Fee fall
Making sure the price is right depends on your negotiating skills. John Timperley and David Webb offer some tips
If we have learnt one thing from the past 12 months, it is that business and client behaviour is difficult to forecast.
Many surveyors have borne the brunt of clients thinking long and hard about their expenditure. Even when the economy makes strong moves in an upward direction, clients will remain cautious and will continue to discuss or re-evaluate fees.
During the recession, there has been a temptation for some surveying firms to discount heavily. While this may have won a client in the short-term, it has often proved to be a tough strategy in the long run.
Clients soon equate the new price with that service and it is almost impossible to regain the original rate. In this situation, and to minimise damage to their profits, surveyors need to rethink the service delivery approach behind the new price.
This often means doing one or all of the following:
– Improving the speed and efficiency of service
– Involving more junior staff on the project
– Systemising or using cost-effective
technology for components of the service
– Considering outsourcing certain elements to give the service a cheaper ‘internal’ cost.
Regaining control
As some surveying firms cope with the implications of discounting, others have tried to ensure that their people are highly proficient in fee negotiation. We have experienced a rise in demand this year for fee negotiation coaching and training, with firms wanting a win/win situation from their negotiations with clients.
So, if you have returned to work after the holidays to find a client objecting to your fees, let us give you some tips from your fellow professionals who have mastered fruitful fee negotiations.
Understand where you add value
If you are going to convince the client that they should accept your fee, you must understand which of their current needs you are satisfying.
The key to your success here will be your
questioning and listening skills.
The client will ultimately be the judge of whether you offer value for money, or are worth paying a premium for.
We often come across surveyors who work hard on a proposal for a client, but often then look at the fee and say “they’ll never pay that – they already think we are expensive”.
In doing so, they rarely negotiate an optimal outcome, as they do not believe in their offer and fee. Clients will continue to ask “Why should I pay that much?” and you should have sufficient powerful compelling arguments in response.
Preparation is crucial
If you are facing an important negotiation with an important client, then spend time preparing. Invest in rehearsals and practise with fellow colleagues. Try to work out the objections and questions the client will pose and have your responses ready.
Also run through the opening of the meeting and the way you are going to manage the session so you get and keep control. Just as pitching and proposal writing takes time to prepare, so do fee negotiations.
Know what you want
Consider also what aspects of your offer you are prepared to lose (or reduce) and those where you want to stay firm. Reducing your price by 10% without a similar change
in your offer sends the wrong signals about what you are prepared to work for.
Find things that are worth 10p to you but worth £1 to the client, so to speak. Create a situation where they feel they win as much as you do. To achieve this you need to have plenty of variables to trade.
Ideally, you don’t want to have to focus too much on the money. Be prepared to say ‘we cannot move on the fees, but what we can do is…’ and have plenty of alternatives up your sleeve. Splitting the difference purely over money often leads to both sides losing in a fee negotiation.
And if you are going to make concessions, make sure the client works for them – or changes their requirements and expectations in some way. That way, the price of your proposal won’t be undermined and reductions will be justified by changes made on the client’s side.
Summary
Ensure you understand the key components that will drive the client’s final decision. Prepare for and invest practice in negotiations. The decision makers you face will be looking to see what positive change you will make to their working lives or business, so articulate the value you will bring.
Make sure you propose fees you are comfortable with and prepare compelling arguments to tackle questions about them. Know where you can move on your offer and where you can’t. Consider factors, other than fees, which you can offer to bring about a win/win for both sides.
Make the client work for any changes or concessions.
Further information
John Timperley and David Webb are business development specialists at the Results Consultancy
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