Professional Relationship Pricing

When Summit Partners first began working with surveyors on improving the profitability and equally, developing the opportunities of their practices I was immediately surprised at the low pricing for professional services being charged in the industry. This was even more apparent when I factored in the value that surveyors brought to their clients projects. It seemed to me that the fixed percentages of real estate agents and architects or the far higher rates per hour charged by solicitors and engineers were more appropriate to the benefits they delivered their clients.

As highly trained professionals it seemed that surveyors often found themselves in ongoing discounting situations. We also noted the general style of clients and their buying habits – developers and builders who are driven by profitability and time pressures and, separately, individuals who are more price driven in the absence of any other criteria. We couldn’t see how your importance could be underestimated.

We found that the more surveyors ‘discounted’ the more clients continued to expect cheaper prices and, separately, the more the clients subconsciously questioned the quality of your work. When such ‘discounting’ took place, together with the general introverted personal profile of surveyors, this presented a continuously downward spiral of: lost profitability on jobs, time pressures on staff, and generally unhappy business owners and often their clients.

The more we worked with surveyors the more we understood why discounting on price was rampant throughout the profession. We discovered that the reasons why prices weren’t more commercial was largely because of 3 principal factors:
1. Fear of a complaint
2. Fear of losing a client
3. Competition – particularly from small 1 person firms

This led to poor fee paying clients, poor profitability and a poorly paid team and owners.

Then after completing numerous client surveys, it has become clearly apparent that clients essentially wanted 2 clear results from surveyors: a quality & timely product, and, also, a relationship. Equally we found, if there is no relationship, price will reign supreme as the most important criteria to evaluate on.

Finally we reviewed how surveyors price their services and we came to the conclusion that suggests pricing was set on: firstly, surveyors own beliefs on prices; the guide for fees in the handbook (which we understand is based on historical costing methods) or, thirdly, competition. All these were based around our fears.

So how do we go about building a more commercial professional fees structure?

From our experience and through our pricing model, a successful adjustment to your prices can clearly be made if you follow a trusted and proven formula.

First, enhance your self belief by questioning yourself about how many complaints you get from the quality of your work and the price on your invoice. Maybe a conclusion you might have is that if we get 5 complaints out of 100 that maybe we’re too cheap.

Secondly, consider delivering quality work in advance of expectations.

Thirdly, and this is the key to this article, build strong relationships preferably with your ‘A’ and ‘B’ clients. When was the last time you had a coffee or lunch with an ‘A’ or a ‘B’ client just to see how you could help them more?

Next consider setting new prices and payment standards and test.

Finally, continually review and improve.

This model has had significant success, however, a word of caution, if you believe you can’t move your prices (which are justified by the odd complaint or poor success on quoting) then your right, you can’t.

But if you believe you can, then read on.

How do I present my new prices?

(Incidentally notice I used the word ‘price’ which has some perceived value, as opposed to ‘fees’ or ‘charges’ which is perceived as a cost with no value)

For phone enquiries – develop a model of seeing how you can help a new enquiry by asking, what, when, why and discuss benefits to the client.

(From our experience, quoting prices on the phone will more often than not succeed or fail based on your sales process and not the price)

For written survey design proposals (not ‘quotes’ i.e. price based) clarify not only the technical requirements but also include clear benefits of the product and service you will provide and features of your firm or ‘why I should use you’. Consider a range of prices to cover obvious unknowns.

For current clients – a superbly worded letter and call model should go a long way to reassuring and enhancing client relationships.

Finally consider your invoices which should be very detailed as to all work completed and the layout is also critical to send a good final message of quality and the volume of work.

What prices do I charge?

If you’ve followed the above relationship formula, consider adjusting your prices by % for 1 month and test the clients’ reaction.

Don’t take exception to the few complaints (i.e. price shoppers etc), focus instead on the vast majority who don’t complain and who understand and still really want to do business with you.

I do understand it takes time, particularly if you haven’t adjusted your prices for some time – hang in there, it does work.

Bill with pride, being content in the quality of your product provided and the timely nature of the service given.

So the message is develop strong client relationships and then sell on value not on price. If you do, I guarantee price will be less of an issue and the positioning of your firm will be more that at the quality end rather than that at the discount end.