Are your Clients prepared to pay for sustainable design services?
In an industry that’s plagued by low fees and high competition, how can you sell high quality (and higher-priced) design services like LEED and WELL certification?
Today we’re going to answer this question by exploring a relatively new field of research called Behavioral Finance.
Before we review the research, let’s start with the basics, what’s the difference between the LEED and WELL Certification programs?
The Differences Between LEED and WELL Certification:
Despite the differences both LEED and WELL, certification services share many of the same goals. For example, both the LEED and WELL certification programs address water quality, air quality, materials, and innovation.
The Similarities Between LEED and WELL Certification:
How to make LEED and WELL Certification irresistible:
So now that we understand the differences, and similarities, which service should we be offering if we want all Clients to prioritize sustainability?
Option 1 – LEED Certification:
If you were thinking that LEED certification is the best option because of its proven track record and suitability for a large range of project types… then you’d be wrong!
Option 2 – WELL Certification:
Alternatively, if you were thinking that WELL certification is the best option because of its holistic approach that’s centered around human health and wellbeing… then you’d also be wrong!
Solution:
Neither of the above two design service options, in isolation, are going to encourage more Clients to commit to a sustainable design service!
Yes, both LEED and WELL Certification are fantastic design services, and yes, they’re going to significantly increase the sustainability credentials of any project.
However, both LEED and WELL Certification services will require a higher level of commitment from your Clients, so if you only offer Clients one of these design service options, in isolation, then your fee proposal is at risk of being overlooked or aggressively negotiated.
If you’re not careful, your high-quality sustainable design service will become a niche service, accepted only by the rare few.
(Note: To help you with your fee proposal and negotiation strategy we’ve created a FREE Fee Proposal Mini-Series. To learn more click on the image below):
What’s wrong with single service fee proposals?
The reason for this is simple.
As discussed in “How Architectural Fees Can Benefit From Anchor Numbers” nobody really knows how much anything should cost.
As human beings, we all rely on benchmarks to help us make purchasing decisions.
If you only provide the Client with one design service option (and one fee level), there are no service benchmarks from which to measure your proposal.
In the absence of service benchmarks, Clients will focus on the only benchmark that’s been provided – the design fee! which explains why your proposal is at risk of being overlooked or aggressively negotiated.
However, if you change your approach and offer the Client a range of design service options at different price points then they’ll have the design service benchmarks they need to measure the services, understand the benefits, and make an informed purchasing decision.
Why Clients won’t choose the lowest design fee option:
Now you may be thinking that if you offer the Client a range of design service options at different price points, won’t they simply choose the most affordable (and least sustainable) design service option?
No, despite what you may think, that’s not how human behavior works… when the options are presented correctly most Client will choose to avoid the most affordable design service option in favor of a higher quality version.
To explain this concept further let’s review a research study from a book by William Poundstone called “Priceless: The Myth of Fair Value”.
The study, conducted by Joel Huber and Christopher Puto at Duke University, in North Carolina, went something like this:
Research Study:
Imagine for a moment that you’re purchasing beer from your local corner store. As you reach into the fridge, you’re presented with just two beer options.
There is a premium beer priced at $2.60 displaying a quality rating of 70 out of 100. Or there is a bargain beer priced at $1.80 displaying a quality rating of just 50 out of 100.
Which one of these two beer options would you choose to purchase?
When this question was posed to a group of business students’ 66 percent of them chose to purchase the premium beer, while only 33 percent opted for the bargain option.
So far this tells us very little about human behavior… but let’s see what happens when we introduce a third, more affordable beer option, to the equation.
The third beer option is called the budget beer; it’s priced at just $1.60 and includes a quality rating of just 40 out of 100.
So, I have another question for you:
Now, which one of these three beer options would you choose to purchase?
When this question was posed to a new group of business students, nobody chose to purchase the low-quality, budget beer.
However, despite the lack of interest, the budget beer still seemed to play an instrumental role in influencing the student’s behavior.
You see, on this occasion, the number of students choosing the bargain beer rose from 33 percent to 47 percent, while the number who chose the premium beer dropped from 66 percent to 53 percent.
Intrigued by these results Huber and Puto tried one last experiment.
So, they removed the cheapest (budget) beer from the table and replaced it with a super-premium beer.
The super-premium beer was the most expensive, and highest quality beer option available. It was priced at $3.40 and carried a quality rating of 75 (just 5 points higher than the next beer down – the premium beer).
So, I have one final question for you:
Now, which of these three beers would you choose to purchase?
When this question was posed to a group of business students, only 10 percent chose the highest quality, super-premium beer, however the number of students wanting the middle option (premium beer) had risen from 66 percent (in the first round) to 90 percent (in this round).
Yes, that’s right, simply by changing the beer options researchers could change the purchasing preferences of this group of students.
Conclusion:
So, what this research, and other similar research is teaching us about human behavior is that everything is relative.
How much people are prepared to pay, and which product (or service) people choose to purchase, has far more to do with how the product (or service) is presented than most of us would like to believe.
It’s not the beer in isolation that influencing our choice, it’s the options that are available!
So, if you want to encourage Clients to choose a high quality, sustainable design service, then be sure to provide them with a range of different design service options, at different price points, so they can see the benefits that a higher priced design service has to offer.
Pricing Options and LEED / WELL Certification:
Which is precisely why these third party, scientifically based, sustainability programs like LEED and WELL certification play such a critical role in promoting sustainable design services.
Just like the quality ratings of beer, these third-party programs provide us (and our Clients) with tangible benchmarks from which to measure and understand the different types of sustainable design services available.
When the different service options are presented correctly (in a fee matrix) you’ll be amazed at the number of Clients who choose to prioritize high quality, sustainable design services.
Not because you’ve told them to, quite the contrary, because you’ve given them the freedom to choose, and by providing scientifically based benchmarks, you’ve made their choice very easy.
The Problem with WELL Certification services:
Now there is just one problem!
To date, WELL certification only applies to a limited number of projects including new and existing buildings, office Interiors, and Core and Shell projects.
However, Biophilic Design which is based on the WELL certification principles can be applied to any type of project including buildings, interiors and/or urban environments.
To see an example of how to offer Biophilic Design services as one of your design service options check out the Fee Proposal Workshop.
Where to go from here?
For the last decade, we’ve been showing Architects and Designers how to win more clients, better fees, and less scope creep by changing the way you present your design service.
To show you how we achieve these incredible results we’ve created a FREE Fee Proposal Mini-Series. To learn more click on the following link: https://blueturtlemc.com/fee-proposal-mistakes/
