s out of the way, your client might still object because of the business that they are in.
As a rule of thumb, the industry sectors with the highest margins will pay higher fees. Banking, Consulting, Pharmaceutical, Innovation and Technology, Lawyers, Accountants and such, will all be far more open to the fees that you want to charge than Supermarkets, Manufacturers, Government and the Public Services (particularly at the moment).
I started my business in the automotive sector 22 years ago. I loved it, they (mostly) loved me. They were making good profits at great margin, and fees were never discussed. I created a proposal, they accepted it with the occasional quibble over details, That was it. Heaven.
Then, sometime in the mid 1990’s, everything in the manufacturing sector changed. From then on, whenever I wrote a proposal for an automotive client, I’d be handed over to a ‘purchasing professional’ (Ford, GM, Peugeot, Chrysler etc) who would ask- ‘OK, that’s great but can we have a 20% discount this year, and next year, and next year…’
When I asked why, they’d look at me as if I’d asked them to explain immunohaematology, and say something like, “It’s what we expect from all of our suppliers, times are tough, blah, blah, blah.”
After tens of such frustrating meetings, when I realised that ‘value’ was an impossible concept to explain to a buyer in a business making no money, I decided I wanted to work where the sun shone, profits were made, and fees were assessed on the basis of improvements delivered, not bean counter ‘costing and purchasing models’.
I took a very deep breath and gave away all my automotive clients to my team, and moved my tent to the sunny uplands of other sectors. My experience since has been a joy. When the business needs to focus on tiny margins, even your best clients are forced to haggle.
In the words of Oscar Wilde- ‘A cynic is a man who knows the price of everything and the value of nothing’. I think this is the adopted strapline of the Institute of Purchasing & Supply’.
This is a part of my Fit, Focus & Flair model. To be great, a presentation must be a perfect FIT for the situation; the content must have complete FOCUS on it’s purpose and message; and it must have enough FLAIR to stand out on the day, and in our memories. Learn more about developing your Fit, Focus and Flair.
Jim Harvey
