The Truth Behind Every Objection to Consulting Fees

What if a single, underlying factor drove every objection to consulting fees … and it was one you could address? There is, and you can.

The issue will become clearer when we separate out faux objections that are really clarifications of parameters, not push-back on the consulting fees.

Parameters clarifications—budgets, signing authority, and so forth aren’t challenges to your rates, they’re simply a refined definition of what consulting fee is allowable or feasible.

After setting aside those clarifications, you’re left with honest-to-goodness dissatisfaction with your requested payments. And your prospects’ real objection to your consulting fees boils down to the exact same, underlying issue that drives every single complaint about pretty much everything:

Fairness.

When a client considers whether to accept or reject your fee, he’s evaluating whether he thinks it’s fair for the consulting work you’re proposing.

Fairness is all about comparison. Comparisons to expectations or benchmarks or alternatives.

That’s why clients issue tightly written (often inane) RFPs, and why they ask for hourly rates and day rates—because those are concrete, easy-to-read measures clients can use to compare consultants to each other or internal staff or expectations.

You win the fairness game—and overcome fee objections—by controlling the comparator.

When you determine the basis for your prospects’ comparisons and you directly call out the fairness issue, objections to your cookie consulting fees crumble away.

For instance, when you shift the discussion from fees-for-tasks to fees-for-outcomes, the client’s sense of what’s fair is reconsidered.

To make this even more tactical, next week I’ll share a script that builds on fairness to support premium fees.

Think of an instance when a prospect objected to your fees, and share in the comments whether you think underlying the objection was a fairness issue or not.


Text and images are © 2018 David A. Fields, all rights reserved.

By | 2018-04-11T05:55:10+00:00 April 11th, 2018|16 Comments

16 Comments

  1. Scott April 11, 2018 at 6:22 am - Reply

    Hi David,

    Thanks for you consistently insightful content and your service to the consulting community. As a fortune 100 alumni who now does consulting, it took me a while to understand every engagement is a business case within a business case. It is so easy to assume that the comparables are self evident when from your side of the desk you are offering huge value for the investment. By getting both business cases grounded, the value gets unlocked.

    • David A. Fields April 11, 2018 at 6:35 am - Reply

      You’ve neatly captured one of the primary transitions in thinking everyone has to make when they move from corporate to consulting. That’s why it frequently takes a year for a senior executive from the corporate world to truly understand consulting.

      In corporate, a project is a project–your conversations are about the outcomes (with, perhaps, a bit of thinking about the politics). In consulting, half your conversations are about the outcome, half are about the relationship, half are about ensuring the perceived value is high, and half are about the client’s politics. That’s four halves… no wonder we’re all so busy!

      Thanks for presenting the “business case within a business case” idea, Scott.

  2. Mark April 11, 2018 at 8:26 am - Reply

    Great way to think about a recent rejection to my fee. The company is a startup but is expecting a large contract award in a few months. They objected to my minimum fee, stating that as a startup, it’s not affordable. So my hope is once they are awarded the large contract, it will become affordable. But I now realize I am making an assumption that it’s a budget issue. I never did check to see if it was a fairness issue or really just a budget issue. Great advice! If it is a fairness issue, I need to go back to discuss the value of our service. Given that they have an in-house resource, which they have found to be inadequate (reason for contacting us in the first place), they may be comparing our fee, which is more expensive, to the cost of their in-house resource, and may view our fee to be unfair because it is more. Of course, it should be more because we provide greater value, but they may not understand that and think all consultants are the same and should cost the same.

    • David A. Fields April 11, 2018 at 9:20 am - Reply

      The clue they gave you was, “As a startup….” which means they feel that fees should be different for a startup than for an established company. That’s an expectations issue. True, they may also have budget constraints; however, it sounds like they objected based on what they feel is reasonable (i.e., fair) for them to spend.

      Your follow up is to understand why your fee was perceived as too high. Even if you’ve lost the contract, you can go back to them and ask.

      Thanks for the terrific case study, Mark.

  3. Janet Falk April 11, 2018 at 11:00 am - Reply

    David, I offered the client a package of services for a retainer. He countered my offer by requesting more services for less money. I pointed out (in detail) that with his budget, he could not accomplish what he requested and asked him to prioritize the services he wanted. Follow-ups went unanswered. I moved on to other prospects. Janet

    • David A. Fields April 11, 2018 at 11:22 am - Reply

      Excellent (though, perhaps painful) case study, Janet. Thank you for being willing to share it.

      I’ll set aside the issue of fee structure, because I’m not totally sure whether you mean a retainer in the sense that attorneys use–which is a pool of money they draw against on an hourly basis, or you mean a fixed-fee project or you mean a stipend.

      Your case appears to be one in which there was a mismatch in the perception of fairness. What you thought was a fair consulting fee for the services requested was not what he thought was fair.

      Of course, other factors could be at play. He may not have had enough signing authority (a parameters issue) or he may have decided not to pursue the project at all (a Want issue).

      The only way to resolve this is through conversation. Alas, you weren’t able to engage in more conversation. (Not sure whether you set up the follow up call before you submitted the proposal, but that usually helps keep the discussion going.)

      Good learning, and good for you for moving on to more fertile pastures!

