Compromise is something you can live with, not something you would die for.
There are times when irresistible forces meet immovable objects. When something “gives” in such circumstances, it usually means someone has won and someone else has lost. Not good in terms of acquiring clients!
Thus, I suggest that you prepare yourself for the negotiable and nonnegotiable. And for that we need a brief digression.
You and the client each have objectives for a project, some of which are mutual and some of which are partisan. That’s all fine and well. You both want the project objectives to be met and successful, for example, but you might want to be paid in advance and the buyer might want to pay you at the conclusion. You’re both merely looking out for what you perceive as your own best interests.
Such personal objectives fall into two categories: must and want.
A “must” has these characteristics:
- Mandatory for your success.
- Measurable, so you know it when you see it (or don’t see it).
- Reasonable, in that you’re not asking for the moon.
A “want” is a desirable outcome or expectation that, while appealing, isn’t crucial to your success and without which having obtained success is still possible and reasonable.
In negotiating, you never want to compromise on a “must,” which is why they are usually few and far between, but vital nonetheless. You can sacrifice “wants” but usually with some commensurate sacrifice or concession on the other party’s part. These dynamics are obtained in conflict resolution, persuasion, negotiation, and so forth. And that’s why they’re important here.
One “must” that you never negotiate is your fee. Don’t forget—we’ve established that the proposal is not a negotiating document or opportunity. So when is it appropriate to change fees, when you meet stiff resistance?
Glossary
Objective: A result desired, either an improved condition and/or a minimized use of resources. Achieving the most possible with limited use of scarce resources is a highly desirable condition for objectives.
Must: An objective that is crucial for your success, without which you will have failed.
Want: A desire that you hope to achieve, but which you can fail to achieve but still be successful in the larger framework.
- The client simply chooses a lesser option. Option 3 may be attractive, but if there is simply no budget, well, that’s why we have an Option 2.
- The client makes quid pro quo concessions. That is, you remove value to justify the lowering of a fee. This may mean that you don’t include the international people or don’t provide quarterly visits, and so on. (Most buyers love to try to reduce fees, but detest losing value, so this technique is highly effective.)
- There is an alternative offer of value to you. The client offers introductions to a trade association, which is chock-full of your prospects, or offers to film an event for free, or offers bartered services that are attractive (don’t forget that these are taxable).
So, to preserve fee integrity, never lower your fee on any option without one of the conditions above prevailing.
What you can negotiate and compromise on are your terms. That’s why I recommend such maximally attractive terms for you at the outset: 50 percent in advance and 50 percent in 45 days, no matter what the duration of the project or its size. The client (and the attorneys) may react poorly to that, or they may have some problem with the overall fee and you can use this to mollify them.
You can always “retreat” to 25 percent on acceptance (that’s not “commencement” but “acceptance”), 25 percent in 45 days and 25 percent in 90 days (assuming it’s more than a three-month project). I would advise to never accept less than a 25 percent down payment, and never accept monthly payments (excluding retainers, and even there you should be paid quarterly at the beginning of the quarter). Never, ever agree to payment “upon completion.” You’ll find in those circumstances that things are never complete, and if your buyer changes or conditions change substantially, you’ll never collect that final payment.
Keep your payments maximized toward the front end, starting heavily in your favor so that compromise is still quite good for you.
Be careful about compromise on timing. You don’t want to have the project “hanging out there” and suddenly being requested when you’re committed to three others. So explain when you’re ready to begin under “timing” and when the client agrees to go forward to solidify the calendar start dates.
Feel free to compromise on the small stuff. You may have anticipated 20 people in certain groups, for instance, but if the client wants 30 don’t look at it as a 50 per- cent increase, because you’re billing based on value, not head count. If the client requests the following, be big about it:
- Extra debriefing days.
- Larger class enrollment.
- Additional copies of materials.
- Discussions with key subordinates or superiors.
- Your presence at certain internal meetings.
But don’t agree to the following:
- Additional work beyond the proposal (“scope creep”).
- Transfer of your intellectual property without compensation (e.g., in licensed form).
- Running more events (focus groups, meetings, and so on) than you deem are necessary for quality and communication.
- Presence at irrelevant gatherings (customer social events, unnecessary meals).
If you’re prepared for what’s in the realm of compromise and what isn’t, you won’t be caught suddenly saying “Of course” in response to a request that’s going to seriously cost you. Never default to the position that if you don’t do something you’ll lose the project. There are worse things.
Like losing your shirt.