Free Design Services:
Today we’re looking at the true cost of free design services and how to (ethically) filter out Clients who have no intention of hiring you.
We’ve also included a case study that demonstrates just how easy it is to avoid the price of free.
Let’s start with a question – why are free design services a problem?
Why are Free Design Services a Problem?
According to Behavioral Psychologist and bestselling author, Dan Ariely, the challenge with offering a free product or service, is that free has the power to persuade Clients to make decisions that don’t always reflect their preferences.
To demonstrate his point Ariely and his colleagues, Kristina Shampanier and Nina Mazar, conducted a very simple experiment.
Testing Free Pricing:
The experiment, as described in the New York Times bestseller, “Predictably Irrational”, was designed to show just how influential the price of free really is.
The experiment began at a local shopping mall where passers-by were given an opportunity to buy one of two different types of chocolate.
The first was a regular, American-made, Hershey’s kiss priced at 1 cent. The second was a mouth watering, Swiss-made, Lindt chocolate truffle priced at 15 cents.
So before we go any further let me ask you a question – if you were presented with these two chocolate options which one would you buy?
Which Chocolate would you buy?
After a period of hard-selling, the more expensive, Lindt chocolate truffle proved to be the favorite. Approximately 73 percent of customers who made a purchase decided to go for the more expensive Lindt truffle, rather than the more affordable Hershey’s kiss.
The 14-cent price difference wasn’t enough to lure people into choosing the lower-priced chocolate.
However, when the experiment was repeated, only this time with the Hershey’s kiss priced at 0 cents (i.e. free), and the Lindt truffle priced at 14 cents, the results were significantly different!
Despite no change in price difference (again, only a 14-cent difference between the two options) there was a significant change in consumer behavior.
This time 69 percent of customers chose the free Hershey’s kiss as opposed to only 31 percent who chose the Lindt truffle.
Free Design Services can cause Clients to act contrary to their Preferences!
Free, it seems, has the power to pull people away from what they like and, on occasion, cause them to make decisions contrary to their preferences.
You may see this type of situation play out in your own life. How many times have you chosen the buy-one-get-one-free offer in your local supermarket, rather than just buying one of what you prefer?
(Note: To help you with your fee proposal and negotiation strategy we’ve created a free Fee Proposal Mini-Series. Click the image below to learn more):
Or perhaps you frequent a local coffee shop, not because it has the best coffee, ambiance or location, but because they offer a loyalty card which rewards the purchase of 9 coffees with a free drink.
Would it have been as appealing if the coffee shop offered a 10% discount off all your coffees?
The Problems with Free Design Service:
Although providing free services can encourage consumer participation there are times when it works against the Design Professionals (and Client’s) best interests.
For example, recently we were approached by a sole practitioner who was frustrated with the residential design market.
Too many of his potential Clients were consuming too much of his time for un-billable (free) pre-design services. These free services included onsite meetings with the Client to discuss their ideas/aspirations and the feasibility of the project.
The problem wasn’t the free service, it was that very few of these potential Clients would go on to hire him for the main appointment.
We were approached to resolve this issue by providing a strategy that would allow him to attract the right type of Client and receive fair compensation for his time, experience and expertise.
After reviewing his standard fee proposal documentation, the reason for his situation became clear:
Firstly, his standard fee proposal failed to provide any opportunities to be paid for preliminary work.
Secondly, when approached by a new Client he would always start the relationship by offering to meet them on-site, free of charge.
We have already seen how the price of free can cause some Clients to behave in a manner that’s contrary to their preferences, and this is exactly what was happening here.
Every potential Client was accepting his offer for an on-site meeting, because it was free!
New Fee Proposal for Design Services:
To resolve this situation, we needed to find a way to filter out the less serious Clients from the serious ones.
We suggested developing a new fee proposal, in the form of a short letter, and to start the relationship by offering not one, but two pre-design service options:
• Option 1 (Free) Office Meeting at the Design Professional’s Office (not the Client’s project site)
• Option 2 (Paid) Pre-Design/Feasibility Study (written report)
By offering two service options in this manner we’re able to achieve three goals:
Firstly, we can still (efficiently) serve those Clients who aren’t ready for a paid service but would like the opportunity to meet with a Design Professional and discuss their ideas and aspirations.
Secondly, we can also serve those Clients (who value the information derived from a feasibility/pre-design service report), an opportunity to pay us for our time, experience and expertise.
Thirdly, we can provide all potential Clients with the freedom to make an informed decision about the level of service they’ll receive and the associated commitment.
Fee Proposal Success:
A week later I received a phone call from the Design Professional confirming that his new proposal had been an instant success.
He’d recently sent the proposal to three new Clients and all three of them had selected the (paid) written feasibility report service option.
It just goes to show that when you give Clients a compelling reason to pay you for your time, effort and ideas, many will choose to do so.
Providing free and paid service options in a clear, written, format, is a great way to keep your potential Clients reasonably informed (AIA Code of Ethics, E.S 3.3)… which is why offering options is a more ethical approach to the free design service pricing model.
This is just one example of how to get paid for your knowledge and skill set.
To learn more examples, come and join us at the Fee Proposal Mini-Series.
It’s currently available FREE of charge at the following link: https://blueturtlemc.com/fee-proposal-mistakes/
During the Fee Proposal Mini-Series, we’re going to show you the 3 most common fee proposal mistakes and how to fix them. Click the link above to learn more.