Negotiating for Higher Fees

Negotiating for Higher Fees By David A. Fields

They say that doctors make the worst patients. Along those lines, consultants surely make the worst clients. Or, at least, the most difficult negotiators. Whether that’s true or not, I can vouch for the most difficult consulting contract negotiation I ever conducted being at the hands of Aaron Veshama, the COO of a Massachusetts-based consulting firm.

I was on the Amtrak Acela while it quickly ate up the miles along the Northeast corridor, which may not seem the most auspicious setting to carry on one side of a six-figure negotiation; however, I was making my way back to Connecticut from a client meeting in Philadelphia and this was my only chance to try to close the deal before Aaron took off for two weeks of travel.

Aaron, an Israeli by birth, is a hard-nosed, no-nonsense veteran of one of the world’s largest consulting firms—one of those companies that is as well known by its initials as its full name. Perhaps because he had faced true danger staring across the Golan heights while in the Israeli armed forces, or perhaps because he had compiled an impeccable track record while rising to partner at the large firm, Aaron approached negotiations with the sure knowledge that his position was right and unassailable.

Since my proposal contained many terms that did not comport with Aaron’s sense of how consulting should work, including a no-cancellation clause, significant up-front payment and a very high, value-based fee, he was quite prepared to derail the engagement entirely. Figuratively, of course.

I verbally wrangled and wrestled with Aaron from the northern suburbs of Philadelphia to the southern suburbs of New York. Almost ninety-minutes of non-stop back-and-forth, at the end of which I rolled into Penn Station with a smoking hot cell phone and verbal agreement to a six-figure contract with all of the proposed fees intact and only minor changes to terms. I also had set a precedent for fees and contract structure that would stand me in good stead over a five-year stream of projects with Aaron’s firm.

The winning defense against Aaron’s well-reasoned, well-rehearsed offensive rested on a handful of best practices that have consistently delivered high fees, rewarding projects, and happy clients. The core of my approach centers on the Three C’s: Calm, Confident and Considerate. Even in the face of Aaron’s rapid-fire assault on my proposal, I didn’t allow myself to get rattled. Of course, the curious glances from nearby passengers whenever my voice rose may have helped keep me in check.

In practical terms, the Three C’s translate into a number of negotiation tips:

Defend the prospect first, the project second
I’m assuming this isn’t your first rodeo, and if you’ve ridden the business development bronco a few times you’ve learned to never become defensive during negotiations. No matter what your prospect brings up, taking it personally and assuming a defensive stance isn’t going to hold sway, right? Not so fast, buckaroo. It turns out becoming defensive will serve you well if, instead of protecting your own proposal you jump over to your prospect’s side of the table. (Again, I recommend you approach this figuratively.)

When faced with an objection, rather than launching into a passionate, well-researched declamation of why your proposal is best for the client, you’ll have much better luck if you start by defending your client’s point of view. Acknowledge the reasons their position could be correct and enumerate some of the advantages.

Suppose, for instance, your no-cancellation clause was being challenged. Instead of pointing out the advantages of your preferred arrangement, when it comes time to talk about the clause (which is not immediately after your client brings it up, as noted in the next best practice), start by articulating the benefits of cancellable contracts. Yes, argue in favor of your client’s position, not your own. Aggressive defenses tend to provoke more aggressive attacks. In contrast, when your initial response embraces your prospect’s claims, they feel validated and are far more likely to accept your final reasoning.

Once you have overtly pleaded their side of the disagreement, perhaps more eloquently than they could have themselves, you’ll find the prospect surprisingly willing to adopt your alternative.

Get all objections on the table first.
This is one of my favorite best-practices and one of the most effective and underutilized negotiation tactics. Before addressing any of your prospect’s concerns, give them a chance to lay out all of the obstacles between you and a signed contract. Your allies in implementing this practice are two words: “What else?” For instance, the client objects to your non-cancellation clause and before you start discussing the pros and cons of including that clause in the contract, you respond with something like, “I hear you have concerns about my no-cancellations policy. Okay, we’ll talk about that. What else? What other issues popped up when you reviewed my proposal?”

This is a surprisingly difficult practice to master. Even when we’re not being defensive, we still want to immediately talk about whatever issue a client has just raised. If the client objects to four of your teams working onsite simultaneously, addressing that issue promptly has huge appeal. After all, you want to demonstrate you’re a good listener, a creative problem solver and a responsive consultant. Resisting this urge yields many, many rewards.

One is that when we get the full list of objections on the table before addressing any of them we ensure there’s nothing hidden that could trip us up. For some reason, prospects often initiate negotiations with semi-important issues and hold back their make-or-break issues. Consciously or unconsciously they want to see how you deal with a few rocks thrown your way before they fire their heavy cannons.

Therefore, if you allow yourself to fall into drawn-out negotiation over the first couple of topics a potential client raises, he may simply grow weary of the process and turn down the proposal before you even get to the larger, underlying objection. Surfacing all of the obstacles also safeguards you against becoming defensive. Inserting a bit of space between the prospect’s objection and your response creates a natural buffer, and you’re less likely to blurt out a knee-jerk, defensive response.

Make smart trades
Imagine walking into negotiations hoping your project will deliver thirty percent margin and leaving the table with a deal that nets you forty percent instead. Sound crazy? It’s neither crazy nor even far-fetched when you master this sophisticated best practice. The art of smart trades involves developing variations on a number of project dimensions and crafting bundles that create more value for you and for your client.

Your starting point on making trades happens long before you write your proposal. The propitious moment occurs way back on the day you’re sitting across the table from your prospect, impatiently tapping your Ferragamo loafers while she drones on about irrelevant details (“…and I printed all the meeting summaries on pink paper to keep the team upbeat and motivated…”). You fight off the urge every consultant feels to simply solve your client’s problem on the spot and, instead, you politely interject a couple of questions: “What concerns do you have about this project? What could get in the way of success?”

Those two questions, and a handful of similar queries are so magical that they deserve an article on their own. When you uncover your prospect’s concerns and perceived risks, you manufacture opportunities to creatively reallocate risk. For instance, let’s say your prospect is worried that the project could take too long and delay their product launch. You could offer an alternative that compresses the timeline by two weeks and adds resource triggers. In trade, you are awarded a higher fee or access to another project or some other benefit.

These three best-practices just scratch the surface of course. There are about a dozen tips that will help you consistently negotiate and close lucrative consulting contracts. One that hasn’t made the list yet is negotiating while you’re on the train.


David A. Fields, founder and Managing Director of the Ascendant Consortium, teaches consultants how to sell more projects to more clients for higher fees. For more informtion about David’s work with consulting firms, visit http://davidfields.com/consultants or contact him at david@davidafields.com.

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