[Roderick Anderson]

We are mandated to use percentage based fees for our services in my location. The percentage is fixed as a minimum depending on the services, but the variable is the projected cost the percentage is calculated upon. Many competitors will cheat by estimating their fees on unreal and impossible project costs or price/sq.meter.

What I’ve done is flip the formula around, and charge the firm’s fees in three packages, with different scope, so I place the power in the client’s hands to choose, but have taken away the fee haggling and negotiation.  In the three packages, I put a dollar amount per square meter for each package, and this way I have control of how much I want to charge for each service package.

The results have been staggering. Since I put this into effect there have been no price negotiation at all, and all but one of the clients went for the premium package with the highest fee price.

[Roderick Anderson]

Hello everybody…. just got confirmation from a client for a new project, and once again the client has chosen the Premium package with all the services included…. no price haggling ! This is the best strategy I’ve used in years !

[Roderick Anderson]

Jessica Spencer this specific situation has not happened to me, and I believe that offering to credit the NOR is important as a hook to get the client to commit to the NOR to begin with. What you should make sure is that always even your most basic amount of work should be higher than what you charge for the NOR, so you can always charge a difference. If you think the job is small and there is a chance that the hired work is equal or lower than what you charged for the NOR then don’t offer to credit it. Now you are in a tough pinch, unfortunately. I am not sure I have any ideas on how to manage this.

[Roderick Anderson]

Luke Durack, I’ve tried now a few times the concept of the proposal with the 3 options of services packages, which I believe is a variation on the concept of productizing our services, and I have had very positive results.

I think overall the change in strategy is basically that this way we give the clients options in what services they want to have, whereas before, I would focus on sending a proposal that would include a long list of services included, thinking this would impress the client, but at the end of the day, the client would always negotiate the price down no matter what.

This way I give them the option to choose a price level, but it is up to them to make the decision if they are willing to receive less services or not. In my activity, they haven’t chosen to receive less services, so they go for the top package.

 

[Roderick Anderson]

Bruce Mitchinson thanks for the recommendation about the book by Alan Weiss. Started reading it, but already implemented one of the ideas in the book’s introduction, which is to use a short final agreement that simply reaffirms the main important ideas on the proposal. I thought this was a great idea that I had never thought about. Put it into use and worked great also, since it was an easy document for the client to review and sign. Thanks !!

[Roderick Anderson]

Go Figure!! The client just responded saying he wanted the premium package. No negotiating price down, he’s negotiating time for execution but that’s fine!!

[Roderick Anderson]

Richard Petrie maybe this is a good topic for discussion in this week’s call, I hope to try to be able to make it for the call this time.

[Roderick Anderson]

Hey Richard, you are correct in that there is always the chance they go cheap, and that is where it gets tricky. At least in my case I am regulated by my local architectural guild and there is a minimum amount of services I am mandated to provide, so it was tough coming up with the added services and features for the other two options and to create the “perception of value” in the higher option. We’ll see, I should hear back from the client later in the week.

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