It Ought To Be Illegal

By Landy Chase

The Minimum Wage Law, established by the Fair Labor Standards Act of 1938, guarantees a minimum wage, under law, for most workers.  I’m sure we can all agree that the concept of guaranteeing all workers a reasonable minimum wage commensurate with their efforts is one that should be protected by law.

You might be unaware, however, that the FSLA specifically excludes outside sales people from this protection afforded other workers. In other words, it is perfectly legal in this country for another person – in this case, a buyer - to take your income away from you.

That’s exactly what happens if you lack effective negotiation skills. A customer balks at the price that they are quoted for goods or services, and you respond by negotiating your price – and your corresponding commission – downward. So, in effect, by agreeing to a lower price without a corresponding drop in value, you willfully agree to take a pay cut.

This practice, of course, isn’t illegal. However, it should be.  Nobody that you do business with should have the ability to take your hard-earned income. As a business person providing goods and/or services, you invest a tremendous amount of time, effort and expertise to provide your client with value. I can’t remember the last time my dentist, florist, trash collector, veterinarian, accountant, auto repairman, or lawyer haggled over the fees for their services. In fact, I am not aware of any other service-based occupation other than sales where a person’s income is expected to be negotiable.

So why should yours be?  I regret to inform you that it is highly unlikely that the government is going to intervene in this matter on your behalf. (Part of the problem is that you are in one of the highest-income occupations). Since you aren’t eligible for a hand-out, you must take steps to protect what is rightfully yours. This means that your policy on negotiating is simple and straightforward: you do not reduce your price without a corresponding decrease in value. If you were to recognize the act of negotiating on price for what it is – a cut in your compensation – you might stop doing it. I can assure you that you would then add thousands of dollars to your income in the process.

This isn’t as difficult to do as you might think. However, you need to learn how to handle price objections properly when confronted with them.

First of all, most sales people assume that, when a buyer wants to negotiate, they are beginning the negotiation process in a position of weakness. This is usually not the case.  Most of the time, your buyer is on little more than a “fishing expedition” when they ask you to lower your price. Furthermore, if the following two conditions are in place, you, not the buyer, are in a position of strength. These are:

• The customer has already decided that they want to buy from you, and

• The customer does not feel that your asking price is unreasonable.

These two conditions depend entirely on the premise that you have done a good job of providing value in your proposal.  If that is the case, and the above two conditions exist, then dropping your price upon request is a very bad idea, because there is no basis for doing so.

The next time a client asks you to lower your fee, or drop your price, take a deep breath and say, “I’m sorry, but I can’t do that.”  (If reciting this phrase makes you feel queasy, say it standing in front of a mirror, repeatedly, until the feeling goes away).

Then explain why: “Our policy on this issue is that it would be unethical for us to charge our clients different prices for the same amount of value”.  Believe me, they will understand – because you are absolutely right. They will also respect you for standing your ground.

Of course, we still have the issue of a difference between where your buyer is (what they want to spend) and where you are (what your current price is). Once you’ve established this by asking, “how far apart are we?” go back to your initial recommendation and look for ways to alter the initial solution in a way that serves to get the price to a point of mutual agreement.

By doing this, you avoid compromising your margins. In other words, you will be paid what you are supposed to be paid based on what is being purchased. If the two conditions discussed earlier are in place – that they want to buy, and don’t feel your asking price is unreasonable – in most cases you will end up with a win-win transaction. This means that the buyer gets a fair and equitable solution at a fair price, and you were appropriately paid for your time and effort.

I’m confident that someday it will be illegal for buyers to stick their hand in your pocket and take your income. In the meantime, you must take the law into your own hands. Upgrade your negotiating skills and keep more of what is rightfully yours. After all, you earned it.

Read other articles and learn more about Landy Chase.

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