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Genius or Stupid? Your Choice...

Today I was poised with a question… Reduce my fee and get the job or stand with integrity for my worth and potentially lose the opportunity? This was not an isolated circumstance it happens frequently in sales negotiations, contract compensations, and more. So why does this happen? Was it because we did not state the value for our products or services, No… It was for what generally kills all potential relationships the lack of understanding of what costs truly are.

Not too long ago I attending a seminar put on by the Virginia, Maryland and D.C. Chapter of the AAML entitled Divorcing the Wealthy. At this seminar, various topics were discussed however one stood out, it was about fees. In presenting fees to clients, particularly educated wealthy clients it was often felt by the clients that they should not be required to pay the full amount as they believe that work can often be done for a lesser rate and one could possibly be taking advantage of their wealth. It was debated that the client came to you for a reason, either through referral from their inner circle or from reputation, both garnered unquestioned credibility and recognition of ability. Thus this could also be argued for any type of negotiation or client, whether it's you or your brand, the client came to you for a reason and it's your professionalism, experience and expertise that will cement to transaction. Is it not worth something.

This respect for your credibility and ability was gained through years of experience, knowledge and expertise. Naturally, your services were worth fair value if not a premium. Upon engagement, the client would be taken care of in a manner they expected. So was that worth a fee reduction, No; and their respect would be lost if given. I have a friend in the Automotive Business that believes his experience is worth every penny and he charges for it. Hs career has spanned decades, all with the same manufacturer with sales volumes placing him in elite status. His clients know they can pay less elsewhere but they still keep coming to him, why? He presents a value proposition to his clients that show paying more is an assurance to exceptional service and should a concern down the road happen to arise having him as their liaison pays a dividend that far exceeds the small additional cost in the original transaction. He knows his worth and the clients do as well.

So that leads to the second part… A lack of the understanding for what a value proposition and what the costs actually are. The value proposition is a general statement does this product or service present value relative to the cost/time I am going to have to expend over the (now this important) lifetime of engagement/ownership. Value can be made up of a number of different items, capital expenditure, financial obligation, overall cost, time of ownership, downtime/reliability, but it should be displayed as a RETURN ON INVESTMENT.

In viewing costs these are relative, both fixed and variable; mostly are a simple equation of expenditure and time, both with a value. Whereas value proposition can be a complex formula combination of ability, expertise, quality, experience along with costs; costs are plain factual, more black and white. Whatever the industry is one can calculate the cost of the product/service. Regardless of billable hours or purchase costs it all comes down to a dollar figure and affordability.

This would lead to some go by the saying "you get what you pay for" and I would tend to agree. However, I do believe when engaging an individual to accomplish a task it’s about being transparent of what you wish to accomplish, understanding the timeline and having a clear idea of the costing. This will also eliminate the “Sell Shock” (yes, I know it is a perceived spelling error, but it’s not) as the client is under the full thought process you are in sell mode, an idea, a result, a payout…

If you change your dynamic, display transparency, explain their costs, justify your value and why spending the additional will increase the return on THEIR investment, give them the respect and trust they are looking for and finally explain, yes, the client can always get a lower cost but like anything in life it’s a risk to what you receive, either in goods or services. John Ruskin said it best in his famous quote “The common law of business balance prohibits paying a little and getting a lot – it can’t be done. If you deal with the lowest bidder, it is well to add something for the risk you run, and if you do that you will have enough money pay for something better.”

It is my experience by utilizing this approach your conversion success will increase along with profitability, retention and referrals. This will increase your volumes and income. Treat people with honesty, integrity and respect, be professional for this is why they came to you in the first place. Don't let them leave because of the lack of it, It will empower trust and create a relationship. It will be this relationship that will forge a future, both your and theirs.

In closing... You do get what you pay for, increase your value, show you worth and close that deal.

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