Why Fee Integrity is Hurting You
I first heard the term ‘fee integrity’ when I started hanging around the National Speakers Association. It means as a speaker you should know your fee level and not waiver from it. Don’t lower your fees. Don’t negotiate price. This goes against everything I know and believe as a pricing expert.
Almost every successful company uses price segmentation. They charge different prices to different customers based on how much the customer is willing to pay. It happens around us all the time. Two examples are airlines and movie theaters. Both industries obviously charge different customers different amounts. Why is the speaking industry so averse to doing something similar?
As a speaker, if you truly adhere to fee integrity it hurts your pocketbook. Highly successful speakers with fee integrity leave a lot of money on the table. Newer speakers who adopt fee integrity are making it so difficult on themselves to launch and grow their paid speaking career.
Imagine you are a speaker that makes $10K per speech. A potential customer calls you up and asks you to speak next week in a nearby city, but they only have $8K in the budget. Will you do it? To honor fee integrity, you would say no. However, many people would be thrilled to pick up an extra $8K for a speech. Why pass up the gig?
Imagine you are that same speaker that makes $10K per speech. A potential customer calls you to speak and asks your fee, which you tell him. However, the meeting planner was able to spend up to $12K. You just missed out on $2K.
I teach value-based pricing. This means: charge what your customers are willing to pay. In the first example, the customer is willing to pay $8K. In the second, $12K. Your goal is to determine their true willingness to pay, often through negotiation. Then, your only decision is whether or not you want to work for that price.
Although the speaking industry frequently uses the phrase fee integrity, many (most?) successful speakers frequently break it.
Here are several examples:
- Some speakers charge less if they don’t have to travel.
- Some offer to do more work than normal (e.g. emceeing an event or an extra workshop session) just to get the meeting planner up to their full fee.
- Still others negotiate for other perks like upgraded travel, travel expenses for a spouse or a professional video of their presentation in lieu of their full fee.
None of these honors fee integrity. They are all backdoor ways to offer discounts while still imagining that they are upholding fee integrity. Although none of these examples truly honors fee integrity, they are absolutely the right thing to do.
Let’s quickly review these three situations.
- Charge less for local gigs. If someone local is willing to pay the full $10K this speaker would surely accept it. He has just set a much lower bar on what he’s willing to accept if he doesn’t have to travel. This is perfect. We are allowed to, and should, treat different situations differently with respect to price. This says more about what the speaker is willing to accept for the amount of effort, but it’s not fee integrity.
- Offer to do more at an event to work the fee up to $10K. This is an awesome technique for increasing revenue per event. But why doesn’t the speaker do this on every gig? If the meeting planner has $10K for a keynote, why not offer to do more at the event and make $15K instead? If a speaker is able to do this at events that have tight budgets, think how much easier it would be to do at events with larger budgets.
- Negotiate for additional perks. Absolutely! But the same questions as #2 apply. Why not do this even when they pay full fee?
What’s funny is speakers share these techniques with other speakers as methods to “maintain fee integrity.” This couldn’t be further from the truth. They are all good ideas, but they aren’t fee integrity.
Hopefully you are now convinced that it’s okay to charge different customers different prices (after all, the big names do it). Now how do you do it? Most companies selling products publish their highest prices and then offer discounts from there. Speakers should do the same.
Think about this strategy. Every time someone pays your full fee, raise your price by 20-30%. When someone pays your published fee of $10K, change the price you show on your web page to $12.5K. When a potential buyer sees $12.5K on your website they assume someone before them has paid it so you’re probably worth it. Then when you get a call from a meeting planner who only has $8K or $10K, you’re still happy to accept.
Although strict adherence to fee integrity costs speakers money, there are two big reasons why we may do exactly that, strictly (or at least somewhat) follow fee integrity.
- If you work through speakers bureaus, you need to have a formalized pricing structure. You must not compete with your bureaus. In other industries, many companies sell both directly to their end customers and through distributors and/or retailers. These companies have to work hard to coordinate their channel. Their channel partners are much less likely to work with them if they sell direct to customers at lower prices than the partners can offer. In speaking, bureaus are our channel partners. You want to make sure every bureau you use is on a level playing field and you aren’t undercutting them. True fee integrity makes this happen. If everyone always pays the same price, you never undercut a bureau.
- Also, fee integrity is a wonderful reminder to not give in too quickly. When someone offers you less than your normal rate, it’s time to start negotiating. Start by holding firm and see if you can get your price. Ask if the planner can move some budget around to meet your fee. Then, when you think you have no choice, you can (and should) lower your price. When we go in with the attitude that our fee is negotiable, we are more likely to lower our price too quickly. Think fee integrity first.
Many of the most successful speakers don’t follow fee integrity. They talk about it because it’s a nice goal. However, when newer speakers hear “fee integrity” they think they should only have one price. They don’t understand how pricing really works.
Here is the message to newer and experienced speakers who aren’t already in the know. Stop taking fee integrity so literally. It’s costing you jobs. It’s costing you exposure. It’s costing you money.