CHAPTER 4
ESTABLISHING FEES
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HOW MUCH DO YOU CHARGE? HOW MUCH HAVE YOU GOT?
FOR THOSE of you who turned immediately to this chapter upon opening the book, my warmest welcome. When you get the chance, you may want to visit the preceding chapters.
Professional speaking is a business. What you make is far less important than what you keep.
THE THREE BASIC FEE RANGES YOU MUST CREATE
Nobody is worth all that much by the hour. My auto mechanic makes about $125 per hour for his shop, some speakers command $7,500 for a keynote, and Colin Powell, the former chairman of the Joint Chiefs of Staff, commands about $75,000 for an hour appearance at a convention. That’s 10 times the average keynoter fee and 600 times the mechanic’s rate. How can this be? Does Colin Powell have 10 times or 600 times their life experiences, skills, preparation, intelligence, and abilities?
The fact, of course, is that the hour (or half day or day) that we spend on the platform is not the value of what any of us brings to the client, yet we insist on charging fees for that time commodity, rather than for our true value. In reality, the mechanic is able to charge $125 an hour because of the experience, training, expertise, and talents that enable him or her to fix your car, provide the proper preventive maintenance, and ensure that the proper performance endures long after you’re out of the shop. That same process applies to you, me, and Colin Powell as well.
People in the audience come to hear an hour keynote,1 but the buyer is paying you to deliver it because of some combination of the following factors. I call it the “value list” because it represents those aspects of what you do that the buyer finds of worth.
Alan’s Value List for Speakers
• Your repute in the field
• The talents you bring to bear in delivering each speech
• Your singular knowledge or approaches
• Your particular platform skills
• The visual aids or demonstrations that you provide
• Your ability to speak to that particular industry
• The skills that you’ll impart to the audience
• Your experiences, stories, anecdotes, and/or humor
• The behavior change that will ensue
• The improvement in the business that will result
• The reference point that you create, which will be an ongoing focus
• The provocation to reconsider positions
• Your perspective from other companies
• The motivation that people will generate from your message
• The sense of unity, direction, and purpose that you can provide
• Your credibility
• Your personal accomplishments and results
• Your ability to serve as an exemplar
• The client’s intrinsic trust in you
• Your special intellectual property
• Your fame, e.g., a commercially published, successful book
The more of these factors that apply, the more valuable you are. If you think about it, Colin Powell delivers virtually all of them. That $7,500 keynoter delivers a lot of them. How many do you deliver?
Note that my list of valuable attributes focuses mainly on the past and the future. While there are some items that are strictly in the present, such as platform skills and delivery, even these are the result of your past training, experience, and practice. In other words, there are two major aspects underlying your value to the buyer:
1. The combination of past experience and development that has produced the qualities that you convey today
2. The long-term results that the client will realize as a result of your time on the platform (or in the front of the room)
Your real worth is in the unique combination of factors that has resulted in your current value to the client and in the skills, behaviors, beliefs, and approaches that the audience will apply after your presentation that will benefit them and the business permanently. The hour itself is incidental, being nothing more than the delivery vehicle that enables your own past to benefit the audience’s future.
Speaking Up: The platform is simply a vehicle that enables the speaker to transfer his or her own value—gleaned from past experiences—to the audience’s future.
A taxi ride from the airport is not worth $35. However, being conveyed from the airport, where you don’t need to be, to the office, where you do need to be, is worth $35. A bus can take you for only $5, but it’s slower, is less reliable, makes more stops, and is far less comfortable. A private limo can take you for $65, with more comfort, a private phone, better climate control, and door-to-door service. We all invest in the kind of ride that makes the most sense, and the kind that we perceive we deserve.
On a per-hour basis, a keynote is far more expensive than a full-day seminar. Someone who charges $5,000 for a keynote isn’t going to charge $40,000 for a full day ($5,000 times 8 hours) if he or she offers both types of sessions. That person will probably charge around $7,500 for the full day. A keynote is much more expensive on a commodity basis because it’s the limo ride—in far less time, in far more comfort, people are arriving at the destination that the buyer has chosen.
