Tired of lowering your design fee to win new work?
You’re not alone!
Today I want to show you how to address Clients who ask for lower design fees so that you can stop the race to the bottom.
Let’s get started by looking at a common design fee negotiation scenario:
A new client approaches you, says they’ve heard a lot of great things about your firm and would like to work with you.
Does this sound familiar?
They ask if you’d be interested in submitting a fee proposal for their new and exciting project.
How can you resist?
You’re keen to build your portfolio and win more work… so you respond by confirming their requirements and then proposing a fair and reasonable design fee.
The next couple of days pass without a word from the client… but then, out of the blue, the client gets back to you and says:
“We’d like to offer your firm the project; however, there is one problem… your design fees are much higher than the market will allow right now… would you like to reconsider your proposal?”
Hmm… that was not the response you were hoping for!
You’re now faced with the negotiator’s dilemma… if you say ‘no’ to this request… you risk losing the project… however if you say ‘yes’… you risk losing your fee… so what should you do?
In a spirit of compromise and believing the project is all but yours, you respond with an enthusiastic reduction hoping it will hit the right spot and finalize the deal.
(Note: To help you with your fee proposal strategy we’ve developed a FREE Fee Proposal Mini-Series)
Unfortunately, despite good intentions… your generous discount is met with yet more hesitation.
The Client is still keen to hire your firm… but they’re not quite ready to sign the contract.
So they respond by saying:
“Thank you for your revised proposal. We’re getting closer, however, we’re not quite there yet. If you could just sharpen your pencil a little more we may have a deal”
Before long you’ve entered yet another round of negotiations and experienced yet another design fee reduction… there must be a better way!
So, what’s the best way for Architects and Interior Designers to respond when asked to lower their design fees?
- First you must understand the client’s interests and then,
- you must ‘Create Options for Mutual Gain’ based upon their interests.
So, the next time you’re asked to lower your design fee, don’t just lower it hoping you’ll hit the right spot… because you won’t!… you’ll only encourage more negotiations.
Instead, start the process by applying the following 2 step negotiation strategy:
Step 1: Open up the dialogue
This requires asking the right questions so you can understand their interests.
Step 2: Create options for mutual gain
Then, once you have an understanding of their interests, respond with some ‘options for mutual gain’ that address their interests.
For example, your fee reduction could be partnered with:
1. more favorable payment terms (discount for early payment),
2. decreased responsibility (reduction in scope), or
3. an opportunity for a success fee (deferring a portion of the fee until a specific goal or milestone is met).
Before you respond, be sure to ask the client what they’d like to achieve.
This will allow you to shape your response around their interests – rather than your own assumptions.
Design Fee Success Story:
Now you may be thinking… does this really work?
Is it really possible to ‘create options for mutual gain’ and benefit from the results?
Well yes, it is… and as an example of just how powerful this strategy can be, I’d like to introduce you to an Architect by the name of Jo Cowen.
Jo Cowen is an ex-Foster+ Partners Architect who went on to start her own design firm called Jo Cowen Architects.
Shortly after starting the firm, she became frustrated with the type of project she was winning. She wanted the opportunity to work on big commercial projects but was only attracting small domestic projects.
So she decided to change her strategy. Rather than wait for work to come to her she’d approach her ideal clients with an ‘option for mutual gain’.
The strategy proved to be so successful that Jo Cowen now has a portfolio full of high-end commercial projects.
So how did she do it?
Well, rather than focus on the design service… she focused on her client’s interests and then offered ‘options for mutual gain’ based on their interests… it’s that simple!
So don’t wait until you get to the negotiation table!
The real power of this strategy comes from offering ‘options for mutual gain’ in your fee proposal document… and that’s what we’ve training Architects to do for over a decade.
To learn more about our approach and how we can help you win more work, higher fees, and fewer problems check out our FREE fee proposal mini-series: Fee Proposal Mini-Series: The 3 Biggest Fee Proposal Mistakes and How to Fix Them.