Guerrilla Tactic Stand Firm on Fees

When bidding against a low-priced competitor, don't lower your fees. Price slashing can backfire because clients wonder why your rates were initially so high. It also signals that additional price negotiations are possible. If you cut your fees, clients may infer that you were trying to gouge them earlier or that you were seeking higher profits than were warranted. Stand firm on your fees, or you will lose credibility you can't recover and you'll face tough price negotiations every time you propose work for the client in the future.

what else they left on the table, which plants a seed of distrust that can cause problems later.

Hold firm when you're up against competitors who quote lower prices. Make sure that you can easily justify your fees based on the costs-to-value ratio in your project proposal. When the competitive process turns into a price war, your services become a commodity. That undermines your value in the minds of price-conscious clients and every invoice you submit will turn into a battle.

Instead of caving in on price or the extent of services you will provide, focus your marketing efforts on the issue of risk. Consider the following analogy.

When you need to replace the roof of your house, it's natural to seek price comparisons and easy to pick the lowest-priced bidder. But is that the best value? Will your new, inexpensive roof leak or blow off in a storm? How quickly will it wear out? Does it have the most efficient insulation and design to save you money in other ways like gutter cleaning and energy costs?

To counter low-priced competitors, stress your established record of success and the ways that your talents will decrease clients' risks. Your competitors may promise similar results, so show clients why they can count on you to keep your promises.

When a competing firm offered to complete a client's customer billing project for 50 percent of the price proposed by the nearest competitor, it was an offer the client couldn't refuse. The client hired the low-priced firm, even though the other consultant had demonstrated a better track record on similar projects.

The client took a risk and paid for it: The project was eventually completed, but it ended up costing the client more than any of the other competitors' proposed fees. The firm that completed the work is no longer considered for projects with that client.

In every negotiation, don't forget the personal risk sponsoring executives take when hiring consultants. Projects may be strategic initiatives that position those executives for promotion. The last thing they want is for consultant-caused failure to derail their career plans.

Since most clients really don't want consultants around, emphasize in your proposal the speed and value you'll provide. Your promise to deliver exceptional work, quickly, and at low client risk can displace lower-priced bids.

Clients seldom hire consultants to perform their most important work solely because they propose the lowest fees. If that is what a client wants, don't waste your time.

> Selling in a Cattle Call

A cattle call, also known as a beauty contest, is a selection process run by a task force that sends requests for proposals (RFPs) to numerous consultants at once. Consultants who participate answer an endless series of questions about their qualifications. It's not uncommon to see a three-pound RFP for one of these competitions. If you receive an RFP with a serial number on the cover page, you'll know you've been invited to a cattle call.

Many consultants specialize in and excel at responding to RFPs. Government agencies, large corporations, and nonprofit groups routinely issue RFPs in accordance with their competitive bidding requirements. A task force is often charged with conducting a fair and unbiased process to find the ideal consultant. Before awarding a project, the task force members must provide assurance that they "reviewed the entire market."

The rules for cattle calls are precise, schedules are fixed, and the RFP spells out project specifications. Normally, consultants don't meet the real buyers. Any questions that arise are addressed in bidders' conferences that are open to all interested parties. Answers to questions are shared with all bidders.

Consultants usually attend these meetings just to find out who else is competing. Substantive discussions rarely occur at bidders' conferences, as consultants are reluctant to reveal their sales strategies through their questions.

Despite numerous safeguards, buyers usually have identified the consultants they prefer long before the sales process begins. If that's the case, consultants who have not established a relationship with the buyer or the buying agency are at a disadvantage.

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