    • Chris Scheu April 17, 2018 at 8:09 am - Reply

      My response in situations like this is to offer my client a counter-proposal that includes the additional work (at my regular billing rates). I structure it in phases or a la carte, so the client can pick the work he values most. This gives me an opportunity to capture the additional work but also show confidence in my rates and value I deliver.

      For the client, this puts them in control and contains an implied commitment on the rates. It’s a great segue way into a cooperative discussion about priorities and value, that can also reveal hidden obstacles.

      The more I can engage my client in the discussion, the more I can learn, which is great for everyone and enables greater collaboration.

      It might be worth exploring the retainer with your client, as well. When rates are being challenged, the retainer becomes an unknown in terms of how much work product (ie value) it will cover. Taking it off the table or stating it as say a percentage of the contract value removes it as a variable, which allows you to focus on the more important focus on value and work product.

      • David A. Fields April 17, 2018 at 1:02 pm - Reply

        Thank you for sharing your experience also, Chris. It sounds like Janet did offer a counter proposal and the client was unresponsive, which happens.

        You’re absolutely right that the more discussion, exploration and discovery you engage in with a client, the more likely you are to win projects and deliver value that makes them happy. That said, not every client is reasonable. The consulting team I’m working with today brought up a case in which their client asked for out-of-scope work, then complained bitterly when the consulting firm pushed back on those requests. (We discussed ways to manage that situation, of course.)

        As for the fee structure–that’s a separate discussion. Structures that involve retainers and rates are sub-optimal for most types of consulting engagements. (BTW, there’s a discussion of fees and fee structures in Chapter 22 of this book.)

        • Chris Scheu April 17, 2018 at 5:15 pm - Reply

          I noticed that Janet did point out some flaws in the client’s thinking, which struck me as potentially confrontational. It’s hard to determine from a one sentence narrative, but it could have turned the client off a bit. I try to view the situation from my client’s perspective and always propose ideas, e.g. ways he could accomplish his agenda with his budget, even if it required trade-offs to squeeze within budget, extend timelines, seek additional budget or partnerships, etc. As a former buyer myself, I could see it being a turn-off to have a consultant point out why I can’t do what I want… I might have turned to another firm that embraced my agenda. There are also some strategies for following up that practically guarantee a response that might uncover some insights, but win some, lose some. (BTW, that’s a great book – it’s packed with valuable insights!)

          • David A. Fields April 17, 2018 at 6:31 pm

            You’re right that it’s always best to agree with the client, even while you’re disagreeing. My assumption is Janet posted the Cliff Notes version of her conversation and in the moment she probably handled the conversation well. She’s a smart consultant, just like you!

  4. Don Garvett April 11, 2018 at 11:42 am - Reply

    Half of my career was as an executive and half as a consultant. As an executive, buying value (results) was worthwhile. Buying time (even activities, without reference to value) was usually worthless. As a consultant, I avoid selling time unless absolutely required (e.g., expert-witness assignment).

    • David A. Fields April 11, 2018 at 2:58 pm - Reply

      You were a smart executive, Don. (And now you’re an even smarter consultant!) Getting out of the fee-for-time conversation is half the battle, and you’re proof that it’s absolutely possible. Thanks for giving us a peek into your practice.

  5. Joe Gregory April 11, 2018 at 3:14 pm - Reply

    Fee objections are also the result of having only fact-based, intellectual conversations, not uncovering their emotionally compelling reasons/motives to do something.

    • David A. Fields April 11, 2018 at 3:57 pm - Reply

      Right on, Joe. As you’ve pointed out, we’re dealing with an emotional issue. That’s precisely what fairness is– a subjective assessment that creates an emotional response.

  6. Bob Hatcher April 11, 2018 at 6:26 pm - Reply

    Like Don Garvett I price by results whenever possible. I usually tell them that they are buying results, not hours. When forced, however, to be solely T&M, I price by the day (I never price by the hour, it’s just not that granular) my fee is normally $3200 – $3600/day, or $350 – $400 per hour. If I get some push back I use the comparative approach. I ask “How much do you pay for an hour of a senior attorney at the law firm you use?” Or, their CPA firm, or even “How much does a principal in your professional services group bill out for?” Even startups know that they pay a LOT for their lawyers.

    People make decisions by comparisons, by putting things in context. It’s up to you to give them the proper comparatives. In the vast majority of cases my efforts provide a LOT more value than the lawyer or accountant who normally are billing them at much higher rates than I’m charging

    • David A. Fields April 11, 2018 at 6:34 pm - Reply

      Terrific case study, Bob. You’ve underscored a key point: people make decisions (which are driven by emotions) using comparisons (which are emotionally charged). If you control the comparator, you can affect the emotion and the decision.

      Pricing by outcomes and results is an excellent way to change the comparator. Setting up attorneys or CPAs as the yardstick may work in many instances. Personally, it’s not my favorite because it directs the client back to the money-for-time mentality. (Also, they often don’t charge enough to make the comparison useful.)

      You’re absolutely getting to the crux of the issue: how much value are you providing and, more importantly, how much value do your clients perceive they’re receiving and what do they think is fair to pay for that value.

      I’m glad you threw your experience into the mix, Bob. Very helpful.

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