What makes you think you deserve a "premium" fee?

Fee negotiations. Fun stuff, eh?

You finally connect with a manager that seems to need your help. You think you've done a good job "not" sounding like an idiot. Though the position was a little outside of your comfort zone you held on nicely. Your questions seemed to spark quite a dialogue: What projects will this person work on? How big is the team? Tell me about your company.........why do you LOVE working there? What are the types of companies that seem to have the best candidates? You know - all the questions you think will help you establish your credibility BEFORE you let them know your fee is...........(drum roll please........)

30%. Or maybe you start at 25%. Either way - you think you've executed your work flawlessly and hope they'll say "OK".

But that doesn't usually happen, does it? Not from what I see and hear.

"We have a policy of 18%". Or "All our vendors have agreed to a cap of 15%"

Damn. And you were so close!

So what do you do? How do you reply to this one? This is one of the 60 second periods of your day or week that GREATLY impact your income for the year.

Rather than suggest a canned reply (there are hundreds - and I've heard them - and tried them - all) let me ask you something: What makes you believe you should charge more than the others who have come before you? You might think "Well - must be the other agencies aren't providing the right candidates. They NEED me!"

But guess what? No they don't. The other agencies ARE getting it done. Turns out - you're just asking if you can play too! So now what? You better change your thinking on this one. You aren't the best. You don't have the greatest candidates. You have no "secret stash" of top talent. The guy in your inbox is also on your competitors desk. Know it. Live it. Deal with it.

What service do you provide which you think commands a higher fee? Have you spent much time thinking about this? If so - have you DONE anything about it? If you haven't - I've got news for you - you don't deserve a higher fee........


Views: 386

Comment by Kevin Jenkins on June 3, 2010 at 10:44am
Good post, Jerry.

My personal opinion is this: once you get to the point of haggling over fees the recruiter has already lost the game. The recruiter didn't do a convincing enough job of selling value upfront. The types of people worth working for will not typically haggle over fees. My experience is that the types who did always turned out to be regrettable clients. Look, these folks have a budget for hiring and the recruiting fee is already factored in. Those out there haggling to save a couple thousand dollars are wasting everybody's time; they probably have six other contingency recruiters in the fold working on the cheap, why get involved in that?
Comment by Sandra McCartt on June 3, 2010 at 1:01pm
Some of my best clients now are the ones who invited me to dance if i wanted to dance to their song.

Since i like to dance to be able to build a relationships over a period of time. I took the deal, made it a point to deliver top candidates consistantly, got to know a lot about the client and watched a lot of those other contingency recruiters fall off the radar as i got to be the "go to gal". Now i get the big ones that the other recruiters don't ever know about and a retainer and a bigger fee.

Those 18 and 20% fees looked pretty good last year when everybody was trying to figure out a way to pay the rent.

All i look for is a chance to play. I can prove i'm a star when i get on the field instead of beating my chest with my own ego up front.
Comment by Kevin Jenkins on June 3, 2010 at 1:23pm
When a prospect starts asking about fees in the beginning of the conversation... one of two things are happening: 1) the recruiter has done a poor job selling value; or 2) the prospect does not care about value to begin with.

I'm only going to address the second point because the "selling" part is up to every individual recruiter.

When a prospect starts asking about my fee immediately, I attempt to turn the conversation around by saying something to the affect of, "I can appreciate that the fee is important to you, Bob. However, we have not even talked about the value I bring to the table yet. If you don't know what you're getting for your money, any fee I quote you is too high, right?" Basically, I inform them that they are putting the cart before the horse at this stage in the game.

Now, one of two things will happen at this point: 1) The prospect appreciates your logic and agrees to discuss the position and what you have to offer without worrying about the fee yet; or 2) the prospect doesn't want to waste time talking to you without knowing what the fee is first.

In the first situation, you're dealing with a legitimate buyer. This person is going to be a good long-term client if your value proposition is sound. By the end of the conversation, the fee will not matter (assuming it is reasonable).

Conversely, in the second situation, you're talking to a cheapskate that does not care what type of value you offer. If you take as much pride in your work as I do, this person is not worth wasting your time on. Run fast!

I hope my approach helps some of you out there who face this dilemma.
Comment by Slouch on June 3, 2010 at 1:44pm
Why not look at it this way. If I am prepared to do a search for you at 20% or 25% which is already discounted and you don't want to pay it, no problem, I'll find someone who will and your company can become a source. The difference between 25% and 20% is not 5% and the difference between 20% and 18% is not 2%. And why would the potential client even be having the conversation with you if they didn't need someone not being delivered by all the recruiters who agree to work at 18%
Comment by Kevin Jenkins on June 3, 2010 at 1:52pm
I like what you say, Jason. My logic is simple: there is no point in discussing fee until you know what you're getting for that fee. Everybody offers a different value, so if value is important to you, let's put a sock in the fee talk. If value is not important to you and you are K-mart shopping, I'm not the recruiter for you (which is in line with Jason's last sentence i.e., if you didn't need better results than what you're already getting at the basement price, why call me?).

Good stuff. Great conversation everybody.
Comment by Sandra McCartt on June 3, 2010 at 2:29pm
The assumption here as i read it, big boys, is that you called them. They didn't call you. So if you called them and made your pitch, got the response that they would give you a shot but it would be on their terms since you are the one doing the asking for business that would seem to change the playing field a bit.

Now that you finally got in the door and got a chance to make a pitch for their business do you really want to tell them that they are either a buyer or a supplier or are you looking for an opportunity to develop a new client. My take is that the timing to talk about how wonderful we are and how if they don't meet our terms we wil take their shit down the street is not when we are doing the asking, it's when they call us.
Comment by Slouch on June 3, 2010 at 2:36pm
I disagree Sandra. It was so rare that ever my phone rang with a potential client looking for me to do search work for them. When looking for new business however that is it is important sometimes to let them know that yes I can help you and yes it is important that my fee be something that will motivate me to not consider your company a source. I don't see anything wrong with that. it worked for me.
Comment by Kevin Jenkins on June 3, 2010 at 2:36pm
I agree Sandra. It does make a difference if you are on the offensive or defensive side of the ball. However, having said that, you have to be able to stand up for what your are worth. And even being on defense doesn't mean you should flip the page to a totally different game plan. You can be a little more flexible in your approach, but you still need to play to your strengths.

I personally have no tolerance for fee discussions regardless of what side of the ball I am on. If the other side is not receptive at all to listening to what I have to offer the game is over. No matter what, if the fee is the first and major factor in the relationship, it is always a bad relationship.
Comment by Kevin Jenkins on June 3, 2010 at 2:42pm
Let me just say this: to engender an enduring and mutually beneficial relationship with a client you have to connect in many ways (i.e., rapport, functional expertise, industry knowledge, etc.) the fee is the least significant factor of them all. If your relationship is built on the fee you are an expendable transactional vendor - plugging holes in the dyke. If your relationship is based on everything else you are a strategic partner and the fee is in last place. Recruiters need to stop being expendable and start being strategic partners. It starts with how you sell yourself.
Comment by Jerry Albright on June 3, 2010 at 2:47pm
What I find interesting in many of these discussions is how there never seems to be any mention of "why" a fee should be higher. Or lower for that matter.

The premise in my original post here was you call them, they say yes, you tell them your fee, they say "our fee is XX". My real question is really quite simple - what makes any one of us think we deserve a higher fee....When the actual service itself is indeed the same?

You're good looking? You have a stronger web presence? You've somehow survived for 25+ years - so that's gotta mean something? You placed somebody there a few years ago?

What?

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