In a recent survey of our clients across the U.S., one of the most pressing concerns noted was how to raise fees. While the economy is improving, faster in some sectors and geographies than in others, fees for Architecture and Engineering firms are not increasing across the board. During the recession from 2007 to 2010, most firms saw their average project revenues and multipliers decrease, along with corresponding hourly rates. Most of this was caused by competition, a reduction in available projects, and a glut of available experienced talent.

Now we face a period of increasing volume of work, a potential shortage of human resources in some areas with resulting growing salaries, yet fees have not increased at the same pace. The average firm fears “not winning” and so they sabotage their own success by reducing fees in order to win work.

So how do you get out of this vicious cycle?

Here are 3 steps that I have practiced myself and witnessed personally among several successful architecture and engineering firms over the last several years that can allow you to transform your firm into a unique class all its own, and break the stigma of commoditization that you may have allowed yourselves to accept:

1. Massive Rebranding – If you are going to charge more for your services then you need to look and feel like a more expensive firm. When going to buy a car, does the BMW experience feel the same way as the Chevy experience? Of course not. If you are currently the Chevy in your field and want to be the luxury brand, you have to look and feel that way. It really starts with your web site, and the other outwardly facing collateral, advertising, and content you are putting out in the world.

2. Thought Leadership – the A&E firms realizing the top percentage of fees in the industry are able to do so because of the position they have earned due to their pervasive presence online and in print. Those firms that have embraced the inbound marketing phenomenon by producing relevant content, poured themselves whole heartedly into social media, and become recognized experts in their niche fields can demand the highest fees and are not “price shopped.” In many cases they are sole-sourced for projects and don’t even have to get into a competition – the client comes looking for them.

3. Fire Your Bad Clients – If you are worried about increasing your fees your current clients are not going to be the ones to start paying you more. Evaluating your profitability by client, and proactively seeking clients that have the money, truly want the best quality, and want to work with the known experts in the field will be the only way to charge more for your work.

One word of warning – this type of strategy does require a significant change in your mindset and focus on business success, profitability and competition. Change is not easy, and this type of business transformation is a big change. It might require spending money, getting your technical people engaged in producing valuable content, and saying “no” more often to work that you previously would have bid on. Increasing fees is not something you will do overnight, but the rewards are great and definitely worth the effort.

 

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