If there was ever a time when the moon lined up with the stars and the timing was right for A/E/P and environmental firms to raise prices, this is it! Never before has the unique combination of circumstances existed as it does now.If you and your fellow principals are currently debating whether or not to raise your billing rates, consider my thoughts on the subject:You are already overloaded and understaffed. Raising prices is one way to reduce demand and make more money at the same time. If there are pressures on you to pay more for labor, why shouldn’t this be passed along to your clients? If there are more of them wanting you than you can serve, this is the time to bump up rates. You are tired of not making the money you deserve. I have heard these complaints from firm owners for years! We don’t make as much as doctors, lawyers, investment bankers, etc. But one reason we don’t is that we don’t value our time the way these other professionals do. Get the idea in your head that the only thing that’s limited is time. Treat your time as if it’s valuable because it is. Don’t be so desperate for approval that you give your time away. There are always other things you can do with your time besides work. If clients want you, make them pay! The more you charge, the more the clients listen. The fact is, many clients believe there is a relationship between price and quality of advice. The more they pay for it, the more they value it. The more they value your advice, the more likely they are to follow it. That makes your efforts more successful, allowing you to charge more than the other guys do. Think about that. Your competitors are raising prices. If they can do it, why can’t you? You know you are every bit as good, perhaps even better, at what you do than they are. You make a lot of money for your clients. You add value. You save a lot of money for your clients. You look out for your clients’ well being at all times. You deserve a raise, don’t you? Here’s a chance to help your employees get ahead. Maybe you don’t care about your own financial situation. But I think most owners of A/E/P and environmental firms really want to take care of their people as best they can. Unfortunately, we don’t all do a great job of that. Pressures of the marketplace hold down pay and benefits during economic recessions. But we aren’t in a recession right now. We’re still in a boom. Now is when our folks need to move up. One way we can all afford to pay our people better is by charging more for their time. Then— and only then— are they really worth paying more. Make sure your old clients don’t get gouged. While now is the time, if there ever was one, to raise prices, I would add one caveat: You should still go out of your way to cut the best deal for your old-line, loyal clients who have been there for you through thick and thin. You cannot ignore the importance of long-term relationships to the value of your business. You do not want to take that for granted and tighten the screws on long-term clients just as you would a new (and potentially riskier) client. The notice of a rate increase can be an effective marketing tool. Here at Zweig White & Associates, we increase billing rates on January 1 every year. We let all of our past and current clients know that prices have gone up by sending them a letter with our new rates in it. My experience is that this letter serves a dual purpose. Besides putting the clients on notice that prices for new work are going up, it actually serves a marketing benefit and makes the phone ring with new consulting projects. Just reminding your clients that you are still out there, and obviously doing well enough to raise your prices, makes you more desirable. No doubt, not every client will react positively to your price increases. Be ready for that. If and when you do hear a complaint, keep reminding yourself that as long as you are selling more work than you can do, you did the right thing!— M.Z. (email@example.com)Originally published 4/03/2000
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.
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