You might never be as direct as me, but just for a moment let’s imagine that I am an architect in a particularly “take no B.S. from clients” mood and Mr. Roberts asked me to reduce my fees …
Mr. Roberts: Mr. Petrie, thank you for coming in today. I want to let you know that we respect you and your design skills, but your fees were 20% higher than the next most expensive architect. We were wondering if you can sharpen your pencil.
Mr. Petrie – Actually, we are 25% higher, but it’s an easy mistake to make. Goodness if I’d known I was only 25% higher I would have raised my fees.
Mr. Roberts – Come on now, Mr. Petrie, is there anything we can do about your fees?
Mr. Petrie – Mr. Roberts, yes, sign me up before I raise them because I am seriously considering it.
Mr. Roberts – I don’t understand.
Mr. Petrie – Mr. Roberts, I see you as an intelligent man. How do you see yourself?
Mr. Roberts – As … intelligent (said cautiously).
Mr. Petrie – Great, as you know I started my firm, Return.On.Design Inc., three years ago. I wanted to create the best VALUE architecture firm in the world. We did not call ourselves “Discount.On.Design Inc.” for a reason.
Do you want the cheapest?
Because if you do, I know a couple of really cheap architects, and they can deliver a really cheap product. I have their number on my speed dial in case I need to off load cheap clients.
Mr. Roberts – That won’t be necessary, Mr. Petrie, we want the best value, not the cheapest.
Mr. Petrie – Oh “value” is the magic word, Mr. Roberts. Warren Buffett said, “Price is what you pay, value is what you get,” and I know Warren, by the way.
Oscar Wilde said that some people “know the price of everything and the value of nothing.”
As I mentioned, we are Return.On.Design (ROD) because great design is a proven investment, not a cost. Do you know where we are going here, Mr. Roberts?
Mr. Roberts – Are you moving the conversation to your value rather than your fees?
Mr. Petrie – By George, I think he has it. Return on Design. Yes, let’s talk about value … value value value value. I don’t blame you for majoring on minor things like my fees because I doubt any other architects have dared to mention “VALUE” when they knew our firm was in the mix.
Say no more, Mr. Roberts. Not only can I help you justify my higher fees to your board, but I will also show you why you cannot afford to hire a cheaper option.
Mr. Roberts – Go on, Mr. Petrie, state your case.
Mr. Petrie – Alright. You have correctly observed that my fees are 25% higher than my lower value competitors but you are probably thinking to yourself, “How can I compare the value between Mr. Petrie and his inferior competition?” Were you thinking that?
Mr. Roberts – Well, not …
Mr. Petrie – Of course you were, Mr. Roberts, because you are an intelligent man. That was a rhetorical question, anyway. Let’s look at a few accurate ways to judge value.
Mr. Roberts, would it surprise you to know that, according to the Springfield Building Institute, only 39% of projects like yours come in on time and on budget?
Mr. Roberts – That does surprise me.
Mr. Petrie – Oh, yes, and would it surprise you to learn that the average cost of a project quoted at $250,000 ends up being $321,000 after typical cost overruns? That is $71,000 over budget. This isn’t even the worst case scenario … this is the industry average.
Do you want to know what our “on time and on budget” percentage is? This is also a rhetorical question, because I am going to tell you anyway … 93%.
We track our numbers meticulously.
My fees, Mr. Roberts, may be $20,000 higher than the next highest, but would you rather pay $71,000 on project overruns to save my $20,000 fee?
Mr. Roberts – How do you get such a high % of projects in on time and on budget?
Mr. Petrie – Because we do our calculations right upfront and because we specialize in this type of project. We do not skip steps or forget to include all the costs. We are professionals at Return.On.Design Inc.
Mr. Roberts – Are you finished?
Mr. Petrie – No, Mr. Roberts, only just started. Let’s look at another value comparison. When your building is complete, the average value for a building like yours will be $350,000.
Did I mention we specialize in your type of project?
Mr. Roberts – Ah, yes.
Mr. Petrie – Great, so because this is not our first rodeo, we are able to make sure that great design is great for your wallet.
