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3 Scripts to Handle Objections to Consulting Fees

Last week we discussed the issue underlying every fee objection: fairness. (If you missed it, take one minute to read this). Okay, but “fairness” is a theoretical concept, like baking. Let’s make some actual cookie recipes. That means scripts.

Your script starts with your prospect, Yuri Yusimi objecting to the consulting fees you’ve proposed. No matter how he couches the objection your initial response never varies:

You: Got it. You have some concerns about the fees. Do you have any other concerns with our proposal?

After you’ve surfaced every concern, you address them one by one, starting with a query like this:

You: Can you tell me a bit more about your fee concerns? It would be helpful if you shared what’s driving them.

Now we get to the meat of the issue. Is this really a fee objection or a clarification of parameters? (The distinction was explained here.)

Assuming you’re dealing with a fee objection, your script follows a four-point pattern

  1. Agree
  2. Shift
  3. Support
  4. Confirm

Let’s pick up the conversation where we left off. I’ll cover a few of the more objections to consulting fees and leave one for you to add your suggestions in the comments.

Common Objection: Rationale

Yuri: The fees just seem very high. How did you come up with them?

You:<Agree:> Yes, they are high! At least I hope so. <Shift:> Our consulting firm only likes to take on projects where we can create tremendous value for our clients and earn high fees along the way.

<Support:> We set our fees so that we both come out on top. You receive an outstanding return on your investment, and our firm is paid handsomely for helping you achieve the results we’ve talked about.

<Confirm:> Does that seem unfair?

Yuri: Oh, well, uhm. No. that seems fair.

Common Objection: Expectations

Yuri: It’s just a lot more than I expected.

You: <Agree:> Yes, this is a healthy investment. You’re right. That’s why it’s important that the project be valuable for you. <Shift:> You had mentioned that the total value of increasing croissant throughput is $2m per year. Though our part in that is, of course, smaller.

Yuri: Yes

You: <Support:> The approach we proposed was designed to help you hit those objectives. Does the approach itself seem right?

Yuri: Oh, yes. I have no problem with the approach. It seems good.

You: <Confirm:> Terrific. So, here’s the question: To achieve that $2m per year, does $200k seem unfair?

Yuri: No. Not unfair. Just expensive.

You: <We need to repeat Agree and Confirm:> Yep. It is. Is it too expensive?

Yuri: Oh. Well… no.

Common Objection: Competition

Yuri: You’re more expensive than other consultants. Why would I pay almost twice as much for you as for another consultant.

You: <Agree:> That’s a good question. If we’re all the same and every consultant is just as likely to deliver the result you want, then you shouldn’t. <Shift:> Are you 100% sure that anyone can come in here and increase your throughput—after all, your engineering team hasn’t been able to.

Yuri: No. but everyone I’m considering seems good.

You: <Support:> No doubt. Do you mind if I show you the difference between good and excellent?

Yuri: Please do!

You: <Support, cont.> We agreed that increasing throughput will generate an extra $2m per year. Let’s say a good consultant has a 90% chance of delivering your throughput goal. That would be very good. Now let’s say my team, which is excellent gives you only a 5% better chance of achieving that $2m per year. That 5% is worth $100k. Every year.

Yuri: Okay. Five percent of $2m is $100k. I follow.

You: <Confirm:> So, a small investment in excellence yields a much higher return in terms of final results. Does that seem fair?

Yuri: You’re still expensive, but yes, I understand. That’s fair.

Common Objection: Internal Staff

Yuri: I could hire three people full time for that fee.

What would your response be? Please share in the comments. Other readers and I want to know how you handle the fee objection.



24 Comments
  1. Daniel Markovitz
    April 18, 2018 at 8:12 am Reply

    Yuri: I could hire three people full time for that fee.

    Me: You’re absolutely right — my fee is about the salary of three employees. However, I know that you want to address this problem now. How long will it take you to interview, hire, onboard, and get those new people up to speed?

    Yuri: I don’t know, but they certainly aren’t coming on board tomorrow.

    Me: Also, hiring three new people carries a significant long-term obligation to them. With us, we’re in and out after the project.

    Yuri: Fair enough.

    Me: Looking at the fee in this context — faster project startup, no long term commitment — does it seem more fair?

    Yuri: You’re absolutely right. Let me double the fee!

    • David A. Fields
      April 18, 2018 at 8:39 am Reply

      Fabulous script, Dan. Absolutely on-the-spot use of the four-point pattern. Heck, if I were Yuri, I’d have paid you as much as SIX employees! Thank you for contributing, Dan.

