What to Do When Your Client Asks You to Lower Your Consulting Fee?

Consulting Fees Down

First I should say that this request is rarer than you may think.

This may be the type of client that is unsure of herself and will look for any excuse to get out of a project, delay things and make your life unpleasant in general.

If you’ve done a good job of educating your ideal consulting client and have given them plenty of reasons to see the value that you can provide to solve their problem they’ll have few reasons to worry about your fee.

In many cases, but not all, the type of client that asks for a discount on your fee is the type of client you have to worry about for two reasons:

1) That you haven’t done a good enough job of demonstrating what value your client will receive – and that means that they won’t be fully committed to the project if they don’t believe their ROI will be significant.

2) This may be the type of client that is unsure of herself and will look for any excuse to get out of a project, delay things and make your life unpleasant in general.

That aside, if a genuine prospect asks you to lower your consulting fee, what should you do?

Here are a few ways to respond:

  • You can flat out say “No, I don’t do that.”
  • You can say “For long-term projects or when we agree to a set amount of on-going, or large scale project work, I can offer a 5-10% discount.”
  • A variation on the above is that you can offer your client a small discount if they pay you for the full project upfront.
  • Another option is to respond with “I can reduce my fee if we reduce the scope of the project, what did you have in mind?”

These responses will typically get the conversation back on track.

My preferred method and the one I recommend is that you ensure that you have (and if you haven’t that you do so right away) described to your client the value they will receive.

In the Consulting Success System I talk about how to clearly articulate the return on investment your client will receive.

If your project fee is $75,000 that may sound like a lot.

But if your client is going to generate an extra $300,000 in profit as a result of the project with you at the helm, suddenly that $100,000 doesn’t look so bad.

The takeaway here is to ensure that you’re prepared with these responses when, and if, your ideal client asks you this question.

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  • thisisdamion

    Thanks for the post — just one quick question.

    What’s your stance on offering a reduced rate for a project of client that will “open a lot of doors” in terms of PR, or connections, or exposure to a new industry?

    • http://www.consulting-business.com/ Michael Zipursky

      Depends where you’re at in your career. If you’re just getting started, reducing your fee a bit to build your client list, experience and confidence, can work well. If you’re not new to consulting and have a track-record you should be able to get the project by demonstrating the value you can produce. If you really feel this client will ‘open doors’ for you, give a try. Though I’d still suggest making sure your fee compensates you well – just in case the doors don’t open as wide as you think they will.

  • Len P

    I find that this is the response given mostly by Government clients, particularly in responses to tender submissions: “we liked you but were too expensive – we’d want you to reduce your prices”, or something like that.
    I’ve also found that by reducing your prices, you’re putting yourself at a disadvantage for future work, where there is the expectation that future (more challenging) projects will have the same fee rates. So my advice: never reduce until absolutely necessary to keep that highly desirable client (such as for experience, for PR). The third option given above is always the preferred option. I’d also recommend a fourth: ask the client what their concern is. It may be that they don’t have the budget for the full amount in this year, in which case, breaking down the project into more digestible chunks would be recommended.

    • http://www.consulting-business.com/ Michael Zipursky

      Len – it’s a common question when you’re engaging with a new client. Good suggestion on the 4th point.

    • http://www.davidleetong.com/ David Lee Tong

      Fourth point is great, and a common sales training technique making the customer cite their main rationale for the objection. Thanks for pointing it out!

      • http://www.consulting-business.com/ Michael Zipursky

        Glad it’s helpful David.