• Ford Harding, Author of Rainmaking - 2nd Edition (http://www.hardingco.com/blog/)
• Tim Klabunde, Author of the CRM Chapter in the Marketing Handbook for the Design and Construction Professional (www.Cofebuz.com)
• Bernie Siben, Author of A Horse of a Different Color: Marketing in the Public Sector (http://builtenvironment.blogs.com/ )
• Bobby Darnell, Former Director of National Accounts at Reed Construction Data (www.buildingnewbusiness.com )
• Mel Lester, Owner of the Business Edge (http://www.blog-bizedge.biz/ )
• Matt Handal, Contributing Editor of SMPS Marketer (http://www.helpeverybodyeveryday.com )

Join us on September 21, 2009 by reading each author’s post at the sites listed and contributing by commenting with your own thoughts and experiences.

I've been thinking a lot about websites. Primarily because I'm embarking on a redesign for my firm's website and I've been on the hunt for "example" sites that I like. Through that research one thing has become strikingly apparent - architectural websites are terrible. They're overladen with Flash, egocentric in the way they only focus on the firms' portfolio (i.e. there is no content contained within to educate their audiences on any issue(s) they may be struggling with) and for the most part they're all the same - firm, portfolio, news, contact. There has to be a better way. And the first step to finding a better way is to realize the AEC community is like any other service business - their job is to make money vis a vis trading services. And those services are usually purchased on trust and reputation.

When looking for a service provider there are key things you look for - reputation, alignment of services offered with needs, trust and value.

Reputation can be earned through existing client relationships, which in turn create word of mouth referrals to your firm. Reputation can also be enhanced through media stories (assuming they're positive) and through the reputations of individuals that serve as the face of your organization. These types of things generate content for a firms' news section. Something most firms are already incorporating into their on-line presence.

For alignment of services with needs we're going to assume, for the sake of simplicity, that the visitors to your website need the services you provide. Your only responsibility is clearly communicating what services you provide. Remember - you don't have to be everything to everyone. Focus on what you do best and communicate that.

Now the meatier part - value. Let's think about how a design firm can provide value. Hint - it has nothing to do with fees. Instead it's giving clients value for their investment. A design firm can do this in many ways. As an example, perhaps you differentiate yourself through a unique public engagement process that's been shown to generate buy-in from stakeholders earlier in the design phase. That's valuable; buy-in is key in many projects and getting it earlier in the design process saves time and money. Tell your prospects about it through case studies that show solid metrics, post the case studies on your website and drive traffic to them through SEO optimization, e-newsletters, status updates in LinkedIn, etc. Or maybe your visualization services are superior to other firms, explain that to you prospects by telling them why it's important. Does it save them money, or make approval processes easier, or does it make the overall project less time consuming? Talk about your visualization services in the context of how they will solve your prospects' problems, not in the context of "look how pretty these are." Explain what you mean by visualization and give solid examples. Tie the examples back to metrics if you can.

Now on to trust. Trust is a lot harder to win on a website, particularly a static one. But by incorporating a blog into your website you have a vehicle to start a conversation with your prospects. A blog can be used to position members in your firm as thought leaders. It gives people a forum for expressing ideas and communicating thoughts and if comments are allowed (and they should be) it gives readers an opportunity to interact with the blog's writer(s) which will put you on the road to gaining trust. However, before incorporating a blog make sure you have buy-in and commitment from the would be authors. There's nothing worse than a blog that goes for weeks on end with no updates.

The above isn't an exhaustive list of things that would make AEC websites (or any websites) better, but it's a start and I hope it makes you think a little harder about the content you're incorporating. The point to leave with is showing a bunch a pretty pictures, while attractive, doesn't tell your prospects why you're better. You need to explain that through non-promotional, educational content.

While a picture is worth a 1000 words, your competitors "1000 words" are just as appealing.

Oh, and heavy flash sites are just annoying. They take up a lot of bandwidth, some companies restrict access to flash sites on their employees' computers and if the version of flash you've built your site with isn't compatible with the version a prospect has on his or her computer you can guarantee they're leaving your site before setting (the figurative) foot in it.

I believe very strongly that "sending client satisfaction surveys" - whenever you send them, and whether you send hard copy or a link to an online survey - are a great way of saying to a client, "Hi there. We didn't want to waste our valuable time calling you, but we'd like to you to take your valuable time and answer these questions to tell us how good our work is!"

If you really want to do a client survey that will have value, try the following:

1. Do it mid-project so if there are any problems, you have time to fix them before the end of the project.
2. Survey by phone or in a personal visit; demonstrate how you value the client's time by spending your own.
3. Have a high-ranking firm officer (president, vice president, chairman, division manager) who is not involved in the project make the call/visit; this demonstrates your commitment to fixing things if that's needed, strengthens the client's feeling of how you value him or her, and gets the information to people who are high enough in the firm to take action.
4. If any action is taken to fix a problem, make sure the client is told what actions you have taken so that he knows you weren't just blowing smoke to make him or her feel important.

Most important, it is too easy for the client to avoid an unpleasant truth if he is filling out a paper or online form at his desk. A personal visit makes it easier to get at the hard truths that you NEED to hear.

