Thursday, March 21, 2013

16 Ways to Avoid a Haircut, Post 7

This is the seventh in an eight part series on how to resist price concession requests. Each two new tips will be posted each weekday for eight days.

Sometimes giving discounts is inevitable. The following tips can help you reduce the impact of those discounts.

Attorneys want to start a new relationship on a positive note and feel certain that they can manage the work profitably. Often attorneys fear the client relationship will be discounted if a price concession is not given. In those situations, discounts may be unavoidable. In these cases it is best to minimize the impact of the discount. Here’s how.

13. Negotiate the lifetime value of the discount. Most company relationships with outside counsel last for several years. The discounts negotiated today form the basis for pricing discussions in future years. Often, a discount in year one is compounded by a similar discount percentage in year 2 and beyond. When a discount is inevitable, ask for a renewal of the engagement in the second year without the discount. This cuts in half the discount amount over the two year period.

14. Negotiate the rate increase instead of a rate discount. Law firms routinely increase their hourly rates on an annual basis. Clients, aware of this, often ask for both a discount and a rate freeze, significantly increasing the value of the discount. Counter rate discount requests with a choice of either a rate discount or a rate freeze.

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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