The basic process involved in speaking, from the buyer’s perspective, has to be the one in Table 4-1. It is your responsibility to educate the buyer that his or her value list is being achieved not through an hour or half day of your time, but through the substantial body of work that has taken place in the past and through the results that will accrue on an ongoing basis well into the future. Few name-brand drugs that we buy cost very much to manufacture—certainly nowhere near their purchase price. However, Merck and Pfizer and Johnson & Johnson have spent billions on the research and development that finally brought the drug to the consumer in a safe, reliable, convenient form. And the drug’s effect will have a long-term impact on your condition, either curing it or ameliorating it. (Eventually, both generic drugs and generic speakers pop up.)
The speaking process is no different from that of pharmaceutical research and manufacturing. We’re not paying for the aspirin capsule, we’re paying for the work that brought it to us and the salutary effect that it will have on our health. Buyers shouldn’t be paying for the hour’s speech, but for the long-term processes that created its value and the longer-term salutary effects on the organization.
Here is the secret to a value mindset: We use the power of our past with a transfer mechanism in the present to greatly improve the client’s future. Got that? If you can understand that process flow, you’ll never have trouble charging high fees.
The key to establishing high fees is to establish high future value in the eyes of the buyer. (The future could be tomorrow or next year.) Let me make this absolutely clear because most speakers focus on the wrong results. Value has very little to do with standing ovations and “smile sheets” that rate the speaker a 9.9 on a 10-point scale. The only thing that matters to the buyer is how well his or her objectives are met, and that seldom involves audience ratings unless the speaker is the one who emphasizes them. There is far more value in improved sales, lower attrition, and greater innovation in the business than there is in a speaker’s rating by the audience. The rating applies to a relatively brief moment in time. The results apply to the company forever.2
Most speakers, including those who “coach” and give all the advice, are charging for the first or second column in my process flow—the wrong columns! They are inputs, not value.
No company or corporate buyer has ever said, “Remember Mary Speaker? She received a 9.9 rating. What a great contribution to our business.” But buyers do tend to say, “Remember the sales improvement that resulted from Mary Speaker’s work? Maybe it’s time to get her back in here again.” Focus on your own ego, and you might get stroked. Focus on the buyer’s results, and you will get repeat business.
So, it’s vital to do the following to this point:
1. Understand your own value proposition.
2. Work only with true buyers.
3. Translate your value into long-term results for any given client.
4. Educate the buyer so that he or she reaches the same conclusions.
5. Only then suggest your value options.
Let’s start with a simple fee system for now: a keynote, a half-day workshop, and a full-day or multiday seminar. Thus, if your keynote fee were $7,500, then your half-day fee would be $10,000, your full-day fee $15,000, and every ensuing full day $12,000. But that’s just for now. We’re going to quintuple that before the end of this chapter.
Ready to read on?
TAKING OUT THE MIDDLEMEN: DEALING ONLY WITH TRUE BUYERS
Note that I seldom use the word customer or client when I allude to obtaining business. That’s because the buyer is the key, and speakers often don’t have a clue about who the true buyer is. A buyer is someone who can authorize a check (or, in noncomputer cultures, actually sign one). The buyer is usually near the top of the hierarchy in smaller organizations, but can be anywhere in larger ones. Titles are highly deceiving. (Everyone in a bank today is at least a “vice president,” but nary a one of them has the authority to even waive a fee on your checking account. I call this “title inflation.”)
In the speaking industry, there has been a great deal of focus on the role of the meeting planner. In most cases, a meeting planner is actually a feasibility or implementation buyer, not an economic buyer. By that I mean that the meeting planner is given a strict budget (by the real buyer) and is paid and rewarded for conserving it. Meeting planners tend to be low-level people; they are rarely involved in corporate strategy or departmental missions, and they invariably evaluate speakers as commodities to fit time frames and budgets.3 Meeting planners love to evaluate potential speakers by viewing demo tapes for a few minutes, making visceral decisions based on such ephemera as a funny story, stage movement, and appearance. I have had meeting planners tell me, without blinking an eye, that they didn’t want a woman to address their group (this from a woman planner), they thought one candidate was too old, they felt that another was “too New York,” and they felt that still another had too much content.
