Fee Negotiations: How to do it right

When it comes to increasing your price or fees, it can be a delicate conversation if not handled correctly.

You can get clients offside, you can lose clients, you can loose face or worst case, you can lose your business because you’re not optimising your margin.

I’ve been helping many businesses over the past month by teaching how to have a successful price increase conversation, without awkwardness or conflict.

They all have differing ranges of increases they are seeking; some will increase a few thousand dollars over a year, and others need to increase their fees several hundred thousand dollars.

Just imagine yourself or your staff being able to confidently conduct a price increase conversation with a valued client, in a manner that promotes collaboration.

And your client responds in a way that they are happy to stay with you, and will allow for the desired increase.

It’s very possible.

Where it goes wrong

It seems that few people get this right. Even if they do achieve the desired increase, their client is under duress and seeks to leave them soon after, simply due to the way it’s been handled.

It also seems that many people are frightened (or in some cases, terrified) about having a conversation about increasing price.

Some people even tell me they are so averse to this conversation, that they don’t even chase up overdue invoices.

So why do some people feel such a lack of competence around this conversation, and how can you do this successfully?

Don’t be weird about price

If you’re uncomfortable talking about price, this will resonate in your sales or negotiation conversation and you’ll struggle to achieve your outcome.

There is a particular phrase I use when discussing price and it’s designed to put the other person at ease. It also opens up the discussion to be a collaboration, rather than a one-way message. It goes a little like this:

“I’m ok talking about price and I’m not uncomfortable talking about it. In fact, I’m sure you’ll agree it’s good business practice to talk about price, because it’s an important topic.”

This sentence does a couple of things:

  1. It normalises the price conversation
  2. It gives your negotiation partner permission to acknowledge that it can be uncomfortable
  3. It sets the scene that you are both good business operators by having the conversation

It’s a process, not an event

If you’re a regular follower of my sales and negotiation content, you’ll recognise yet another opportunity today where I will beat the drum of “these conversations are not events, they are a process“.

By calling your client, or booking a meeting with them and surprising them with the old “we need to have a conversation today about increasing your fees”… I can tell you know, you’re on the fast track to tanking.

Instead, the first step is to call (not email) your client and ask to arrange a meeting in the weeks ahead. Be clear that the purpose of the meeting is to have a collaborative conversation around price and that you will be talking about the fact that your fees will increase.

No client is going to be thrilled by this news, but they will be much less thrilled if you spring it on them in a meeting which you tell them is about something else. That’s not good negotiation, that’s sneaky and manipulative, which breaks the honesty code for good negotiation practice.

By making that phone call in advance, they will have time to come to terms with the news that there will be a fee increase.

Springing this on them will likely result in one of a few different ways, they will:

  • express annoyance
  • shut down
  • appease you at the time… then start looking for alternative providers soon after you leave

Giving advanced notice of the conversation will more likely allow them to:

  • maybe express annoyance initially, but be more calm when you meet
  • collect their thoughts and prepare for the conversation
  • be more ready to collaborate when you meet

It’s ok to make a profit

Don’t be afraid to share with your client that you too, have experienced business stress over the past while.

It’s also ok to share with them that your intention is also to make a profit in your business. It’s actually better for them if you do make a profit because if you don’t, you won’t be around to serve them any longer. You may then need to reduce your staff, which affect client service continuity and overall levels of service.

There is an actual negotiation framework I teach for how to execute this conversation in the meeting. Please contact me if you’d like me to teach it to your organisation.

Listen to this podcast

If you’re keen to hear another way to conduct a great pricing conversation, here’s a 17 minute podcast interview I did on the topic.