Today we’re looking at the science behind a successful Architectural Fee Proposal. We’ll show you how to provide certainty in an uncertain world (and why your Clients will love you for it!). Let’s get started:
You may think that an architectural fee proposal has little to do with the aviation industry and you maybe right.
However I couldn’t help noticing that at the end of a recent United Airlines flight, the flight attendant finished up by saying:
“We know you have choice when flying, so we thank you for choosing United Airlines for your travel arrangements.”
We all know that when purchasing airline tickets, the consumer has choice… and when it comes to the purchase of Design Services, the same is true.
This is why understanding the psychology of decision-making is extremely important to the success of your design firm.
Architectural Fee Proposals and the Ambiguity Effect:
When writing an architectural fee proposal one of the biggest (and least talked about) psychological challenges for Architects and Interior Designers to overcome is the “Ambiguity Effect”.
What is the “Ambiguity Effect”?
The Ambiguity Effect is the tendency to avoid options for which the probability of a favorable outcome is unknown.
This tendency is described in detail by Jonathan Baron in his book, Thinking and Deciding.
Baron discusses many cognitive biases but the Ambiguity Effect is particularly influential when potential Clients are choosing a Design Professional.
Baron explains that, as human beings, we prefer to avoid “unknown quantities” when making decisions.
Instead, when making decisions we will opt for certainty, rather than uncertainty, even when the probability of a positive outcome may be higher in the ‘uncertain’ option.
How does the Ambiguity effect work?
Imagine this scenario: You are presented with a bucket of balls, the contents of which you cannot see.
You are told that the bucket contains 90 balls – 30 of which are definitely red, and the remaining 60 are a mixture of yellow or black balls. The twist, however, is that you don’t know how many of the remaining balls are yellow and how many are black.
(30 red balls)
(60 yellow or black balls)
You’re then asked to choose one of the following options:
Option A:
When a ball is selected from the bucket, you’ll receive $100 if it’s red.
Option B:
When a ball is selected from the bucket, you’ll receive $100 if it’s black.
Which option would you choose A or B?
Let us know in the comments below 😊
Results:
When this experiment was conducted, the majority of participants leaned strongly towards Option A.
Why?
Because Option A provided them with certainty… they were certain that they had a 33 percent chance of receiving the $100 in Option A.
Whereas, Option B provided them with uncertainty… the probability of receiving the $100 in option B ranged from 0 percent to 66 percent.
They preferred the certainty of knowing the probability rather than the uncertainty, or ambiguity, of not knowing the probability… even though the outcome may have been better in Option B.
What if the options were different?
Imagine now that you are presented with the same bucket of balls… but this time your options are different:
Option A:
When a ball is selected from the bucket, you’ll receive $100 if it’s red or yellow.
Option B:
When a ball is selected from the bucket, you’ll receive $100 if it’s black or yellow.
Which option would you choose this time A or B?
Let us know in the Comments section below 😊
Results:
When faced with the second scenario, the majority of participants preferred Option B!
Why?
Because Option B provided them with certainty… they were certain that they had a 66 percent chance of receiving the $100 in Option B.
Whereas Option A provided them with uncertainty… the probability of receiving the $100 in Option A ranged from 33 percent to 100 percent.
How does this effect an Architectural Fee Proposal?
People want certainty! People avoid uncertainty, or ambiguity, even when it may pose a better outcome.
So, if certainty is so highly prized during the decision-making process, why do we tend to ignore this tendency when we’re creating our architectural fee proposal documents?
What does this mean for Architects and Interior Designers?
The problem of course is that providing design services inherently holds a lot of uncertainty.
Clients are not buying a finished product, they’re buying potential. They’re essentially buying the probability that we can deliver a positive outcome for them… and we’re responsible for selling this potential at a time when we don’t always know what the Client would like to achieve, and how feasible those outcomes may be.
It can also be challenging to offer guarantees of more tangible outcomes, like the number of apartments that may be achieved on a multi-unit residential development, or the time it will take for an approval authority to grant permission for a new development. These factors are also typically out of our control.
Not only would it be commercially foolish to make guarantees for things that are out of our control, but it would also be in conflict with the ethical codes that govern our professional conduct: 2018 AIA Code of Ethics and Professional Conduct Rule 3.301
So, how can Design Professionals provide certainty?
While we can’t guarantee the outcomes of our work, we can guarantee the documentation we will deliver to the Client.
Similarly, we can’t guarantee the Client will ‘like’ the design, but we can quantify the studies we will complete to create a functional and aesthetically pleasing design.
What do I mean by this?
We can provide certainty in our Fee Proposals by:
- listing the deliverables the Client will receive rather than simply listing what we will do – i.e. the Scope of Service,
- by adopting lump sum or unit rate fee structures in lieu of a percentage fee arrangement,
- by guaranteeing specific time frames for work that’s within our control, or
- by providing design & build contracts in lieu of design only contracts.
To learn more about fee structures visit: Which Fee Structure is Best for Architects and Design Professionals.
Where do you go from here?
This has been a very quick look at the ‘Ambiguity Effect’ and how to provide certainty in a very uncertain process.
To help you learn more about the psychology of design fees we’ve created a free Starter Kit packed full of useful resources:
What do you think?
Let us know which options you chose in the comments section below.
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Ready to Improve your Fee Proposal Strategy?
Here are four resources that are available right now to help you win more projects, better fees, and happy Clients.
• The Design Professional’s Guide to Design Fee Psychology (eGuide):
https://blueturtlemc.com/product/design-fee-psychology-eguide/
• Fee Proposal and Contract Template (Available for instant download):
https://blueturtlemc.com/product/multiple-fee-proposal-template/
• The Ultimate Fee Proposal Online Traingin Course (CE/CPD points available):
https://blueturtlemc.com/feeproposalworkshop/
• How to Sell a High Quality Design Service (Free Blog post): https://blueturtlemc.com/blog/how-to-sell-high-quality-design-services/
Very interesting and great example to explain it! My instincts were to go for red but I think the answer is there is no difference? 0.33*$100 = $33. 0.67*0.5*$100 = $33.