Speakers’ bureaus tend to deal through meeting planners, middlemen (consistency with “middlemen”?) dealing with middlemen, sort of like “Middle Earth,” and kind of like hobbits. If you work with bureaus, you won’t miss these potential buyers because the bureau will find them for you. But for your own approaches, eschew the meeting planners and focus on the economic buyers, who themselves are focused on results. They are the ones to whom you can make your value/results appeal. Since they are paid to achieve results themselves, they will find the money to pay for anyone who can help them engender those results. The equation for them is simple: ROI (return on investment).
Whenever possible, market and sell to economic buyers. If you find that you’ve been introduced to a feasibility or implementation buyer, use that entry point to gain access to the economic buyer. Bureaus will otherwise attend to the meeting planner market, although the good ones will pursue economic buyers as well. Your strategy should look something like that depicted in Figure 4-1.
The primary thrust of the speaker (and of any marketing or staff personnel who are employed in these pursuits) should be to establish a relationship with the economic buyer. A secondary thrust should be toward those bureaus that can place you with economic buyers, although they will invariably also work with meeting planners. Only a tertiary thrust—meaning if there is time or as a result of serendipity—should be geared toward the meeting planner on the chance that this path may lead to the economic buyer. In my experience, most speakers reverse this sequence, thereby securing a poor return on their scarce resources.
Figure 4-1 Speaker Marketing Priorities
So, our steps might really look like this:
1. Understand your own value package.
2. Translate your value into long-term results for any given client.
3. Find the economic buyer in your target customer.
4. Educate the buyer so that he or she reaches the same conclusions.
5. Only then suggest your value options.
How do you know a true buyer when you see one? Is it like the yeti, something that is rarely seen, but leaves just enough tracks in the snow to suggest a sentient being? Or is it Waldo, hidden in some crowd awaiting your scrutiny?
My economic buyers have had titles such as director, manager, business process consultant, vice president, owner, and, of course, CEO. At higher levels, it’s fairly easy to tell. You might be talking to the vice president of sales who is interested in a speaker for his or her sales conference. There’s not much detective work required. But what if you’re talking to a sales director who tells you that she has been given the task of securing the speakers for the meeting? How do you tell if this is the economic buyer or merely a feasibility buyer, without offending her?
Speaking Up: The reason it’s imperative that you find the economic buyer is that he or she is the only person who can appreciate your value in terms of the results generated and will make an investment decision on that basis. Otherwise, you’ll be purchased like pens, packing material, or produce.
Here are the questions I’ve found useful in ferreting out the real economic buyer. You don’t need to ask all of them, and you should choose those that best fit your style, since I’m prone to simply ask, “Are you the one who’s investing the money?”
Alan’s Questions to Find the Economic Buyer
• Whose budget is supporting this investment?
• Who will evaluate the final results?
• To whom do the participants all commonly report?
• Whose objectives are at stake?
• Which executive will open and/or close (be featured at) the meeting?
• Who approves the final agenda?
• Will you make a decision or a recommendation to someone else?
• If there are conflicts over the agenda, who makes the final call?
• Who is most affected by the success or failure of the participants?
Committees are seldom economic buyers. By definition, they are evaluators and recommenders. You can ask these questions in as blatant (New York) or subtle (California) a fashion as you wish, as long as you do ask them. Too often, we’re so delighted merely to have been considered for a speaking engagement that we fall all over ourselves trying to impress whoever will see us. That’s fine if we want to secure jobs, but it doesn’t contribute anything if we want to create a million dollar business.
(Incidentally, sometimes we find ourselves magically with the economic buyer at the outset. Here’s some complex advice: don’t leave. It’s not uncommon for the speaker to react to the initial contact by accepting delegation to a feasibility buyer. If you actively participate in the intent to delegate yourself downward, you’ll experience a vertiginous drop through the organization, landing dazed and bruised in the office of someone who will ask you, as soon as you’ve revived, “So, how much can you reduce your fee if we cut the slot from 2 hours to 45 minutes?”)
And what happens when we meticulously apply the questions and discover that we are, indeed, dealing only with a gatekeeper who resists allowing us to talk to the economic buyer? We’ve all encountered the palace guards who bloviate about how busy the management is, but whose sworn duty is to protect the decision makers from actually receiving information that might lead to a high-quality decision. Do we resign ourselves to the ignominy, or do we scale the ramparts?
