How to discount when you HAVE to discount!
by Neil Lebovits
Let me make this perfectly clear. I am NOT a fan of discounting your fees or markups ever, in the hopes that it will bring in more business. That said, it isn’t reasonable to assume that prices wont drop during a recession (or anytime when supply exceeds demand) or that there aren’t times when it simply does make sense to lower a fee. I often hear from people who are concerned about the long term impact of lowering their fees with their existing clients. For example, “Neil. I have always done business with this one client at 30%. Now, they are doing poorly and the president really won’t approve any deal that goes above 20%. They are hurting and truthfully, I am also. BUT, if I lower my fee now to 20%, do you think that I will then always be stuck at 20% and will have a hard time getting it back up to 30%?”
Well, I have a great easy TRICK FOR YOU!
The key is to actually NEVER EVER EVER NEVER EVER NEVER (get it) LOWER YOUR FEE OR MARKUP!! NEVER!!! BUT feel free, WHEN YOU HAVE TO, to offer a special one time or limited DISCOUNT to your fees!
For example, using the above example, if you always do 30% fee with a client, and decide that you WILL agree to what NETS OUT TO BE a 20% fee, then here’s how you do it. Simply KEEP YOUR FEE at 30%, but give them a 33% special “recession buster” (or whatever you want to call it) discount. Bear in mind, if you place temps, this works exactly the same for markup!
Thus, your invoice would read the fee at 30% less a special “recession or agreed upon one time discount” of 33% and then show the net fee. For example, on a $50,000 salary, you would invoice the client $15,000 and then show a $5K discount, with a net fee of $10K. Thus, your fee is really a NET of 20%, but you have invoiced them at 30%!
The client gets what they want. You have made it clear what your fees are and you haven’t lowered your fees, per se. This is also great, because even most recruiters get stumped by how much of a discount you are offering a client (or what they are asking for). For example, a client may not think twice to ask you to go from 30% to 20%, because after all, that is a 10% discount. But, we just showed that it is a 33% discount!! Going from 25% to 20% fee is a 20% discount. Twenty percent is a huge discount, so if you are going to do it, you might as well make your generosity obvious!!
I might also offer up this tip that has made people ALOT OF money! DO THIS ALL OF THE TIME and ANY time that you have to discount. So, if you negotiate starting at 30%, then as soon as you agree to do a deal at 25%, then try to write it as a 30% fee with a 16.67% discount. This way, you may raise the fee one day. Of course, you can always agree to give your client a lifetime “priority” discount of 16.67% and never have to raise the fees.
Try it. You’ll like it!
Precision Recruiting
Ottawa: 613-287-3767 Toronto: 647-727-4737 Web: www.PrecisionRecruiting.ca