      • Anatoli Naoumov
        May 2, 2018 at 2:40 pm Reply

        The only 2c I can add to Dan’s script: hiring costs about 1/3 of payroll in fees and time, onboarding costs another 1/3 through lost productivity of other employees and managers. Bringing these points up has a risk of losing conversation momentum and deviation from ‘agree’ mode.

        • David A. Fields
          May 4, 2018 at 12:04 pm

          It’s certainly possible that the prospect could wander off into the weeds and start talking about the details of hiring costs, etc. Fortunately, if you’re having a candid, in-depth discussion about the minutia of personnel decisions, your in a place where trust is high and that will lead to a closed deal at a high fee premium.

    • Jennifer Leake
      April 18, 2018 at 11:47 am Reply

      GREAT script Dan. You captured David’s teaching perfectly – and your reasons are spot on.

      • David A. Fields
        April 19, 2018 at 8:57 am Reply

        Dan’s good! Thanks for giving him kudos, Jennifer. Every consultant likes to hear when they’re on the right track.

    • Lynette Panzieri
      April 19, 2018 at 9:45 am Reply

      Thank you so much David, and to everyone else for contributing! I love specific examples, and these are all fantastic. Theory is great, but adding application is the meat in the sandwich.

      • David A. Fields
        April 19, 2018 at 9:50 am Reply

        Indeed! (For those of us who are vegetarian, application is the falafel in the pita.) Thank you, also, Lynette for taking the time to offer your appreciation. It makes a difference.

        • Kama Wilson
          April 19, 2018 at 11:48 pm

          Love your posts! They’re one of the only “non-work” emails I read. Talking about being vegetarian…David, does the term “SDA” mean anything to you?

        • David A. Fields
          April 20, 2018 at 12:39 am

          Gosh, Kama, I’m flattered to make your reading list, and grateful that you posted too. Chris just mentioned Jewish humor and you’ve brought up SDA. If someone posts a Ramadan comment I’ll know readers are finding the hidden messages inside each article.

  2. Kent Vincent
    April 18, 2018 at 8:57 am Reply

    David,
    Based on current trends toward shorter consulting engagements plus the objections you correctly point out, I could foresee a “win” here using your scripts, but in many cases maybe only half or three quarters of a loaf. The project could get truncated at its peak when some benefits start to flow and a cheaper more junior level full time croissant making expert is put in place to “take it the rest of the way” and presumably research or google gaps in his/her own knowledge. Note that existing staff members who have not succeeded in solving the issues are bypassed in this long term approach too.
    Obviously, you would want to try to shield the agreement contractually from any such cut off, but you may not have that option in larger firms or with brokered or subcontracting situations.
    The one common weak objection you didn’t cover is the client asking about “what can we do about the price” just as a last minute probe for strokes of kindness and charity. The internal party designated to ask about that may not be that enthusiastic about pushing it. I find that a quick second pass through the line item components of the Statement of Work with a few additional thoughts or facts is often enough to provide enough cover to that party that they can use to show their management that an appeal for price relief was at least attempted.

    • David A. Fields
      April 18, 2018 at 10:36 am Reply

      Kent, you’ve raised a concern that, while somewhat unrelated to fees, is worth exploring: how do we ensure clients contract for enough help to achieve their outcomes. May be a good topic for another article.

      The whole purpose of the “what other objections do you have?” start of the script is to eliminate the last minute requests for help on pricing–and it works! When you’ve asked, very explicitly, “If we work out all these concerns you’ve raised, can we move forward?” the prospect very rarely comes back with a last minute objection.

      Besides, this conversation happens with the decision maker, where the project is won or lost.

  3. Bob Hatcher
    April 18, 2018 at 10:03 am Reply

    If someone got a 5% raise as part of their annual review, are they happy or not? Well, if they learn that the average raise was 1% then they are happy, but if the average was 10% they are ripping mad.

    If I told you that both Joe and Sue have $1 million in the bank are they both happy? You’d probably say yes, but what if I told you that six months ago Joe had $50 k in his account and Sue had $5 million? Now who’s happy and who is sad?

    People make decisions and draw conclusions based upon reference points. So, in the examples above being expensive is in the mind of the buyer. You need to understand what their reference point is and then change it.

    In my response to the previous post on this subject I offered ways to change it. My response to “you’re too expensive” is always on the line of “How much do you pay your attorney?” “How much do you pay your CPA?” “Given what I can do for your business and what value they add, who will help your business more?” I also like to make it personal for them and ask “How much does your top professional services guy bill out at?” (I work exclusively with tech companies who always have prof services.)