Get out your ladders and climbing gear. Here’s how you convince the gatekeeper to either open the gates or get out of the way while you open them.
Leverage Points to Get to the Economic Buyer
• I have to ensure that his or her objectives are met.
• I have to be sure that there are no unreasonable expectations.
• I have to ensure that the full value of what I can deliver is understood.
• I must tailor my approach to his or her style/theme/philosophy/agenda.
• Ethically, I must see the person who is investing the money.
• It’s unfair for you to do my marketing for me.
• There are technical details that only I can explain.
• It’s imperative that I hear his or her strategy and tactics.
• You and I can collaborate once we’ve both received his or her advice.
• I do this with every client. It’s why I’ve been recommended to him or her.
• This is what outstanding professionals do in this business.
• It’s for his or her protection. Objectives sometimes change.
• It’s a strict quality policy, and I can’t work with him or her unless we meet.
In the event that all of these fail, you may want to simply contact the economic buyer and advise that person of the same types of issues. You do risk irritating the gatekeeper and perhaps losing the potential business. However, no risk, no reward. It’s simply that important to find the economic buyer and secure your agreement with him or her because only that person can appreciate your value package and the long-term results for the organization in terms of an appropriate investment.
PROVIDING THE CHOICE OF “YESES”
I’ve spent the entire first half of this chapter leading up to fee structure, and we’re not quite there yet. That’s because your fee strategy is irrelevant if you’re dealing with the wrong people or if you’re not in a position to establish value and results. On the assumption that you’ve accomplished that, however, we’re at the final step:
1. Understand your own value package.
2. Translate your value into long-term results for any given client.
3. Find the economic buyer in your target customer.
4. Educate the buyer so that he or she reaches the same conclusions.
5. Only then suggest your value options.
You never want the buyer to be making the decision as to whether or not to use your services. You want the buyer to be making the decision as to how to use your services. To accomplish that, you must provide the buyer with options. You control this dynamic. If you provide options, the buyer will consider them. If you don’t, it’s unlikely that the buyer will say, “Why don’t we develop some options that provide me with a range of ways in which to use you?”
This is not abstruse reasoning. The buyer will do what’s in his or her best interest. You must manage the relationship so that what’s in your self-interest is in the buyer’s self-interest: hiring you.
An Example
Let’s suppose that the buyer is considering you for a two-hour concurrent session at an annual conference. The buyer has budgeted for six speakers at $3,500 each in the three concurrent sessions and $6,500 each for keynoters to open and close. Here are some options you might propose:
• Conduct one concurrent session as planned for $3,500.
• Conduct two of the concurrent sessions on different topics for $6,000, saving the client $1,000.
• Present one of the keynotes and a concurrent session for $8,000, saving the client $2,000.
• Present the concurrent session and facilitate breakout groups when the participants are later divided into working teams for $5,000.
• Present the concurrent session and moderate a customer panel that the client had planned for later in the program for $5,000.
• Use any permutations of the foregoing options.
Speaking Up: Remember, the discussion should never be about fee, solely about value.
However, there is a far more powerful way to build speaking fees into project riches.
TURNING AN EVENT INTO A PROCESS AND TRIPLING YOUR SUCCESS
A standard exercise that I insist on in my coaching of speakers is to create a list of everything that they can do prior to, during, and after a session. Many speakers include these elements anyway, since their low self-esteem drives them to throw in everything but washing the dog to justify their fee. None of this will be terribly new, until you see what I’m about to do with it.
Here is a synopsis of what most people tell me. Your lists may differ based upon your topic, background, and focus.
You can see where this is going. Instead of an “event,” you now have a process for improvement. Instead of throwing the kitchen sink into the pot, you’re offering the buyer a menu of options.
“What will the fee be?” you’re asked.
“I can’t tell yet, but why don’t you select the value that appeals to you during our overall time together, and I’ll create a fee based on your needs and preferences.”
