How you determine your rates when starting or running a business is all important and requires a great deal of thought which goes to the core of how you view what you do. Once those questions are answered you are far better equipped to deal with the price objection which every recruiter would be familiar with.To counter and conquer the price objection you also need to think about what the client wants. As each individual business is different you can start this analytical process by pondering the following:What do you do:

1. Do you provide a service or a product? Every recruiter needs to know the answer to this question and naturally it needs to align with the company answer.
2. Is the fee charged for a service? In which case the retained model is far stronger than the contingent model in terms of ROI of time and resources.
3. Is the guarantee offered for the service quality or product quality? What are the performance indicators of these?
4. How and where do you differ from your competitors? Many recruiters take for granted that every other recruiter does what they do. Think about the recruiters who do not interview, skills test, reference check or any number of things which you might do.
5. Where in the market do you sit in terms of price? Are you Gap or Gucci? Why are you there? Who is your target market?

These are some preliminary questions which every business needs to answer. Once you know the answers, you are in a much better position to counter a client's price objection. Here are some helpful questions to use when a client uses the: “you're too expensive” objection:What do they want:

1. Who is the decision maker you are selling to? When they say expensive are they coming from a procurement viewpoint where they want a low price unit? Or are they coming from a supervisor/managerial point of view; you need to understand how and what they will be measured on in their companies; e.g. retention, low prices, increased profitability etc.
2. Value vs. Price comparison; this can be used depending on who you are selling to and what their KPI's are. If procurement; they want low prices, so you could offer a bulk discount for e.g. 10 placements per annum But ensure you give this discount as a rebate just like when you get your tenth coffee for Free at your local cafe as you have no guarantee they will have 10 placements or that they will give them to you, then potentially all you have done is give them a heavily discounted first coffee! If your fee is 18% and the salary is $100k, then the fee would be $18k. For 10 placements, this would be $180k. Your rebate might be that for every $100k they spend with you, they get a 2% rebate in the form of a credit towards their next placement. 2% of $100k = $2000 off their next placement. This way the client has skin in the game and will continue to use you to get their rebate or 'free' coffee (provided you give them superior service of course). Also consider that in a skills short market, there is even less need to discount as you can most likely persuade the client's competitor to hire that quality candidate instead!
3. Ask them:”expensive compared to what”? Do they mean that they can recruit themselves and 'save' the $17,000 fee, but have you gone through a cost comparison with them i.e. shown them what their time and effort is worth? And are they the best one for the job? What on-going training do they undertake to stay abreast with recruitment methodology and industrial laws? Would they e.g. do their own plumbing? They probably could but more than likely it wouldn't be as good a job and occasionally they may even have to get a professional in to fix the original problem and the one caused by their own attempts.
4. What is it costing them in time to do their own recruiting? During the GFC some businesses reverted to doing their own recruiting. Some companies were looking for a while, but had to go without the desired staff member for most of this year. What was the cost to the business in reduced revenue? Remember it costs money to make money.
5. It is tax deductible! Depending on whom your client is they may or may not be aware that fees paid to a recruitment company are fully tax deductible ( in Australia as a cost of running your business)

I know some companies have slashed their fees during the past 12 months but it becomes difficult to increase your fees again just because you think the client can afford it.If and when you lower your fees, it may be a special offer for the next 45 days that all jobs taken and placed in that timeframe will be at 12% if exclusive and 50% of the total fee paid up front. Or it may be that you have varied levels of service i.e. Basic service @ 12%, Full service @ 16% and Deluxe service @ 20%.Once you know your differentiation and charge accordingly the price objection will actually disappear, just like no one would argue that a BMW and a Toyota should be the same price!