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The Practice Management Knowledge Community (PMKC) identifies and develops information on the business of architecture for use by the profession to maintain and improve the quality of the professional and business environment.  The PMKC initiates programs, provides content and serves as a resource to other knowledge communities, and acts as experts on AIA Institute programs and policies that pertain to a wide variety of business practices and trends.

    

  • 1.  Simple proposal strategy yields 300% fee increase

    Posted 03-03-2017 11:20 AM
    A Dallas-based firm recently shared with me their success with a little-known proposal pricing strategy.

    The fee for the project went from $40k to $120k - at the client's request.

    That's an increase of $80k in the project fee for this small firm (300%).

    This means less time hunting for the next project.

    Here's how it worked:

    Instead of offering only one service option, they offered 3 service levels.

    The lowest service level offered 'builder set' plans and details (which is what this firm typically offers).

    Level 2 offered fully specified drawings and details.

    The premium level included level 2 plus full contract administration through the construction phase.

    The clients opted for the premium service level.

    I write about this strategy a lot because it just works.

    Offering multiple service levels is one of the easiest 'profit levers' you can use to increase your firm's revenue (and give your clients more options and better service).

    I go over more of the details and psychology behind this strategy in this article here (https://www.businessofarchitecture.com/business/write-killer-architecture-proposal/).

    Let me know … have you used this strategy successfully? Or what questions do you have about using it?

    ------------------------------
    Enoch Sears AIA
    Founder and Publisher
    Architect Business Institute
    Visalia CA
    ------------------------------


  • 2.  RE: Simple proposal strategy yields 300% fee increase

    Posted 03-06-2017 05:51 PM
    From the way I read the laws in our state, we can only offer level 3 services.

    The State uses a term called, "Coordinating Professional" and they require the Coordinating Professional to aquire the services of any necessary licensed services, under the coordinating professional . . . and each shall provide construction administration services.  Although it happens, there is no wording (that I find) for providing less than level 3 services.  That's the minimum.  I am now offering expanded construction period services.

    ------------------------------
    Robin Miller AIA
    MSH Architects
    Sioux Falls SD
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  • 3.  RE: Simple proposal strategy yields 300% fee increase

    Posted 03-06-2017 06:12 PM

    Mr. Sears,

     

    Thanks for sharing ...

     

    Yes, we've used this proposal strategy for years and it works well to help clients understand what the concepts are behind service levels and fees.

     

    We don't see 300% increases in fees, but will boast that we have clients, services and fees that are most often well-aligned.

     

    Often we will analogize the concept as the same airlines use to price seats on an aircraft:  Coach, Business and Forward Cabin.  All offer safe and [usually] on-time travel from one point to another.  The differences come in the services offered with the same base product – in our case the solving of a design problem.

     

    Less time searching for the next project.  That is something we can all get behind.

     

    --Scott

     

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    Scott Ryan

    ryangrouparchitects.com