I guarantee you—guarantee you—that if you take this structure and organize every speaking opportunity, whether keynote or training, around it, you will quintuple your fees over the course of a year. That means that you must overcome the mentality that “I’m not worth it” and adopt the mentality that “I have tremendous value to offer, and I’d be remiss if I didn’t provide everything I can for the buyer’s consideration.”
Note that this doesn’t work unless you’re talking to a buyer. A human resource person will simply ask you to do it all for the lowest fee possible.5
Buyers may love to reduce fees, but they hate to reduce value. Once you introduce significant value, buyers want it. This is an emotional decision. Logic makes people think; emotion makes them act. On the trust “pyramid,” you’ll find this progression:
Emotional
Intellectual
Affiliative
Expert
Referral
Being referred by a trusted source is important; being seen as an expert is comforting; filling a desire to have an affiliation is significant; holding high intellectual status is imposing; but creating an emotional bond is invaluable.
I once thought that as value increased, fees could increase. I was incalculably wrong. The lines actually cross as trust and a brand are developed, because people expect to get what they pay for!
No buyer says, “Listen up, I was able to get the cheapest speaker in the country. I might have obtained his services for less, but I felt sorry for him. I want you to hang on his every word.”
Figure 4-3 When Value Follows Fee
Instead, they say what Curt Nelson, CEO of Silicon Space, said when he asked his people how much they thought I was costing to address them for a few hours at a meeting. Their guesses ranged from $1,500 to $3,500, with one executive wondering if that included lunch.
“He has charged me $18,500,” said Curt, “so listen up!!”
Buyers have egos, too.
40 WAYS TO INCREASE YOUR FEES
Here are 40 ways to increase your fees, in addition to the model I’ve already provided:
1. Establish value collaboratively with the client.
2. Base your fees on value, not on the task.
3. Never use time as the basis of your value.
4. Don’t stop with what the client wants—find out what the client needs.
5. Think of the fourth sale first—fees are cumulative, not situational.
6. Engage the client in the diagnosis—don’t be prescriptive.
7. Never voluntarily offer options to reduce fees.
8. Add a premium if you personally “do it all.”
9. If you’re forced to consider fee reduction, reduce value first.
10. Provide options every time: the choice of “yeses.”
11. Always provide an option that is comprehensive and over budget.
12. As early as possible, ask the QGTRIHF (Question Guaranteed to Result in Higher Fees): “What are your objectives?”
13. Broaden objectives as appropriate to increase value.
14. Ensure that the client is aware of the full range of your services.
15. If something is not on your playing field, subcontract it.
16. Always ask yourself, “Why me, why now, why in this manner?”
17. Determine how many options the buyer perceives other than you.
18. Use proposals as confirmations, not explorations.
19. When asked prematurely about fees, reply, “I don’t know.”
20. If you must lower fees, seek a quid pro quo from the buyer.
21. Do not accept troublesome, unpleasant, or suspicious business.
22. When collaborating or subcontracting, use objective apportionment.
23. Any highly paid employee must bring in new business, not merely deliver.
24. Seek out new economic buyers laterally during your projects.
25. It is better to do something pro bono than to do it for a low fee.
26. Fees have nothing to do with supply and demand, only with value.
27. If you are unaware of the current market fee ranges, you’re undercharging.
28. Psychologically, higher fees create higher value in the buyer’s mind.
29. Value can include subjective as well as objective measures.
30. Introduce new value to existing clients to raise fees in these accounts.
31. Do not accept referral business on the same basis as the referent.
32. When forced into phases, offer partial rebates to guarantee future business.
33. At least every two years, consider jettisoning the bottom 15 percent of your business.
34. Start with payment terms that are maximally beneficial to you every time.
35. Offer incentives for one-time, full payments.
36. Never accept payment subject to conditions to be met upon completion.
37. Focus on improvement, not problem solving.
38. Provide proactive ideas, benchmarking, and best practices from experience.
39. Practice stating and explaining your fees.
40. Always be prepared to walk away from business.
You’d have a hard time convincing me that at least half of these points don’t apply to your situation and business.
