When price objections are initiated by prospects they indicate deeper concerns or obstacles that
the company has about a firm. These may include a perceived lack of experience, the
low ‘insurance’ value of the firm’s reputation, hidden internal agendas, poor
personality fits, internal operational issues, incumbent lawyer relationships, competitive
pressures and a host of other issues.
But very often, requests for discounts are routine
requests in every negotiation. The firms that lack the will to resist or, at the very least, take the time to explore
the root cause of price resistance are the ones that allow profits to leak out of the firm. Training in resisting price
concessions pays off handsomely.
Discounts are not necessary to win a
prospect’s business. In large part, the eagerness to discount is a function of
several factors, all well within the control of the law firm. These include a
lack of confidence in the value of attorney services; a belief that discounts
are required in order to compete; a lack of sales technique and training in
complex sales processes; and a lack of understanding of the buyer’s purchase
behaviors to name a few. The truth is that by the time the prospect discusses
payment terms the firm has made the short list or the decision to use the firm
has already been made. Discount requests typically are final efforts to reap a
last bit of value at the height of the final negotiations. And because the
'close' is so near, these requests are usually granted.
Many attorneys assume there’s no risk on the part of
prospects to ask for a discount. But discounts can present risk for the client,
especially if it leads to choosing the lowest price provider. An inferior
result effectively shifts a portion of the blame to the decision makers who
choose the lowest rate provider. Choosing the cheapest forgoes the ‘insurance’
value of higher priced services. Additionally, there is an inherent fear, if
not a complete acceptance, that rate cuts result in corner cuts. The company
hopes that cuts will be absorbed in the firm’s profit margin. The reality is
that this is the last source of cuts. Savvy buyers know this.
Working from
this common ground of shared risk, several techniques can re-direct discussions
away from price concessions and minimize the financial impact.
1. Just say ‘no’.
Present the offer you submitted as a fair
and reasonable offer that the firm stands behind. Suggest that the relationship
be reviewed at a later date and, if the client is not happy with the value at
that point, a discussion about discounts should happen then. Let the prospect push
for the discount. Often, the client won’t take the issue further.
Regardless, prepare in advance your justification for why the
firm or the attorney’s rates and fees are set at their current levels. Use
comparative studies of rates, publicly available records of past competitive
bidding processes, projected ROI calculations and other objective evidence of
the competitiveness of rates to justify your fees.
2. Use the fact of higher rates as a reason to buy. The
market place is a brutal equalizer. Higher prices result from higher quality
and service. Long established firms with robust track records of results
continue to thrive with higher rates because other clients find value in those
fees. Use the power of market success to justify your fees.
This is the first in an eight part series on how to resist price concession requests. Each two new tips will be posted each weekday for eight days.
It goes without saying, if you would like to talk about training your lawyers in resisting pricing concessions, please give me a call. It costs nothing to talk.
It goes without saying, if you would like to talk about training your lawyers in resisting pricing concessions, please give me a call. It costs nothing to talk.
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