Contract - Essay from the Past: If You Cut Your Fee, Do You Bleed?

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Essay from the Past: If You Cut Your Fee, Do You Bleed?

20 April, 2010

-By Roger Yee, June 1990



You’ve done your best to win the job. Pored over the RFP minutely since the client invited you just two weeks ago. Coached your team through nonstop days and nights. Pulled together a solid proposal— only to be told you’ve lost. In the follow-up call to the client you hear that all the short-listed firms offered competent solutions. “But you priced the design fee at $2.25 a square foot,” the voice at the other end finally concludes. “The winning firm quoted 75 cents.”

Even if these remarks were not based on an actual incident involving a complex office design in New York City (they were), other examples are all too easy to find. Architects and interior designers are losing a small yet significant number of commissions to reputable competitors who bid so low that clients feel they must accept them. For practitioners who recall the dark days of the mid-1970s, when overbuilding created excess inventories of space and a glut of design talent, this situation has the aura of a deja vu.

Designers can readily understand why firms are tempted to undercut fees. Keeping otherwise idle staff is important, even when profit is sacrificed; many organizations are loathe to dismantle talented teams that have taken years to assemble and train. And “investing” in an important new client is another rationale for selling design services below cost; one commission can lead to years of repeat business that could more than compensate for the initial loss.

Yet the overall impact of fee cutting is disastrous to both individual firms and the design profession as a whole. It’s obviously bad business to deliver services at no profit or a loss; sooner or later the firms that play this game may come to grief, particularly if the anticipated change orders, special services, or reopened contract negotiations fail to cover the shortfall. Even more, it’s discrediting to all architects and interior designers to devalue design services in the eyes of the public; for all the schooling, problem solving and responsibility involved in design projects, practitioners are paid little enough as it is.

Ultimately, architects and interior designers would have much more to gain by educating society about the true value of design in our lives—and receive a fair days wage for a day’s design work.

 

 Roger Yee served as Contract editor-in-chief.




Essay from the Past: If You Cut Your Fee, Do You Bleed?

20 April, 2010


You’ve done your best to win the job. Pored over the RFP minutely since the client invited you just two weeks ago. Coached your team through nonstop days and nights. Pulled together a solid proposal— only to be told you’ve lost. In the follow-up call to the client you hear that all the short-listed firms offered competent solutions. “But you priced the design fee at $2.25 a square foot,” the voice at the other end finally concludes. “The winning firm quoted 75 cents.”

Even if these remarks were not based on an actual incident involving a complex office design in New York City (they were), other examples are all too easy to find. Architects and interior designers are losing a small yet significant number of commissions to reputable competitors who bid so low that clients feel they must accept them. For practitioners who recall the dark days of the mid-1970s, when overbuilding created excess inventories of space and a glut of design talent, this situation has the aura of a deja vu.

Designers can readily understand why firms are tempted to undercut fees. Keeping otherwise idle staff is important, even when profit is sacrificed; many organizations are loathe to dismantle talented teams that have taken years to assemble and train. And “investing” in an important new client is another rationale for selling design services below cost; one commission can lead to years of repeat business that could more than compensate for the initial loss.

Yet the overall impact of fee cutting is disastrous to both individual firms and the design profession as a whole. It’s obviously bad business to deliver services at no profit or a loss; sooner or later the firms that play this game may come to grief, particularly if the anticipated change orders, special services, or reopened contract negotiations fail to cover the shortfall. Even more, it’s discrediting to all architects and interior designers to devalue design services in the eyes of the public; for all the schooling, problem solving and responsibility involved in design projects, practitioners are paid little enough as it is.

Ultimately, architects and interior designers would have much more to gain by educating society about the true value of design in our lives—and receive a fair days wage for a day’s design work.

 

 Roger Yee served as Contract editor-in-chief.

 


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