INCREASING FEE VELOCITY
There’s one more aspect to improving fees that most speakers neglect: the velocity of the fee. This means that you want to get your fee into your bank as rapidly as possible, but the default position of speakers is often “pay me whenever you feel like it.” The terms and conditions of your engagement should be stipulated after conceptual agreement on outcomes and value so that they are merely an afterthought for the buyer. But if you don’t establish payment terms, some purchasing agent in the bowels of the client organization is ready—and paid—to do so.
Always try to get paid in full in advance. You won’t always be able to, but you will never be paid this way if you don’t ask. Simply state that your policy is full fee in advance to secure the date and begin any preparatory activities, such as presentation design, materials customization, participant interviews, and so forth.6
If you can’t get your full fee in advance, you may want to try a soft incentive, such as a 5 or 10 percent discount if the fee is paid in advance. (Don’t offer this if the presentation date is imminent.) Such a discount is important for two reasons:
1. You will be holding the money and using it for a long period, sometimes as much as a year in advance.
2. The client cannot cancel your engagement if you are holding the money.
Note: Many bureaus have a “policy” of holding your fees “in escrow” until after you deliver the presentation and the client is happy. Simply don’t do business with someone with this kind of benighted mentality. The client is YOURS, not the bureau’s, which is merely the middleman. Your payment terms are up to you. (Some dopey bureau principals will ask, “How do I know you’ll still be here on that date?” I reply, “There’s a lot better chance of my being here than of your being here!”)
I have a myriad of letters from speakers and consultants testifying to the wisdom of this advice, providing examples of contracts that would have been canceled or delayed because of internal client changes if the fee had not already been paid.
Demand, as a minimum, a 50 percent deposit, with the balance to be paid prior to the time of the presentation. That’s right, you get an envelope before you show up. Some bureaus will demand a 50 percent deposit and keep all of it until your presentation as a “guarantee.” Tell them to take a walk. If a bureau collects a 50 percent deposit, it should keep its 25 percent full commission and forward the balance to you immediately.
Speaking Up: Payment terms are often subject to your policy. If you don’t have one, the client’s policy will prevail, and it certainly won’t be one of paying you as quickly as possible.
If a bureau places you and collects the deposit, the balance should be payable to you at the presentation, not to the bureau (which will further delay payment, sometimes for months—some bureaus even demand that expense reimbursement go through them).
I don’t advise ever accepting less than a 50 percent deposit, or a bureau collecting its 25 percent commission, with the remainder being received on the presentation date. Anything less is not a collaboration and leaves you vulnerable to cancellation, delay, late payments, disputed costs, client internal turmoil, and so forth.
Guarantee your work in writing, but make your contract noncancelable in writing as the quid pro quo. This is a business. Businesses turn a profit. (I had four such full deposits prior to 9/11. I offered every client its money back in the wake of the tragedy. Every one told me that it would reschedule; some took over a year to do so, but each one did, and I kept the money and the clients.)
To summarize: base your fees on the value you bring to the client’s objectives; provide for options (value packages) in the context of a process flow, so that the client can decide how best to use you and not whether to use you; and increase the velocity of the ensuing payment in every way possible through aggressive terms. If you do that, you’ll have the processes in place to make a million dollars. Let’s turn now to how you attract that kind of business.
SUMMARY
Fees should be based on value. Even a “bare bones” keynote request has the potential for advance work, concurrent work, and follow-up work. Don’t view what you do as an “event,” but rather as a “process.”
At a minimum, set your fees aggressively for a short, medium, and longer presentation. These fees should not be based on your tenure in the profession, but rather on your brand, your intellectual property, and the value you deliver. The easiest, best, and most lucrative way to do this is to deal directly with economic buyers, not with middlemen.
Speakers’ bureaus and meeting planners are not organized to maximize your fees or even to maximize your success. The former work on a volume basis, trying to place as many people as they can in the mistaken belief that the client belongs to them and that speakers are merely hired hands instead of talent. The latter are paid and given incentives to minimize costs, irrespective of quality or results.
You can get so good, so much in demand, and so talked about that value will follow fees—buyers will expect to get what they pay for, just as they do with a Bentley car or a Baume & Mercier watch.
If you want to make a million in the speaking profession, focus on these two keys: work only with true buyers, not middlemen; and focus on the process and its outcomes, not the time or event. If you do, you’ll be ahead of about 85 percent of the speakers out there.