Architects: Stop competing with each other on fees!!
Why the discounting trend is just a race to the bottom.
For many Architectural studios, this pandemic has wreaked havoc.
Pipelines have shrunk, work is not as stable and with blood in the water, the sharks are looming.
Unfortunately, the “discounting trend” in architecture has reached fever pitch, with some architects low-balling their competition by offering clients ridiculously low fees.
I feel for the studios who are just trying to keep their heads above water however this creates a myriad of problems, for now, and in the long term.
Discounting will only attract low paying clients, force you to compromise on quality and damage your reputation. You could also be ‘that’ type of studio that goes in with a low fee then makes it up with a glut of variation fees; causing clients to become very annoyed and damaging any chance of repeat business.
When the conversations are more about money than design, it also creates a pretty glum environment for your staff.
You are forced to produce a fast, lower quality outcome that is often in opposition to the ethos of your practice.
Lower fees = less time spent = lower quality work OR running projects in the red to try and produce champagne on a beer budget.
In the long term, your work is your reputation; if you are delivering average work, how can you expect to increase fees again
A successful firm who values their worth will always outlast others.
So, how can you avoid competing on price and still win enough work to make a healthy profit?
Stop chasing the wrong clients!
Be clear on who you are as a practice, your core offering and differentiators.
Know your niche
Don’t try to be all things to all people unless you are large and diverse enough to warrant this.
Set a clear Business Development Strategy.
Target specific clients that align with your ethos, as well as expertise; take time to build strong relationships. Listen, really listen to them.
When you understand what want and need, you can create a clear value proposition that makes them want to work with you, even when you are not the cheapest.
Invest in being good presenters.
Be honest, authentic and sculpt a narrative that speaks to who you are as well as how well you understand the client and respond to the brief.
Keep your standards high
As we all know, bad news travels faster than good. A good reputation is a valuable asset, maintain it by keeping checks in place internally as well as externally.
Seek feedback
Not just from your clients but also from prospects you didn’t win over. Investigate where improvements can be made and make those changes.
How is your studio finding this competitive climate? Have you been pressured to submit low fees?
Architectural Consultant | Aligning Practice Brand + Vision with Delivery Excellence
4 年Love it thanks Suzie, a deftly targeted value proposition is the antidote to commodification
Design Director - Design and Development at Diriyah Gate Development Authority
4 年Pricing jobs to gain cash flow is risky business especially if you have to provide a level of service required by your PI insurance. Failing to deliver those services can be catastrophic and can negate your level of cover. Unfortunately the profession is dying and being taken over by those that can manage the design process more efficiently, namely design managers under the auspices of contractors and developers under D&B.
Structural Engineer
4 年Equally applicable and valid for structural engineers in the domestic housing sector. Consistently seeing some consultants submit low fees to win the job, then excluding items from the scope or charging extras/variations along the way. Or producing rubbish documentation because their fee won’t allow them to document it properly. Client thinks they’ve saved $5k on fees, only to end up with a design that costs $10k-$50k more to build. You get what you pay for, folks.
Senior Design Manager - NEOM, Facilities Planning Division
4 年I recall from one of my first jobs after Uni - we had put in a Fee Proposal for a job, however the client was playing us and another consultant, going back and forth trying to get us to undercut each other. My boss had had enough and decided to call the other consultant. What he basically said was "I don't know your price and you don't know mine, however I suggest that we stop this undercutting game and each stick to our original figure". The other consultant wholeheartedly agreed and it stopped there. No collusion, no price fixing, just an honest gentleman's agreement. I don't recall which company got the contract, but it doesn't matter - it's the principle that is important. I have always remembered this exchange as a good life lesson.
Client Side & PMC Project Management, Development, Delivery and FM leader with 14 retail malls, 3000+ hotel keys and 2 nos. mixed-use developments, luxury residential developments and FM leadership experience.
4 年I have seen this in another market I know very well, and it's been happening there for a few years. The undercutting bid approach may end up working out for the consultant, if they know the Client very well and believe that this Client has a history of numerous changes and variations. It's still a very big gamble. What eventually ends up happening goes together with the well known idiom @, "you get what you pay for." And based on the other market I referred to earlier, the results will include: 1) Lesser quality of design. 2) Low quality design leading to higher construction cost. and, 3) Items 1 and 2 leading Clients to consider D&B projects, or ECI (Early Contractor Involvement) where only a concept level design is provided by consultants. It is not uncommon for consultants to cut their margins in a challenging market, but there is a big difference between operating with reduced margins, and gambling a bid at cost or even below cost.