It’s a fact of recruiting life that clients will push you to negotiate your fees.

Right now, with a rocky market, that is happening more than ever. Sadly, many recruiters are struggling to hit targets and are quick to drop fee percentages to secure briefs.

I learned a lot over 45 years negotiating fees with clients in good times and bad (Yes, 45 years. Stop that sniggering at the back! After all, you are reading my blog, and I am not reading yours 😊)

There are several tactics or mantras I learned, and over time, that saved me uncountable dollars – but also a lot of stress and self-esteem degradation.

It all starts with your belief in your value. You must firmly believe that you do good work and provide excellent value. That is the platform from which a successful negotiation will start. Not arrogant, but with genuine pride in what you do. It is fantastic to start that conversation with complete trust in what you are selling. It’s based on ‘Recruiter Equity.’

Strangely enough, the next step for successful fee negotiations is to move the conversation off the fee percentage and on to the question of what your fee is actually for. Bundled up in that conversation is your ability to sell your differentiators. That is the secret sauce to a successful fee negotiation. What do you have, and what do you do that gives your client unique value?

This is the big secret of successful fee negotiations. You don’t talk about the fee. You talk about what the fee is for!

Most recruiters cannot answer that question, and it bemuses me why leaders are not training people on this daily. If you can’t articulate why your fee is justified, why would your clients be convinced?

Now, please understand that this strategy only works if you do have meaningful differentiators. So, here is the bad news: if you do not have parts of your process or abilities that offer unique (or at least advantageous) value, you won’t be able to hold your fees when things hot up at the negotiating table.

However, if you have worked hard to create differentiators – and you must – that is where you want to focus.

At Aquent and Firebrand Talent Search, for example, we emphasised our deep sector focus; our unmatched access to creative, marketing, and digital talent; our multiple branches in the Asia-Pacific, the USA and Europe; our specialist knowledge and understanding of client needs; and our proprietary testing software, which meant we knew candidates had the design skills they claimed to have. This was all wrapped up in a 110% money-back guarantee.

That was (and still is) a compelling argument. (I am sold just reading the previous paragraph!)

It’s also vital that the differentiators you nominate have relevance for the client and are centred on the advantage you bring regarding access to talent.

So, when a client does ask you to drop your fee, don’t talk about your fee!

Go through your entire recruitment process, explaining everything you do to secure the right person. Take your time. Start at the beginning, and don’t leave anything out. Talk about your screening, interviews, and candidate generation strategies, such as social media, events, referrals, and networking. Mention having several offices (if you do) tapping into talent. Explain how you act as an advocate for the client and how you will qualify each candidate concerning cultural fit, salary, and skills.

Don’t assume your client knows about these!

I absolutely guarantee you that many clients think you just dip into a massive database of candidates that you somehow ‘just have’ and flick them a few resumes.

And then you charge a huge fee!

Outrageous!

When you drill down, you find that we recruiters do a lot! That’s the point – so tell your client.

The biggest reason clients want to lower fees is that they don’t perceive the value in what we do. Usually, they don’t recognise it because they don’t know what we do to earn our fee—they don’t know what we do because we don’t tell them!

It’s like looking at an iceberg. 10% of an iceberg is visible above the waterline. The rest, 90%, is out of sight. So, it is with what the clients see of our work. 90% is out of sight, so the client does not factor it into his perception of “value”.

So, tell the client everything you will do to solve their staffing problem, chapter and verse!

Then, and only then, ask the client why they feel a reduced fee is appropriate.

This is important. Put the ball firmly into the client’s court.

The client is asking for a discount. They should be squirming, not you! When it comes to fee discounts, you don’t have to justify why not – they must explain why! This shift in the dynamic is very compelling indeed.

The client will often stumble a bit at this, but they usually say something like, “Your competitors charge less.”

This often scares recruiters. But there is no need for fear. Ask, “Can you tell me about a situation where you were charged less than the fee I am suggesting today, where you got the level of service and the calibre of talent you want — regularly and consistently?”

This is a gamble, sure, but the fact that you are there (or having this conversation) means that the client is most unlikely happy with their current supplier.

Sometimes, the client pushes hard for a reduced fee. Don’t feel pressured or emotional. It’s a purely commercial decision, and it’s your decision to make. Are this client and this order so attractive that they are worth a lower fee?

Be prepared to walk away if the fee suggested does not match your expertise and ability to deliver. Always leave the door open. You will be amazed at how often they come back.

Remember this before you discount next time. Don’t think of the fee only as dollars gained or lost; think of the fee as what your service is worth.

A discounted fee means a discounted you. Never forget that

A final word. Sometimes, you will feel it is worth compromising to secure a particular opportunity. In these cases, remember one golden rule.

Never reduce your originally quoted fee without extracting a concession from the client.

In other words, if you say, “my fee is 20%”. The client asks for a discount. You say, “OK, 18%”. You have just signalled to the client that you never believed in your value proposition and your service in the first place. You will struggle with getting her respect ever again — and you will never get your fees back up.

So, if you reduce your fee, always ask for something in return – a retainer perhaps, exclusivity maybe, the client gives you multiple orders maybe, or perhaps you waive the guarantee.

Make sure the negotiation involves both sides giving. This way, the equal partnership is intact. So is your self-esteem, by the way—essential considerations in a challenging market.

Are you confident in the prices you charge?

Getting paid the right price for your service is critical if you want to run a successful and profitable recruitment desk or business. Too often, we let our clients dictate terms or agree to match the price of the cheapest competitor – even if the service is wildly different.

If you’re looking for advice and insights on how to get your clients to value what you do – and pay you more – then sign up for Jon Brooks’ free Added Value emails here.

Jon is the world’s leading expert on how to price recruitment services, helping you win higher fees, more retainers, and clients who value what you do. Sign up to his emails for free here.

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