Selling on value not cost

Selling on value not cost

In today’s highly competitive recruitment world, defending placements fees and contract/temp margins seems to be a hot topic for a lot of Recruiters that I meet. Clients are insistent on transparent rate calculations and some have the perception that the placement fee is practically pure profit.  On the other hand Recruiters may not be fully convinced that the job they perform is worth the fee that they charge and this is largeley due to not understanding the value of the process, the benefit it offers for the organisation and overall viewing recruitment as a professional service.

So let’s discuss this a little more…..

For a lot of clients price by itself is not the only key factor when choosing an agency.  This is because most clients compare the entire offering and do not simply make their decision based solely on the price. In essence when a purchase situation arises price is one of several variables clients evaluate when they mentally assess the overall value of your service.

Any easy way to see this is to view value as an equation:

For the client, the value of a product will change as perceived price paid and/or perceived benefits received change. But the price paid in a transaction is not only financial it can also involve other things that a client may have to do. For example, in addition to paying money a client may have to spend time going through a lengthy recruitment process, pay for additional costs, lose productivity whilst distracted by recruiting or incur other expenses and lets not forget  the cost of a bad hire.

To defend fees confidently Recruiters need to be very clear themselves on this equation and be able to demonstrate benefits and value.  They need to ask themselves the following questions:

  1. What are the direct costs involved in recruiting?
  2. What are the costs for making a bad hiring decision?
  3. What benefits do you offer?
  4. What price would you put on the benefits provided?
  5. What value do you offer?
  6. What price would you put on the value they receive?

To help you get started with this I have provided a Defend and Justify Your Fees Guide.

For further assistance we are running a number of  Sales Training Workshops – take a look at our National Training Schedule for a course near you.

I hope that you enjoy the offerings in this edition and if you have any feedback, tips or suggestions for upcoming training events, I would love to hear them.  Simply reply to this email or contact me directly.

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