Creating a Realistic Fee Proposal

EXERCISE 2

Creating a Realistic Fee Proposal

The goal of this three-part exercise is to uncover the subtle obstacles that block us from creating more realistic flat fee proposals. We’ll consider ineffective language tools, unknown variables and our ability to speak to our own value.

A. Language Matters – Optimistic or Realistic?

Read the following questions and select the answer that most closely represents your immediate response to each situation.

1.A light fixture is back-ordered and it means a delay in your timeline. You say to the client:

a.Darn. That light fixture we ordered for the foyer is back-ordered. Don’t worry. I’ll take care of it.

b.Darn. That light fixture we ordered for the foyer is back-ordered. That means we’ll have to adjust our timeline and there may be a delay. I’ll keep you posted.

2.The contractor makes an error in calculating material required for dry walling the new addition. You say to the client:

a.Nothing. Why should she worry about this? The contractor better handle this!

b.It looks like there’s been a miscalculation and we’re going to need to order more drywall. That means you won’t have anyone on your job site for three days. It may also mean a delay on the final timeline.

3.The client says she’s worried about the timeline. You say to the client:

a.Don’t give it another thought. I’ll talk to the crew and whip them into shape.

b.Tell me where you see an issue with the timeline. I’ll review your concerns and get back to you with an outline of what lies ahead.

4.The client says that she talked to her husband about the additional fees this month and he’s just not comfortable with them. You say to the client:

a.Yes, there is some additional billing this month. It’s for the extras that you asked for. But don’t worry, I’ll make sure to keep fees to a minimum going forward.

b.I can appreciate that. I’ve done some renovating myself and the extras add up quickly. Going forward would you like me to put any request for additional work in writing so you and your husband can discuss it before approving the extra costs? It may delay the timeline but at least you and your husband will be on the same page.

If your default response to the above questions is closer to a. than it is to b. (like mine used to be) then you use overly optimistic language when addressing your clients. This is something I have to vigilantly watch for in my own dealings with customers.

Every time I avoid, ignore, or downplay an error, delay or overage, I set the stage for my clients to be disappointed later. If I know that’s true, why would I ever do it? Because I’m busy and I don’t want to “deal with it right now.” Or I am hoping the whole thing might blow over. Maybe I’ll get lucky.

If you’ve read Volume 1:HAVE THE PROFESSIONAL LIFE YOU’VE ALWAYS WANTED you know we’ve already agreed that it’s far better to live by a philosophy of Satisfaction by Design than Satisfaction by Luck. Luck eventually runs out.
Dealing head-on with anything that has the ability to impact the project—especially regarding money or timing—is the best way to earn a clients’ trust and manage expectations. There is no benefit to downplaying or making light of the challenging work we do. Instead, let the client know what the difficulty is, provide the best solution, ask for additional fees as necessary and don’t be lulled into a false sense of security by wishful thinking or by avoiding the difficult conversations.

B. Anticipating Unknown Variables

The next questions ask you to consider any particular experiences you’ve had where unknown variables tripped you up. I give examples from my own work experience following each question, but your situations may vary. Consider the most problematic circumstances you’ve encountered as you answer the questions.

1.Describe a situation during one of your own projects where an unknown variable took you off course. e.g. We arranged for our clients to receive a new stair railing in their condo. We’d never worked with this supplier before. We invited them to Trade Day (STEP 3) and a few days later they provided us with a quote. Ultimately, we hired the firm to do the job. When it came time to install the railing, the company asked us for an additional $750.00 because the new railing, which was manufactured in a single piece, wouldn’t fit in the client’s elevator. The manufacturer had to return to their shop and make a new railing in several sections. They wanted us to pay the additional $750.00 for that extra work.

Now, describe a situation that you encountered:

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2.How did you handle the situation that occurred on your own project (the one you described above)? e.g. To resolve our railing issue, we met with the supplier and agreed that it was partially our fault (we could have verified the length of railing). However, it was also partially the fault of the railing supplier who had more experience with railings and could have anticipated the problem. Ultimately, we shared the $750.00 cost. #truestory

Now, describe how you resolved your situation:

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3.Were you entirely satisfied with how this incident turned out? e.g. Initially I was pleased with the solution since we didn’t have to pay the whole $750.00. However, if I’m honest about it, I would rather we didn’t have to pay extras like this. It hurts profitability.

Now, describe your level of satisfaction with your outcome:

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4.Are there unknown variables that have tripped you up repeatedly on flat fee proposals in the past? e.g. Clients always want to see the items I recommend in person. They want to sit on sofas and chairs etc. It takes hours to get them back on track once they start that process.

Now, describe situations you encounter repeatedly:

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NOTE: If there are variables that occur with regularity, then they are no longer variables. In those cases, create a system to ensure these situations are managed effectively. For instance, if you find clients always want to go see furniture in person, then plan for that upfront. Manage that situation. I tell clients they are free to visit my suppliers following the presentation when there is a firm plan in place and I can keep them focused. If you always forget upgraded hardware and it’s costing you money, then add a permanent note to the quote request forms you send to all cabinetmakers: All required hardware to be top of the line, xxx brand, unless otherwise stated. Please quote accordingly.

5.Can you recall a job that had no misSTEPs or hiccups? e.g. Hmmmm. I can’t think of a single one.

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This last question is rhetorical. There is rarely a job, no matter how small, that goes perfectly. We all have stories of nightmare projects that went on and on.

Since there’s no such thing as a small or an easy job, make sure your reasonable quote for services has an allowance built in for unknown variables and the extra tasks that inevitably creep in. If you are low-balling fees, you will lose significant time and money when, not if, these variables occur.

C. Self-confidence and Value

The professional designer provides tremendous value to clients by sharing knowledge and expertise that is worthy of compensation. But what precisely is the customer paying for? What tangible value can you, the design professional, bring to the client?

We often expect our clients to know the value of our work. But do they? We state a fee for their project and almost invariably we are met with, “That sounds like a lot of money.” Too often, that’s all it takes to prompt us to lower our fees.

The most effective way to counter such a comment is by defining our value and outlining exactlywhat we do. That information should convince a potential customer to accept our fee as quoted.

In order to help us avoid the temptation to low-ball fees, it’s important to understand the value of your work and be able to describe specifically what the client can expect to gain by hiring you for the project. Let’s look at a couple of examples of value descriptions.

EXAMPLES:

DESIGNER: On my projects the client doesn’t lift a finger. I source every product and every service required to fulfill the project goals. I provide pricing and present all selections, including estimates, to the client. Once approved, I order and take responsibility for the goods. I track ordered items and arrange for their delivery. I manage trades and determine proper work orders. My involvement ensures that the work will be performed according to professional standards and the project will be completed on time and on budget. When there’s a deficiency or error, I handle it. The client can rest assured, I manage every last detail.

DECORATOR: On my projects I work with the client to narrow down the selection of all furniture, fabrics and accessories—everything required to complete the decorating project. I bring all samples to the client. I take care of ordering, tracking and delivery. The client doesn’t have to be home to let the trades in. I supervise all of that. My involvement ensures that the work will be performed according to professional standards and the project will be completed on time and on budget.

Using your own words, how do you describe the value you bring to projects?

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What do clients repeatedly praise you for? e.g. You think of everything or you’ve captured the spirit of our vision perfectly or you were exactly right about the budget and the timing.

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VOLUME 3: HOW TO WIN THE FLAT FEE GAME