Business of Architecture Podcast 256: Win Without Lowering Your Prices
"Wow, that's a lot of money … I had no idea it was going to be that much!"
If you've ever heard this before, then you've probably presented a proposal to a client.
As architects we hear this from our clients all the time when we give them our proposals.
There's a specific reason why they react this way.
It's because their expectations don't match reality.
When our clients tell us something is "too expensive" or "more than they were expecting," what do they base that on?
Is there any form of reality attached to their expectations?
Probably not.
They've heard that their brother-in-law did something for XX$ /sf, or some mysterious family friend tells them that it shouldn't cost more than "X."
Yea, right.
All of their wishful thinking isn't going to change reality.
Last week two things happened to me that made my jaw drop.
I was reminded how utterly clueless the average person is about building design and construction - and I'm not just talking about residential clients - you'll find this with more 'sophisticated' clients also.
I was over at a friend's house who just added a garage behind his home.
He did most of the work himself, and he was surprised that it ended up costing so much.
"I just wanted something a little bigger than the sheds available at Home Depot!"
FYI, the sheds at Home Depot cost USD 3,500, his building was over USD 15,000.
He gave many reasons why the building cost more - the draftsman charged "way too much" and specified the "wrong details," the City made him do things that were unnecessary, etc.
I asked him why he thought he got ripped off.
Turns out he got his information from his "contractor friends" who confidently said that "we don't build like that around here."
Huh.
I don't know what these "contractor friends" have been building, but it won't pass code.
I took a look at the 'overpriced' plans his draftsman did (he called him an "architect"), and the drawings looked just fine - I didn't notice any 'wrong details.'
Well, as it turns out ...
"It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so." - The Big Short
This applies to clients both small and large, residential and institutional.
Another example:
This week I was coaching one of the firm owners in our A-Team Mastermind who does high-design focused work for Higher Education Institutions.
He told me of his frustration with potential clients not 'getting' the value that they get when they work with his firm.
"Our fee was double some of our competitors. They went with the cheaper option even though I tried to explain that you get what you pay for. That fee wouldn't even be enough for us to pay the engineers."
The University went with the cheaper option.
I'm sure they'll be knocking on his door in 18 months.
“The bitterness of poor quality remains long after the sweetness of low price is forgotten.”
One way to solve this problem is what I call "right-setting" your potential clients (a.k.a. set them aright).
Educate them about all the headaches, problems, disasters, and full-blown red-light emergencies that can happen if they don't compare apples to apples, AND on the flip side - all the peaceful, happy nights they'll get from working with you.
Fortunately, with the amazing technology we have nowadays, it's easier than ever to educate your clients.
Here are 5 effective ways to educate your clients:
- Record explanatory videos
- Write articles
- Record a podcast
- Give seminars/webinars
- Write a book
For more information, listen to this week's podcast episode above.
Do you have any horror stories of when a client was too focused on the upfront-cost and underestimated the long-term consequences? Tell me about it - head over to the Business of Architecture Facebook group and let me know!