Tips on Negotiating a Rise in Fee Rates

Some firms struggle to negotiate increases in fee rates. As Oliver Twist demonstrated, it can be hard to ask for more.

But with staff getting annual salary increases and with inflation rates starting to go up, it becomes more important to have these conversations and to do them well.

Here are some tips:

Negotiate face to face. You may want to ask for a meeting by email but try to avoid ask for a fee rate increase by email. I appreciate that this can be a challenge for international clients. A phone call might be ok as a last resort, but probably only suitable with a long-term and trusted relationship.

Pick a time of least pressure and distraction for you both to have your conversation.

Emphasize your value to the client, not what you need to make your life easier. Remind the client of the value added you have provided.

Try to take a “What’s in it for them?” approach when you outline why fee rates need to be raised. Examples might include benefits and risks, such as:

  • more experienced staff able to provide greater added value,
  • improved efficiencies through greater experience working with the client,
  • the importance of creating win-win for a stable long-term relationship,
  • risks of cost cutting to maintain margins that might diminish benefits to the client,
  • continuity of supply, etc)

Avoid ultimatums. Remember this is a collaboration. Ultimatums can damage your working relationship seriously.

Suggest your percentage figure. Allow your client to put questions and challenge. Have your supporting evidence. This might include information about the client’s product price increases. It seems fair that if the client’s prices have gone up, yours do too!

Have a list of other requests that might be open for negotiation should fee rate increases not be available or be negotiated down.

Follow-up with your requests but be professional at all times. For the long-term success of your relationship, you need to be seen as a trusted advisor.

Give it a go! After all, Oliver Twist ended up well!

 

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