Pricing your firm out of business

Jan 29, 2018

You lament the commoditization of your services, but are you doing anything to differentiate your firm, and in turn, earn better fees?

We have all had the experience of standing with a group of our peers at an industry function bemoaning as a group the low fees being paid by our clients for our services. We keep asking: How can our clients think so little of our expertise and quality? Then we all go home, get up the next morning, go to the office and continue to send out fee proposals based on what we think the market will bear and not based on what our services are worth nor even what it costs us to provide those services. So the reality is that it is not our clients who think so little of our firms, it is we who think so little of ourselves.

But if your product and level of service are no different than the other firms in your market, emerging from the pit of commodity pricing can be extremely difficult, if not impossible. So what should you do to avoid being the next “widget” of the A/E community?

  1. Take a hard look in the mirror. Before you can formulate a change strategy, you have to make a critical assessment of your firm and your markets. What are your strengths and weaknesses? What are your areas of expertise? Are your markets saturated with other firms? Who are the best peer firms and why are they considered the best? You also need to realize that you may be too close to this conversation to have the candid evaluation that is needed. After all, aren’t you the one who thinks your graying hair makes you look distinguished and not just old? For that reason, enlist outside help to independently facilitate this evaluation. If you are serious about implementing change, the cost of this assistance is worth it so that you can start with the best data.
  2. Determine your differentiators. The only real way to be allowed to appropriately or even aggressively price your work is to be different from those around you. But this cannot be differentiation by catchphrase. It must be tangible and demonstrable in how you operate compared to others. How tired is your client of hearing value-added or cost-effective or schedule-driven when none of these are shown in your work? Just saying that you are better does not make you better no matter how much you wish it were so. Also, your differentiators cannot be differentiators that only matter to you because you are not selling to yourself. Those differentiators must be operating traits or expertise that matter to your clients. The differentiators that you promote may vary client to client as the needs and desires of your clients vary. Your firm should not strive to be all things to all clients, but you can interface and provide different expertise to different clients provided they are the right clients for your firm.
  3. Be consistent. You must be consistent in your approach. You cannot give your client an appropriate yet higher fee on one project only to turn around on the next and drop the bottom out of your fee just because you “have to have the job.” By doing so, you have either told your client that you were trying to price gouge him on your first fee or that you are going to reduce your services and quality on your second fee. Either way, it is not a message that you want to send, and it is not a sustainable approach toward maintaining your client.
  4. Be willing to say goodbye. While you may have been the one sending out undervalued fee proposals, your clients were the ones expecting them and will be the ones continuing to expect them. You may be able to rehabilitate some of these clients to ultimately pay proper fees, but others will not be willing to change. The only solution to that dilemma is to say good-bye and move on to those clients who value your firm. You have finite resources and you want to use those resources to maximize your benefit.
  5. Delivery on your claims. Absent fulfillment of your commitments of service, quality, expertise and a differentiating experience for your clients, you will not be able to sustain requests for higher fees. We have all seen firms that start out with a flash, rapidly gain market presence, and then crash when they cannot consistently deliver on their promise. How many of those firms gained all that early attention because the one differentiator that they had in the beginning was lower fees? Yes, they were a huge disruptor in the marketplace, but without providing the differentiating benefits to their clients, they fade to the background.

Bottom line – value your firm. It all starts with you. If you do not place value on your firm, why should your clients? Know your differentiators, be able to demonstrate them, and deliver on them internally and externally. Build a profitable path for your firm based on a great reputation, not as a commodity, and your results should be nothing short of wonderful.

Stephen Lucy is CEO of JQ with offices in Austin, Dallas, Fort Worth, Houston and Lubbock, Texas. Contact him at

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About Zweig Group

Zweig Group, three times on the Inc. 500/5000 list, is the industry leader and premiere authority in AEC firm management and marketing, the go-to source for data and research, and the leading provider of customized learning and training. Zweig Group exists to help AEC firms succeed in a complicated and challenging marketplace through services that include: Mergers & Acquisitions, Strategic Planning, Valuation, Executive Search, Board of Director Services, Ownership Transition, Marketing & Branding, and Business Development Training. The firm has offices in Dallas and Fayetteville, Arkansas.