With the economic malaise that the world has faced since 2008, many corporate clients have been asking service providers tough questions about their rates and fees. In some instances, they are asking for justification. In others, they're seeking fee concessions, i.e. discounts. Is this reasonable? Is it fair?
As a service provider, I'm tempted to answer these questions with an unqualified "no", but that would be wrong. Any service provider should be able to support their fee structure relative to the value that they provide. If they can't, perhaps fee reassessment is in order. For example, if their rates are based on providing certain services, including some that the client doesn't need, then restatement may be in order. If a client pressures a service provider to make concessions, it doesn't necessarily mean that they don't value the provider. Instead, it may be that economic conditions have forced them to pursue this course. It may not seem fair to the provider...but it may happen nonetheless.
A recent Fees and Pricing Benchmark Report for the consulting industry reported a range of 58-76 percent of firms within particular consulting sectors discount their fees. Professionals in the graphic design, marketing services and consulting industries may be asked, and even expected by prospective corporate clients to make fee concessions.
As a technology intermediary, I've been asked on occasion by prospective clients to discount my services due to reported budgetary pressures. As a small business, this can be quite challenging. Each service provider needs to determine the defensibility of his fee structure based upon its respective value offering.
I won't suggest that service providers should never consider discounting their fees to win or maintain business. Similarly, I won't condemn clients that seek concessions under appropriate circumstances. In today's challenging marketplace environment, service providers must continually ensure they deliver value to their clients according to the latter's definition.