Many times, professionals are going to set the price based on the service itself, its benefits and the desire to maximize profits. If the charged fee is closer to the real value of the service, the professional will make a bigger profit. To employ the rational criteria when setting a fee is extremely difficult because there will be as much rational criteria as interests at play. Here you will find six facts about the negotiation of a professional fee.
1 – Fair price
The fair price is the transaction price, which you cannot tell until the transaction is done. There is no supreme fair price. People are willing to pay when the problem is in its epicrisis, not when it is solved. The key issue when the payer sets the price is that they do not feel forced, that is the best aspect of being paid when the payer wants it.
2 – Time to set the fee
It is not easy to assess the value of professional work, to set its price and to collect fees because of fear or anxiety. Both the customer and the professional often postpone the moment for setting the fee. Some people hesitate when they should fix their fees so they often miss out on open opportunities to make a real profit.
3 – Cheap or expensive fee?
In order to set fees successfully, you should do it before you provide the service, in the middle of a crisis fees will be seen as cheap. If they are set while the service is being offered, when the crisis is under control, they will be seen as expensive. Finally, if they are set when the problem is solved, and the crisis has ended, any price will be seen as unacceptable.
4 – Value is more important than demand?
There is no necessary connection between value and price. The two concepts are different in nature. Market supply and demand define the price of the service. On the other hand, fees depend on the current state of a customer’s problem. There should be a balance between the amount of money the professional seeks to charge, and the price that the customer believes is right and fair. Market demand and offer must meet in dynamic prices. This will provide prices with more flexibility. If the price is too high, the professional will not be called. But, if the price is too low, the professional’s quality will be questioned.
5 – Raising the fee
In order to achieve financial independence, it is appropriate to charge as little as possible to ensure survival. First, many transactions must be conducted at low prices, then prices must be raised without reducing the number of transactions. Finally, because of the increased prices, the number of expected transactions must decline.
6 – Client setting the fee
By setting a value on the service, the client feels the need to demonstrate generosity; they feel that you value their money and that the service is affordable. Customers often set higher values than the professional in question; if a client is extremely satisfied, they themselves will offer higher payment. The intention of the client to increase the price indicates the recognition and appreciation for the work.
Continue reading: How to deal with an experienced negotiator