Value billing and differentiation

Regardless of the fee you charge, clients and prospects decide the value of your professional services based on their experience with your firm. 

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April 15, 2014 |
Steven Burns

Photo: Serge Bertasius Photography via FreeDigitalPhotos.net

Regardless of the fee you charge, clients and prospects decide the value of your professional services based on their experience with your firm. It can be based on any of the following:

• Word of mouth

• Employees answering the phone

• Projected professionalism and friendliness

• Enthusiasm for their needs and your own services

• Proposal quality and completeness

• Fee and charges

• Services offered, their quality and timeliness

While you cannot control exactly what clients and prospects think, you can influence how they perceive your company and the value you provide. The key is differentiation.

The death spiral

While productivity-enhancing technology can help, it is usually the last option taken. Cost cutting is done first because it is the easiest. For example, you might choose to:

• Replace a live person with a “Press 8 to...” phone menu, leaving clients and prospects with a less friendly experience and reducing opportunities to communicate a professional, friendly image.

• Cut corners on services, telling yourself and your staff “It’s good enough” or “We don’t have time (or margin) for that.”

• Produce quick and simple proposals, bragging, “I can crank out four proposals an hour just filling in the blanks.” With such a shotgun tactic, you will win some jobs, but professionalism may be short-changed. 

Unfortunately, all of these cost-cutting decisions are common in a commoditization death spiral because decisions are based on a survival mentality. To break out of the spiral and thrive, you must differentiate your company in more than one way.

Differentiation

Differentiation has many facets, but the result is simple: it is easier to pick your company out of a crowd.

Treat your prospects and clients with respect and care. Call clients and prospects by name. Make them feel welcome. Thank clients for a referral and for simply sharing their positive comments.

What’s the effect? Positive word of mouth – the most powerful force in the marketplace. It pulls the market toward your company like a magnet. Neutral or no comments make you a non-entity, a business not worth the time to check out. Negative word of mouth repels prospects, keeping you on their radar as an obstacle to avoid (and to warn others to avoid). With positive word of mouth, you can justify a higher fee. Your firm becomes a brand name in a world of confusing, overwhelming choices.

Successful differentiation efforts result in higher perceived value from clients and prospects. As differentiation grows, your fees rise and you gain more of the kind of clients you want. And you earn a healthy profit and return on your investment in talent and technology. 

Read more from the BQE blog. 

Steven Burns | The Business Behind Design

Steven Burns, FAIA spent 14 years managing the firm Burns + Beyerl Architects, and during that time the firm’s earnings grew at an average rate of 24% per year. After founding his own software company, Steve took his management expertise to BQE Software, where he is refining their business strategy and product development for the company’s groundbreaking project accounting solution, BQE Core.

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