Proposal Mistake #3: thinking fee is directly tied to value

Here's the big secret about pricing architectural services and writing a winning proposal: the fee you fetch isn't directly related to your value as an architect.

What?!?

Now, before you assume I have some screws loose (which I do) and hit that back button, hear me out.

IF this is true, it's great news!

Because it means that to earn substantially more than you now make, you don't need to change what you're offering (or work any harder doing architecture).

You don't need to be the best architect on the block.

Com'on Enoch, this is architectural heresy —

It goes against conventional thinking setting fees and writing proposals.

However, this isn't a secret — many architects have this figured out, and they use it to their advantage.

Read on to discover why this is true, and how you can use this fact to write killer, client-getting proposals that fairly compensate you — and even give you a healthy profit margin.

Value is Perception

Let's illustrate with a story.

Imagine you visit the Tiffany's & Co. store on Union Square in San Francisco.

As you step through the tall glass doors, the noise of the city disappears, and you hear only the soft hum of the climate control and the pleasant ambient music.

An attractive attendant greets you and ushers you back past the public retail area to a private waiting room where you take a seat on a plush velvet sofa.

The attendant disappears through a door, shortly emerging with a beautiful diamond necklace and places it in front of you.

Pause — hold that thought.

Now compare this experience to a visit to the local strip mall jewelry store.

As you approach, you see a sign that says, “2 for one earings every Thursday.”

Inside you find an identical diamond necklace to the one at Tiffany's.

Which one would you expect to pay more for?

In our example, the actual diamond necklace didn't change — but the packaging around the diamond necklace did.

By packaging, I'm not referring to physical packaging, although that's included.

Packaging refers to the environment you create around yourself, your firm and your proposal.

Packaging includes the physical presentation of the proposal, your brand image, even your clothes and your demeanor.

This is why branding is important, despite what some people might say otherwise.

In truth, people pay for the perception of value, not the actual value delivered.

Focus on Influencing Perception, Not Reducing Fees

Winning proposals is more about influencing perception than reducing fees.

Read that again: winning more proposals is more about influencing perception than discounting your fees.

Dr. Robert Cialdini explains the psychology behind this – it's difficult for the mind to separate the presentation of a product or service from the merits of that product or service itself.

He shows this in his landmark bestselling book, Influence: The Psychology of Persuasion.

A friend called Cialdini, happy about some news she thought he'd appreciate as a professor of psychology.

She owned a store selling Native American jewelry and was headed out on vacation.

Even though it was high tourist season, some of the jewelry wasn't selling.

Before she left, she scribbled a note “Everything in this display case x ½ off” and handed it to her associate, trying to get rid of it, even if at a loss.

Turquoise Jewelry
Cialdini's turquoise jewelry story shows how perception defines value

She wasn't surprised when she returned to discover that every article had sold.

She was shocked, however, when her associate revealed that everything sold for twice its original price because the associate had misread the “½” as a “2.”

Cialdini explains:

The customers, mostly well-to-do vacationers with little knowledge of turquoise, were using a standard principle — a stereotype — to guide their buying: ‘expensive = good.' Thus the vacationers, who wanted ‘good' jewelry, saw the turquoise pieces as decidedly more valuable and desirable when nothing about them was enhanced but the price. Price alone had become a trigger feature for quality; and a dramatic increase in price alone had led to a dramatic increase in sales among the quality hungry buyers.

One last example.

How much would you pay for a spoonful of common dirt, a spoonful of the stuff you'd find at a construction site?

Absolutely nothing, I'd imagine — my kids constantly grumble about having to sweep this kind of dirt off our kitchen floor.

Well, let me introduce you to Brandon Steiner.

Brandon Steiner is the founder of Steiner Sports, a 50 million dollar organization with 100+ employees that sells sports memorabilia.

Brandon Steiner
Entrepreneur Brandon Steiner built a $45 million dollar business empire selling dirt.

Now let's say that instead of common dirt, the dirt is from Yankee Stadium — dirt that Mickey Mantle, Babe Ruth, and other baseball legends once graced with the soles of their shoes.

Steiner understands packaging.

In 2009 he finalized a deal to buy Yankee stadium for $11.5 million and another $5 million in demolition and other fees.

He parted out the stadium and sold everything, including the dirt.

Over the years Steiner has sold multiple millions of dollars of dirt.

And right now these vials of dirt are proudly displayed on the living room walls of Yankee fans from Yonkers to Los Angeles.

Steiner went from a poor, fatherless kid from Scarsdale, NY to building a multi-million dollar empire — because he understands packaging.

So the next time you're feeling frustrated by a client trying to hammer you down on fees, or not understanding the value you bring to the project, remember Brandon Steiner, a normal guy from Scarsdale, New York, who sold dirt for millions.

Instead of fo

“The margin on dirt is incredibly high,” adds Steiner.

ABOUT

ENOCH SEARS

Enoch Bartlett Sears is the founder of the Architect Business Institute, Business of Architecture and co-founder of the Architect Marketing Institute. He helps architects become category leaders in their market. Enoch hosts the #1 rated interview podcast for architects, the Business of Architecture Show where prominent guests like M. Arthur Gensler, Jr. and Thom Mayne share tips and strategies for success in architecture.

4 Responses

  1. Is there any chance you could talk about the “packaging” in greater detail? I would really like to know what is specifically included in the general idea of “packaging” for a licensed architect and what it looks like to take the “packaging” to the next level.

    1. Hi Nicole. There is a lot that goes into packaging and it is difficult to address all aspects in a comment reply. In terms of how you package your offer, think about positioning and branding.

      Positioning = the position you take in the market with respect to your competition. Example: We are the leading designers of Skilled Nursing Facilities.

      Positioning yourself at the top of the market is one of the strongest strategic positions you can have. Sort of like Tiffany’s. people expect to pay top dollar because you are a top firm.

      So all the packaging should support that – your website looks high class, your portfolio is high class, you have an assistant that answers the phone, etc.

      Everything the client experiences about you is the packaging. These things are built over time, not in a day. But it’s worth it.

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