I was monitoring an online thread in a professional speaking group recently, and someone asked, “What are everyone’s payment terms?”
That’s a smart question. The responses, however, weren’t. More than ¾ of the folks weighing in gave answers to that question (50% now, fee due after the talk, etc.) that didn’t establish them in the strongest negotiation position and guaranteed to create more time for them in chasing down fees, reminding clients to pay the balance of the fee, etc.
Professional speakers as a whole are the best communicators on the planet, but few of them have backgrounds in sales or negotiations. That means they can motivate an audience but few know how to successfully negotiate their fees. For years in my own speaking business, I put less-than-favorable terms in my own speaking proposals and lost a lot of actualized revenue and time in chasing down the balances of my fees. Then two things happened that changed the way I positioned myself and in turn changed the amount of revenue I was able to capture.
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First, I asked other sales professionals what their initial payment terms were to establish the strongest negotiation positions in their sales. Whether they sold low-cost commodities or million-dollar software platforms, it was always, “Full fee up front.” Not one, unless required by client policy or a state or federal law, said they would willingly start negotiations by asking for half of their fee now and half at some point in the future.
Second, I tried what worked in every other industry – I asked for full fee up front. And, surprise, I got it. The heavens didn’t crack open and I didn’t disrupt the space time continuum – both things I thought would happen by not following the industry standard of asking for 50% of my fee up front. From that moment on, I learned that asking for what I wanted at the very least positioned me strongly for negotiating payment terms. At best, it ensured I was paid sooner and could put those funds to work in my own business and life.
It’s not about taking advantage of the client
Before we walk through the payment term ladder and how to leverage it, understand none of this is about taking advantage of a client. Instead, it’s about being a businessperson. Your business doesn’t run on goodwill and rainbows. It takes revenue to keep the lights on, make investments in your own development, and fuel your quality of life. The sooner your fee is in your business’ bank account, the sooner you can put the money to work. Amazingly, our clients feel the same way about retaining our fee! The longer their funds are in their account, the more leverage they have in their own organizations and companies. The magic is meeting both our need to be paid more sooner and our client’s need to retain as much of our fee as possible.
Where Do I Start With My Payment Terms?
If it’s not apparent, start by asking for everything up front in order to secure the date of the speaking engagement on your calendar. You’re not guaranteed to get it, but positioning yourself at the top of your payment term ladder ensures your client meets you closer to the top of the ladder where you started. Surprisingly, we’ve found more often than not clients are willing to pay full fee if they understand the investment of time and resources it takes you, the speaker, before the event to interview, customize and prepare a great talk.
The Payment Term Ladder, And How To Leverage It
Here is the payment term ladder for professional speakers, regardless of the fee you charge. It starts at the most advantageous position for you and ends at the most advantageous position for your client. There are many ‘half’ rungs on this ladder using variable percentages of speaker fees (33%, 75%, etc.) that we won’t be able to cover here, but the major payment term negotiation scenarios we’ll encounter as professional speakers are:
Rung 1: Full payment now to secure the date
Rung 2: Some payment now, the balance to be paid (90/60/30) days prior to the event and/or on the event
Rung 3: Some payment now, the balance to be paid on the date of the event
Rung 4: Some payment now, some to be paid on the event date and the balance (90/60/30) days after the event
Rung 5: No payment now, some payment (90/60/30) days before the event
Rung 6: No payment now, full fee on the event date
Rung 7: No payment now, some payment on event date, balance to be paid (90/60/30) days after the event date
Rung 8: No payment now, no payment on event date, some/all of the fee paid (90/60/30) days after the event date
What do we do if the client won’t pay full fee up front?
This is where the fun starts – and if you’re trying to maximize revenue in your business and enjoyment of being a business owner, this process can be a lot of fun. If a client won’t pay full fee up front, we can move down the payment rungs while asking for a concession every time we move down a rung on the payment term ladder.
