Cut The Fee or Discount It, Continued…

October 26, 2009

Neil,Neil, Neil…I just have to address some parts of the comment you made on “Part 1” and I think the responses are worthy of a post instead of burial in the comments. We do all have our opinions. That doesn’t make them qualitatively equal. I believe some elements of this debate can be supported as ideals or models to the detriment of some other elements and I think the debate itself might end up being instructive for some people.

Your assumption about most recruiters having a max fee that they then discount is probably correct. That’s not because it is right. It is because they are not taught how to properly handle the whole fee aspect of what they do.

You mention statistics. I don’t see them and I don’t know what you mean by a ‘flat fee’. That usually means x number of dollars. I am advocating a static percentage fee. I just want to be clear about my argument. I do not buy the premise that this loses business if we never cut it or go above it and it is impossible to even measure statistics for it.

I guess we are in agreement that recruiters already knock $ off the price and prove that they priced it too high to begin with. That’s what I have been fighting and dealing with for years. Your instruction to keep doing this but call it something else is sophomoric at best and disingenuous to boot.
Your paragraph about being from the ‘pricing on the fly’ school is facile here. The general model that evolved at 30% evolved for a reason. We can violate that model regularly and consistently because we don’t have certain costs that some businesses have. Mostly we can work at 25% because we are efficient. I do not have statistics but I’d be willling to bet that studies would show that in the business we are in (call it the Fordyce Reader Model) that 30% is actually paid less on than 20 or 25% of all the invoices in the industry. Most of the people you are talking with probably never get enough information or never have enough knowledge to accurately judge what a given search is worth on the fly.
They should, however, know, or be working for someone who knows, what their own efforts are worth given a standard amount of information. They should accept,or turn down, jobs based on things like degree of difficulty as opposed to trying to assess those items while talking.

You just can’t have it both ways. “See my video on why to never discount your fee” in an argument on why we should discount our fees just doesn’t work. They neither complement nor compliment each other.
“and if you have to agree to a lower fee”. Neil, you never “have to”. You always can.

This is not the way most professionals work. Most attorneys, doctors, accountants and consultants do not spend much time or energy cutting their fees to get business if they have built practices based on providing value at a certain general rate. I dare you to go to Jeff Allen or Bob Style or Bernie Frechtman and tell them your problem, hear their rate quotes and then see what each one says when you tell them “I can’t pay that” or “The others all do it for a third less” or “That’s just too much”.

Maybe people could consider a rebate if there are truly economies of scale involved but that’s not what we are talking about.

Your unfamiliarity with the reason for banded commission plans is surprising. It is because the higher dollar levels costs less to produce so there’s more to share. That factor has nothing to do with this argument. Nothing at all. I was talking about situations where some kind of subterfuge is involved…like explaining later that 5k of a fee isn’t commissionable because it pays the research assistant and stuff like that.

Maybe some people do tell you how wonderful it is to learn to try to supposedly harmlessly deceive clients. I am sure a toilet looks like a punchbowl when people are crawling out of the desert.
The bottom line for me is that it should be clear to anyone that establishing a fee and learning how to sell it are better tactics than putting the lipstick of a fee discount on the pig of taking less than your established fee.

Even Danny Cahill might argue for a discount now and then but he damned sure won’t tell you it is better than having a price and sticking with it.

I guess I should put this on video… “We get 25% of the first year’s compensation with 1/3 down before we make a sourcing call. No one else gets a better deal. You may not appreciate that yet but you will if you become our client.”

If cutting isn’t an option it makes self-discipline easy…and it leaves nothing to try to raise later.  

Now I have to go prepare to defend myself against all those who will come back and tear me apart for doing all my business at what they’ll call a ‘discounted’ rate.

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2 Responses to “Cut The Fee or Discount It, Continued…”

  1. Tom Keoughan Says:

    Dave,

    As always you make a lot of sense and a lot of good points. Unfortunately, this does little good out here in the hinterlands where only you and I see it.

    Go ahead slap it up on Fordyce.

    Tom Keoughan
    http://www.toyjobs.com

  2. Dave Staats Says:

    We’re a step ahead. Elaine wants to run the whole mess as an article in TFL. I sent it to her yesterday. Maybe I’ll send to Yahoo as well…in that format…


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