We have completed two projects similar to yours and one was valued at $410,000 and the other at $402,000. That is a profit, Mr. Roberts, of between $152,000 to $160,000 because we completed them on budget at $250,000.
Now if you go with my lower value competitors and they produce a building for the average cost of $321,000 and your building on completion is worth the average value of $350,000, then you have a capital gain of $29,000.
Now, Mr. Roberts, is $160,000 greater or smaller than $29,000?
Mr. Petrie – Can you really afford to hire a cheaper architect?
Would you like me to discuss the rental yield of our R.O.D. buildings when compared to an average designed building?
Mr. Roberts – No, Mr. Petrie, I think you have made your case.
Mr. Petrie – Shall we talk about the happiness rating factor between an R.O.D. designed space by experts who truly understand this type of project versus average design that is cheaper?
Mr. Roberts – No, Mr. Petrie. I get the point.
Mr. Petrie – When you only look at fees, we are always the highest, but when you factor in Return on Design we become the lowest … or should I say the best.
Our clients get richer faster, and that’s why, Mr. Roberts, you cannot afford to hire a cheaper architect.
Is that a Mont Blanc pen, Mr. Roberts? I always wanted a Mont Blanc pen. You have convinced me, Mr. Roberts, that my fees are too low.
Mr. Roberts – Mr. Petrie, let’s sign now before you get carried away. You can keep my pen.
Now obviously my Return.On.Design Inc. is fantasy and maybe Mr. Petrie is a little over the top, but I wanted to graphically illustrate a very serious point. Too many architects get bullied on fees by clients because they cannot point to Return On Design. Without something as powerful as Return On Design to focus on, the clients will fixate on fees which, in the context of the big picture, is ridiculous given the huge value a good architect can add.
My fantasy firm …
- Does not allow the client to fixate on fees ––“Don’t major in minor things.”
- Does not back down on fees at any stage.
- Shifts focus to the big picture –– the big factors that make a project a success or failure and make clients rich or poor … R.O.D.
- We have done our homework. We have the data ready to back up our value claims.
What are the simple steps?
1) Define where you can deliver superior value.
2) Prove it with as much data as you can collect.
Those are not many steps to deliver a knockout punch but yes, you are RIGHT, collecting the data is not something an architect is used to. Until now, it’s only scientists, lawyers and journalists who collect evidence, stories or testimonials that prove their quantifiable value.
This is the HUGE opportunity. Once you have built your R.O.D. case, every other architect will be bringing a knife to your gunfight.
What CEO or board is not instantly seduced by an R.O.D. proposition? Even homeowners who need to justify a big spend will be able to say, “Honey, the money is still ours, the architect is just transferring it from our bank account to our home and lifestyle. We get it all back and more when we sell, BUT this way we get to enjoy our wealth as it grows.”
Let’s look under a few stones for your value.
1) Can you design a building that has a higher resale value? (Get a valuation on the building and compare against similar local building valuations.)
2) Can you give the client a higher % chance of their project being delivered on time and on budget? (Collect your stats and compare to the industry average.)
3) Can you design a building that can attract a higher rental yield when compared against the local average? (Get the rent roll and compare to similar local buildings.)
4) Can you design a space that produces more happiness when compared to their previous space? (There is a happiness app that can collect this data.)
5) Can you improve staff retention or staff efficiency? (Client HR might have these figures.)
6) Can you survey the homeowner for BEFORE vs. AFTER on their quality-of-life aspects and come up with an average improvement percentage for your clients? (Yes, you can.)
Stop Making Other People Rich
STOP backing down on fees to clients who are getting rich on the back of your design.
STOP presenting your portfolio as your primary project-winning strategy.
START presenting your R.O.D. Your life will change overnight.
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What a great topic you have going here. It really touches on many levels that us Architects lack in understanding the concept of “Value”. This is very enlightening to me and others for sure.
Keep this up. I already knew you were good, but this article is I am thinking one of your best concepts that needs to be taught to all of us Architects.
Well done and said.
PS. Reaching out with Hello and stay safe kind sir.