Don’t cut your fees… cut the scope…
Sooner or later you will be asked to cut your fees. The reason may be legitimate (budget constraints) or your client may just be testing you (particularly if you are new.)
Either way, do NOT cut your fees. Rather, cut the scope…
- If the budget is truly limited, this may salvage the project and allow you to still help your client, albeit in a more limited fashion.
- If you are being tested, it sends a message that there is no “fat” in your proposal. This testing tactic is quite common with purchasing agents, who are tasked to get the “best deal” for their employer.
Don’t fret about doing this, and NEVER buy the business. Your time is better spent finding a client who is willing and happy to pay for your services.
This is the voice of experience speaking. Prior to consulting, I was a sales engineer for ten years. On two occasions I spent considerable time to round up “demo” equipment at substantial discounts for some “needy” customers.
Both turned out to be very poor customers, demanding extra support and hand holding while grousing all the time. Not a good deal.
As a result, this lesson was learned prior to starting my consulting firm. Good clients appreciate your value, and are willing to pay for it. If they don’t, move on.
Another example. I once put together a proposal for an overseas training project, which involved several extra tasks. Upon submission, the purchasing agent asked for a reduction, so I asked for a target price. Based on that, I revised the proposal – no small task in itself.
The purchasing agent’s response was, “We like the new price but we still want everything in the original proposal.” My response was to withdraw the proposal. I no longer felt comfortable working with the client.
I found out later that the engineering manager who initiated the project was unhappy — but not with me. Apparently this purchasing agent had done this to other consultants. While I didn’t like losing the business, at that point I felt justified in my action.
The best part was some good business came in, which I would have passed up had I gone with the bad business. Karma anyone?
Finally, the late Howard Shenson advised setting your fee at the minimum amount you would accept. That way there is no fat, and if you lose the business, you don’t end up second guessing yourself. Good advice – I’ve followed it for years!
P.S. Now back in Arizona, and hope to be posting again on a regular schedule. It was the “Lost Summer” with my sister-in-law. Alzheimer’s is a cruel disease.
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