VERY IMPORTANT: Don’t ever, under any circumstances, jump down to the rung your client is on or the rung right above the one they are positioning themselves at. That’s poor negotiating. Instead, move down your payment rungs one at a time from the top. For instance, if they won’t pay full fee up front then move to rung 2 on the ladder, stating that you “understand their position and are happy to work with them to find a payment term scenario that works for both of you. If full payment to secure the dates is not an option, we’re willing to accept part of the fee now and the balance to be paid (30 days, 60 days or 90 days) before the event, in addition to …” That ‘in addition to part’ is where concessions come in and we’ll cover that soon.
To fully leverage the payment term ladder, understand that it’s a negotiation and it’s not personal. You’re both attempting to establish the strongest position possible while ensuring everyone gets a fair deal. If the client says that your second-rung offer still isn’t acceptable, respond, “I appreciate your policies, and due to the costs of preparing for the event and the time I have to allocate away from other clients to prepare for your event, we’re willing to make an exception to our normal payment terms and take partial payment now (ideally, ¾ or half) and the balance to be paid on the date of the event, in addition to [concession 1]… and also including [concession 2]…”
Keep walking down the rungs, adding concessions with each move until your client agrees to the payment terms.
OK, What concessions are available?
So glad you asked. This is all about fee integrity. While we’re not touching on the dollar amount of fees here, if you state that your talk is $15,000 and your client says they only have $10,000 and you agree to the talk without removing any value, you have no fee integrity and are running an unethical business model.
Fee integrity isn’t about, “I charge $15,000 no matter how empty my calendar is, because well, that’s what my talk is worth.” Instead, fee integrity is an alignment of value to return on investment for what your clients pay. In the same way that you should always remove value when asked to reduce your fee (by removing pre-event videos, articles, additional sessions, books, follow-up courses, etc.) if you are asked to modify your payment terms, your client should make a concession as well. That’s where concessions comes in. Those are the places where you ensure you’re receiving things that make delaying the payment of your fee worthwhile and that keep you in integrity with your fee.
What concessions do I have?
You’re asking some really good questions, my friend! As a speaker, we have a long list of concessions we can ask for both for reduction of fee and for altering our most advantageous payment scenario of full payment up front. The more concessions you stack into the changes on your payment terms the more willing your client will be to stop dragging you down to their rung on the payment term ladder – and one of those concessions is absolutely increasing your overall fee if the client wishes to modify payment terms.
“Happy to break up payment, but due to the costs I incur in preparing my talk, I’ll need half of our agreed-upon fee up front and then the other half, plus a 10% convenience charge, on the date of the event.”
Does asking for more than your original fee sound a little too pushy? Here are a few other ideas that involve additional fee and value-adds to consider in your concession plan:
-Client finds an additional corporate sponsor for a percentage more of your original fee
-Client works with other departments at the company/association to find budget for additional presentations for a reduced fee.
-Client gives you access to event mailing list
-Client guarantees referrals to meeting/event planner’s peers, industry associations, specific number of email introductions.
-Client arranges a VIP Dinner: client finds a sponsor for a dinner and the organizer pays for that time in addition to your budgeted speaking fee
-Client arranges One-on-One Coaching: client arrange meetings for attendees with 1:1 time with you, for which you are paid, but also likely leads to add-on consulting
-Client arranges a sponsored workshop for additional fee
-Client gives you a sponsorship package/sponsor booth for no additional cost to you
-Client gives additional nights at the hotel/resort and/or airfare for your family to travel with you
-Client arranges follow-up programs for an additional fee: Webinars, on-site, telephone Video/digital interactions
-Client commits to buying a certain number of your books
-Client provides high quality video for your future marketing
-Client commits in writing to hire you for certain number of additional events.
-Client makes a charitable donation in your name
If we don’t ask, we don’t get. Now you know how to ask, how to negotiate and how to establish the strongest negotiating position out of the gate while ensuring your client knows you’re maintaining fee integrity with concessions. That will ensure you maximize impact to your audiences and maximize your income.
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