Why you should always know your BATASFI when negotiating fees with clients

May 23, 2023 | Pricing, Sole practitioners

This is probably one of the most valuable tips I share during 1-2-1 mentoring sessions. It’s not just relevant to sole practitioners though. Every client facing partner needs to know their BATASFI when negotiating fees with clients. Indeed it’s equally relevant to service providers way beyond the accountancy profession.

I even know some accountants who have shared thus thinking around BATASFI with those clients for whom they provide business advice.

BATASFI stands for the: Best Alternative To A Significant Fee Increase. In this context, ‘Best’ means: The most acceptable outcome to you if the client won’t agree to your proposed fee increase.

Let’s imagine two accountants. Harvey and Mike. They each have clients who are getting a good deal, as the fees they pay are below what other comparable clients are paying for similar services.

Mike does what most accountants do when they eventually build up the courage to raise the issue with their client. He calls his client to explain that next year’s fee will be somewhat higher than the client has previously paid.

The client isn’t happy. Regardless of how well Mike attempts to justify the fee increase, the client threatens to take their business elsewhere. Mike doesn’t like that idea so capitulates. He is only able to get agreement to a much more modest (inflationary) fee increase.

Afterwards he feels disappointed. Bullied even. He gave in. He didn’t get what he wanted. He’s not happy. But, hey, at least he did get agreement to a nominal increase in the fee and he didn’t lose the client. (Yet).

The second accountant, Harvey, makes a similar call to his client. They also have been paying way less than other comparable clients.

Before making the call Harvey considers his BATSFI. What would be his Best Alternative To A Significant Fee Increase? What would he consider to be an acceptable outcome to the discussion?

Harvey and I had discussed this and concluded that the most likely outcomes of the conversation would be one of the following if the client doesn’t agree to Harvey’s proposals. So Harvey needed to consider which of these outcomes he would consider to be his BATASFI:

  • A smaller increase, still significant but allowing the client to negotiate him down a tad
  • Staggering the proposed fee increase over a period of months/years
  • A modest (inflationary) increase that keeps the client happy (for now)
  • The client reluctantly accepting the fee but threatening to look around for a new (cheaper) accountant
  • Resigning from the engagement with the client if they won’t accept the proposed increase

I have lost track of how often I have introduced my clients to the BATASFI concept. It is based on the BATNA negotiation tool – Best Alternative To A Negotiated Agreement. The term was first used by Roger Fisher and William Ury in their 1981 bestseller, Getting to Yes: Negotiating Without Giving In.

In 1-2-1 mentoring conversations I have role played fee negotiations with accountants to help them identify their BATASFI. The BEST, most acceptable, alternative can vary as between clients and between accountants. The options and amounts can vary too.

In the first example above, Mike felt bad about accepting a modest fee increase that seemed to keep his client happy. I know accountants who, in some circumstances, would accept that as their BATASFI. At least they don’t feel so bad, as they kept the client.

In the second example, Harvey was clear beforehand that he would resign from the engagement if the client couldn’t be persuaded to accept the new fee proposal. That was Harvey’s BATASFI.

During our role-play ahead of him calling the client, we considered Harvey’s options and how he might address the client’s reluctance to agree to a significant increase in their fee. This wasn’t one of those situations where an accountant disliked the client.

I helped Harvey to realise that he was being unfair to himself and to his other clients who were (mostly) paying a fair fee for the work he did for them. Harvey had not previously had the courage to raise the question of fees with this client.

During such role-plays (or simply during 1-2-1 mentoring conversations) I often help my clients to unpack their thinking and fears around discussing significant fee increases with clients. The options can be much more varied than you might think – and so, therefore, are the BATASFIs.

When Harvey did call his client and explained the position they weren’t happy. But Harvey told me later that he stuck (pretty much) to the script we had role-played. He was clear that either the client would need to start paying the increased fees or Harvey would help them find a new accountant. That was his BATASFI.

If he had lost the client he would have been happy that this was better than continuing to work for less than he considered to be a reasonable commercial fee.

We had also discussed how, if this happened, he might expect to replace the lost fees. He was ready for this. It wasn’t the ideal outcome but, letting this client go was, for him, the Best Alternative To A Significant Fee Increase.

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