Companies in this industry could be more successful if they spent more time on writing better fee proposals.
Most architecture, engineering, and related firms are B2B service providers that sell what they do to other businesses. I have always felt many companies in this industry could be more successful if they spent more time on their fee proposals, instead of spending all the time they do trying to manage a lousy fee.
So here are some of my thoughts on how to write better fee proposals:
- Have a very clear and appropriate scope of services. Anyone in business who buys services from another firm wants to know exactly what they are getting. So tell them. Lay it out in very clear bullet points. In my experience, this is rarely done well. Too many times it is an exercise in “cut and paste,” where another proposal is used and a standard scope is just thrown in there. Ask yourself if this scope really makes sense for this client and this specific project. Maybe you need a clean sheet of paper and an all-new scope of services that is actually custom-tailored to this client and situation.
- Work on fixed fees versus hourly. Fixed fees allow you to benefit from being fast and efficient, and clients usually appreciate them because they know exactly what the job is going to cost. Hourly work can reward inefficiency and may breed suspicion on the part of the client that they are being overcharged. Of course, being able to work on a fixed fee requires a very clear scope of services. While it isn’t always possible to define that clearly, it probably is more often than not if you make a real effort to do so. And if you have to do hourly, don’t do it with a not-to-exceed number. That is a one-way street for the client you can’t win on.
- Always ask for money up front. Will you always get it? No. But should you try? Yes. Not only will your cash flow improve if you do (and what firm in this business doesn’t need to be concerned with that?), but your clients will likely treat you better because they have had to immediately part with some of their cash to work with you. I was taught this very early in my career – “ask and you shall receive!” You are busy. You have lots of projects. They need to step up.
- Mark up reimbursable expenses by 15 percent. As long as I have been part of this industry, marking up reimbursables has been standard practice, yet too many businesses will give that up at even the slightest pushback. But why? You have to part with your money to benefit a client. Then there is all of the accounting and billing hassle associated with that, plus a wait to get paid back. That markup is crucial so you don’t LOSE money on reimbursables. It isn’t an undue or unfair request.
- Sell, but don’t oversell. Many times I read these proposals and there is way too much sales language in them. If the selling content is half as long as everything else, that may be too much. Tone it down. And remember to focus on benefits versus features. Benefits are less expensive, faster, and better quality. Features are things such as how many offices you have, how long you have been in business, and how many registered professionals you have, etc.
- Give deals for longer term contracts. When a client commits to a long-range deal, they deserve a break. They are helping your ability to plan your year ahead with a base load of work. That is very valuable to you. Recognize that.
- Make unsolicited proposals. It was always one of my favorite tactics to employ. A client tells you about a problem they have. Why wait for them to ask you for a proposal? Just make one and send it. It’s your potential solution for their problem. Why hold back? You may be surprised how well this can work.
So yes – there is usually a lot of room for improving fee proposals. Maybe more room for improvement here than in your project management capabilities. Think about it!
Mark Zweig is Zweig Group’s chairman and founder. Contact him at mzweig@zweiggroup.com.
