Win Strategy - Fee Development
A thoughtful pricing strategy should communicate confidence, clarity, and relevance. Whether you’re aiming high or offering leaner options, your proposal should make the case with purpose: why your fee is right for this client, this project, and this moment. Done well, your pricing strategy not only wins work—it builds trust, reinforces your brand, and sets the foundation for a successful partnership.
Understand your Firm’s Market Position
Your firm’s fee strategy should align with how it’s positioned in the marketplace. Are you a premium provider, a value-driven competitor, or something in between?
Brand Positioning: Your firm is positioned at the top of the acceptable price band, akin to brands like Rolex or BMW. However, this positioning can vary depending on market conditions, the sector, type of work, service, client, building, and location.
Value Proposition: Premium pricing must be backed by a compelling value proposition. What sets you apart? Is it your people, systems, design excellence, research capabilities, or breadth of expertise? Articulate these advantages clearly—especially how they translate to better outcomes for the client. But remember: every client’s perception of value is different. Tailor your message to match what matters most to them.
Market Creativity and Commerciality: In the current market, it is essential to question if your approach is creative and commercial enough. Consider if there is a viable low-cost option, akin to the “base model” of a car, to offer clients who may be price-sensitive.
If your pricing is above the norm, make sure your proposal tells that story. Clients may pay more for innovation, reliability, ease, long-term savings, or added value. Your proposal should connect the dots between your fee and their benefit.
Pricing Strategy Considerations
Market Rate and Scope: Understand the market rate for your services and what is typically included in that scope. Work up the figures from the bottom up and adapt the price to meet the market rate. Consider the market you are targeting and whether decisions are based solely on price or if the client values quality.
Competitor Analysis: Ask the client who your competitors are and consider what they might charge. Understanding your competitors’ pricing strategies can help you position your bid effectively.|
Go/No-Go Decision: If, after considering all factors, you determine that your price will be too high no matter what strategies you apply, it may be best not to bid. Focus your efforts on opportunities where you have a better chance of winning.
Pricing Team: Form a dedicated pricing team to ensure your bid receives the right focus. Price should not be an afterthought but a primary consideration from the beginning.
Transparent Pricing: Clearly outline what is included in your price and list any added-value items as optional extras. Explain the benefits of these extras in terms of better, faster, or cheaper outcomes.
Continued Client Dialogue: Encourage open communication about your fee schedule with the client. Deliver bids personally when possible and be prepared to discuss different pricing models.
Resource Allocation: Avoid over-resourcing your bids. Be realistic about staff utilization and consider cost/profit reports from previous projects to optimize resource allocation.
Project Timelines: Consider project timelines. Short-term projects may allow for lower profit margins, while long-term projects require careful consideration to avoid being locked into low rates.
Avoid Over-Delivery: Communicate clearly with your team about the time and resources allocated in the bid. Ensure tasks are completed efficiently and within the allocated time to maintain profitability.
Different Pricing Models
Open Book: Offer a fee equal to the net cost of resources plus an agreed uplift for overheads and profit, ensuring transparency for the client.
Capped Fee: Agree on an initial target fee with a cap and offer potential rebates based on actual costs.
Minimum Service Offer: Provide a lean service model with optional bolt-on services, clearly communicating any additional fees for repeat work.
Payment Discounts: Offer discounts for prompt or frequent payments to incentivize timely client payments.