    Only by offering these comparisons can you change the buyer’s mind about whether you are expensive or not.

    Now, regarding the script on competition, IMHO it is not optimal to say that using you will give you n% more productivity. Rather, you should put it in terms of risk. It is less risky to use you because of your experience, etc.

    Here’s a thought experiment on making the choice about risk. Consider these two bets, which would you take?

    Bet 1: 80% chance to win $1000 and a 20% chance to lose $200 (the cost of the consultant)
    Bet 2: 90% chance to win $1000 and a 10% chance to lose $220 (this is higher because you cost more)

    IMHO you’d be nuts to go with Bet 1!

    Now look at the bets when put in terms of increased project results. (I use a delta of $50 because in your example above you have a 5% better return.)

    Bet 1: 80% chance of winning $1050 and a 20% chance to lose $200
    Bet 2: 80% chance of winning $1050 and a 20% chance to lose $220

    Lastly, in the field of behavioral economics it’s proven that when presented with a gain that people are risk averse and when presented with a loss they are likely to accept risk. In that regard, you should NEVER present your results as “the outcome will be 10% greater productivity”. Rather it should be “If you don’t proceed you will be 10% behind your goal.”

    Sorry to be so long winded on this. But, this is a topic near and dear to my heart. I have made presentations on the topic of “How to use Behavioral Economics to Sell More” to a number of my clients.

    Bob

    • David A. Fields
      April 18, 2018 at 10:28 am Reply

      Bob, I appreciate your passion. Comparing yourself to attorneys and accountants when you’re a consultant is generally counterproductive. Both of those professions work hourly and are, by and large, implementers of an established system. They’re not thought leaders paid on value.

      As you pointed out, the topic of fairness was covered in this post.

      The question of whether you should position against positive outcomes or negative losses is interesting and is covered in this article.

      • Bob
        April 18, 2018 at 11:44 am Reply

        My writing is not as effective as it should be. I wasn’t suggesting you compare yourself to a CPA, but rather to get them to consider other benchmarks.

        • David A. Fields
          April 19, 2018 at 8:56 am

          You’re writing’s fine, Bob! No worries there. We’re in agreement that we need to shift clients’ benchmarks–in fact, that’s what the two articles on fairness are about: reorienting your prospect’s view to a comparator (e.g., a benchmark) that makes your fees appear fair. In my experience, we consultants raising paid-by-the-hour professionals such as attorneys and CPAs as the new reference point is counterproductive. Especially if we want to be paid on value, not for time. We’re totally in sync on the overall principle, Bob.

  4. Reuben Swartz
    April 18, 2018 at 11:23 am Reply

    It’s good to ask a prospect why they are talking to you early in the sales process. So by the time you get to price objections like “I could hire 3 people for this price”, you know already know that perhaps they don’t want to take on long term payroll expenses, they hate managing people, they haven’t been able to find people with the right skills, etc.

    • David A. Fields
      April 19, 2018 at 8:52 am Reply

      Absolutely right, Reuben. And that’s why one of the first two questions you ask during the Context Discussion is along the lines of, “Why don’t you just do this yourself?” Thank you for highlighting that point.

  5. Tristram Coffin, CMC
    April 18, 2018 at 7:05 pm Reply

    Hi David,

    Excellent topic and valuable advice. The vast majority of Clients view consulting as an expense. I almost always tell Clients that I don’t want them to spend money. If Clients can view the cost of your services as an “investment” and that the primary reason you want to do the work for them is that you want them to get an R.O.I., you should price your services in a way which produces a healthy R.O.I. It’s about understanding what they hope to accomplish by hiring you then pricing your services to provide a healthy R.O.I. For example, when I work with Clients in the transportation industry I usually guarantee that they will get a minimum of 15:1 R.O.I. from my services. Working for an hourly or daily rate is something that I rarely do. Whether it’s 5:1 10:1 or 15:1, Clients feel better about hiring you. All the best, Tris Coffin, CMC

    • David A. Fields
      April 19, 2018 at 9:10 am Reply

      The cost vs. investment distinction is important. ROI, too, is essential to explore.

      It’s worth remembering that when your prospects are weighing the Value of your projects, by and large they aren’t only comparing the return from your project to the cost. They’re comparing the financial and personal benefits of your project to those they’d receive if they invested their time and money elsewhere.

      Also, Value is only partly about financial return. The more motivating aspects of Value are emotional. That’s why even the scripts that reference the financial gain quickly pivot to fairness, the emotion that’s currently blocking the sale.

      Tris, you provided a good reason to reinforce the emotion vs. logic aspects of overcoming price objections. I appreciate you bringing it up!

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