Ask the Expert

Fees

Question by: Lindsey

We submit a tender, get selected for presentation, then learn we are the preferred choice. At this point, a client will try to chip us down on fee. How do we avoid this?

Answered by
Alison Zalecki

Answer

Hmm, they’ve already told you you’re the preferred bidder…! It’s not likely they are going to change their mind on that. They want to work with you, but just want to see if they can get an even better deal.

Don’t just agree to a discount!

So, don’t be so quick to drop your fee. The other bidders may have come in lower, but they are the same bidders that your client doesn’t want! Agreeing to reduce your fee sends out a very quick message that you overpriced in the first place, and it’s a hard position to climb out of for future work. Instead of offering a reduction, there are a number of credible things you can say and offer instead:

 Ask them why they want to review the fee

Sometimes they just like to ask for asking’s sake. Go to point 4 below.

 Ask them why they selected you as the preferred bidder

They will say some combination of:

“We like you the most.”

“Your solution is better than the other bidders and will get us better results.”

“You have the most relevant experience so we feel more confident going with you.”

And you can respond with: “It took us time, skill, and investment to get to this level of capability for our clients, and it’s why we need to charge more than our competitors.”

 

  1. Explain your value

Most people outline their fee and the terms that go with them, but rarely how they arrived at that figure. Explain why your fee is good value for money. I use the following stripped-back example to explain value to my clients:

Your competitor’s fee is £100 and they prove they can save or make the client £1,000.

Your fee is £500, but you prove you can save or make them £5,000. Which one would you rather go with?

  1. Give options

Don’t budge on your original quote, but offer something. Outline some options. This gives them the freedom of choice.

  1. Put a percentage at risk against your agreed targets and performance levels
  2. Go through it together and take something away, reallocate resource, or adjust timings
  3. Ask for more work as part of the agreement within a timeframe

Never round your numbers up or down. £10,000 looks like it has been plucked out of thin air. £9,700 comes across as considered and reflects your best possible price, reducing the desire to negotiate.

The fee is the pivotal element in winning work, but it doesn’t mean you have to be the cheapest to get it. Explain why you are worth what you are charging, how you arrived at that figure, and how you will drive better results for your client.