Cut Your Fee By Two-Thirds? That’s Bad Business

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Nov 6, 2013

Dear Barb:

I have an established client who has been my top account for the past five years. They have been purchased and now I’ve been asked to reduce my fee from 30% to 10%. I don’t want to lose this account, but I also don’t want to reduce my fees by 20%. My client doesn’t want to lose us as a resource and hopes our fees can be increased once the new parent company sees the caliber of candidates I present. What would you do?

Frank N.

Toronto, Canada

Barb Responds

Dear Frank:

You have already lost your account – they were sold.

The first thing I want to address is the accurate reduction of fee they are requesting. If you currently charge 30% and they are asking for you to agree to 10% that is not a 20% reduction in fee, it is a 662/3 % reduction in your fee. Thirty percent represents 100% of your current fees.

There is no guarantee this new owner will ever raise your fee. You need to ask yourself why you would significantly reduce the value of your services and talent you represent. Why would you give this new company a lower rate than you are charging your best clients?

My advice would be to explain to your current contact at this company that you can’t provide your services at such a deeply discounted rate. It’s not a good business decision or fair to the other clients you represent. You then market your services to clients who will realize the value of your services and replace the business you were getting from this client.

Barbara J. Bruno, CPC, CTS

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