By Andrew Sobel
Especially in a difficult economy, clients may ask you for a discount. There are at least five reasons why a client will pressure you to reduce your fees, and you need to understand which of these is at the root of the discount request in order to effectively respond. I've named a client type for each of these reasons:
- "Red Ink": This client is under extraordinary budgetary pressure due to a decline in profits, and really is having trouble funding your work. Right now, there are many companies out there that are in this predicament. In this case, try in earnest to structure your work to help the client meet internal budget pressures. Make recommendations for ways that your client can become more efficient and productive in the way they are spending their budget for your particular service.
One of the firms I work with, for example, was told by a large Fortune-500 company that it was cutting the budget for all external service providers by 50% across the board. My client spent serious time developing a very cogent business case which showed that the company could save more by consolidating around just a couple of suppliers, and they were able to retain the same level of fees while increasing their share of the company's total spend.
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