"Money itself isn't lost or made, it's simply transferred from one perception to another." - Gordon Gekko

I just saw the movie Wall Street for the first time this weekend. I guess everybody knows the famous scene in the movie where Gordon Gekko, a corporate raider played by Michael Douglas says, "Greed, for the lack of a better term, is good." But this is not the main speech that Gordon Gekko gives. And I believe greed is not the bad guy in the movie, it is perception.

Let me explain. At the climax of the movie, Gordon Gekko is asked how much is enough and he responds by saying, "It's not a question of enough, pal. It's a zero sum game, somebody wins, somebody loses. Money itself isn't lost or made, it's simply transferred from one perception to another." He gives the example of one of the paintings on his wall and how its value is based solely on perception. The main plot of the movie is about how a young stock broker is tricked by Gordon Gekko into helping him steal an airline company away from its shareholders. They do this by artificially adjusting the perceived value of the stock. In fact, the value of stocks is based solely on perception. Therefore, the value of a company is based solely on perception.

But it doesn't end there. As another character in the movie points out, our money is no longer based on the gold standard. That means that the value of the cash in your pocket is based entirely on perception (at least the value of gold is in some part based on supply). That's why the Federal Reserve can give out trillions of dollars. Because when it comes down to it, its just paper and they can print as much as they want (as long as they can maintain the perception that the money is worth something). Many experts have even stated that the current recession is entirely about perception because the banks have money to lend, they are simply afraid to lend it. So your dad or aunt got laid off from their job simply because of a bank's perception of risk. Your perception may be that there must be a much better explanation to the current economic crisis. This is because everything you see on TV leads you to believe there is much more to it than that. To make it even scarier, if the TV or our president said that our entire economy is based solely on perception and that our money had no real value, the effect on our economy would be devastating. It would be akin to treason against our country (so for god's sake, let's keep this between you and me!). 

What does this have to do with marketing? Everything. The reason you win or lose a proposal is based entirely on perception. Ever lose a proposal to a firm that sucked? Well, that wasn't the perception of the person awarding the job. Proposals are awarded based on perception. The value of your firm's work has nothing to do with whether or not you did a good job. The value is measured by whether your client thinks you did a good job. I fear that marketers focus a little too much on reality (believe it or not), when they should focus more on the client's perception. Because as Gordon Gekko explains in Wall Street, the only reality is perception. 

As some of you may already know, last Wednesday we had the first Philly Design and Construction Network networking happy hour event. It was a smashing success to say the least. As i watched the greater than expected crowd packing in, I couldn't help but to think back to the event's planning.

The event was not really extensively planned. I must admit that I was uncertain about whether we could get as many people to these events as Washington DC did. But what Tim Klabunde and I decided was this, "let's just set the date and get people to come. I mean, we claim to be marketers after all."

And that's essentially what we did. Tim sent out a few emails. I sent emails to people in my local network. I even contacted some local associations. But my strategy with the local associations was not, "please send an advertisement about our event to your membership." It was, "we are having a free networking event. What advice can you give me about getting the word out to your membership?" You'll find that associations are often hesitant to send out notices about other events. They frequently get these requests.

Tim was a little surprised that every association I contacted helped me get the word out to their membership. As marketers and people, we should know that the most productive thing you can do is to help everybody everyday (Tim's saying and the name of this site). However, we often hesitate to ask for the help of others. We are often even more hesitant to accept the help of others when its offered to us. Maybe we don't want to look incompetent or weak. Just think about all the times you said, "no, that's ok," when someone offered you help. Now think about how much more you would have accomplished if you simply swallowed your pride and said, "yes, I would greatly appreciate any help." 

People want to help you because helping other people feels good. And when you rob someone of the chance to help you, you are actually robbing them of their chance to feel good about helping someone out. And that goes against the whole idea of helping everybody everyday. So when you want to accomplish something, let down your guard and ask for help. And when help is offered to you, accept it. 

How do you get 150 people at your next networking event? Simply ask for a little help. 

I sense that a good many marketers are getting laid off due to the current economic situation. If you get laid off, what can you do to get back on your feet and land a new job? I'm certainly no expert on job searching. But here are a few things that have worked for me in the past. I would suggest you give them a try.

1. Work For Free. Let's be honest, most laid off professionals are not spending 40 hours a week looking for a new job. But that's a problem, because you have to address your job search like it is a full time job. But how many resumes can you send out? There might not be 40 hours of job searching to do. Here is a solution, call up a local firm and tell them your situation and that you are interested in marketing for them three days a week for free...no strings attached. Believe it or not, the first firm you call will tell you to jump off a bridge. But the third or fourth firm you call will take you up on the offer. The best case scenario here is that the company sees your value and hires you in some capacity. The worst case is that you develop a good professional reference who feels he or she "owes you." My very first real job came when I called the South Jersey Chamber of Commerce and told them that I would work for free over the summer. In a matter of a couple weeks, the President called me into her office and said that although they didn't have a lot of money, they would pay me (I think it was something like $10 per hour). I think I agreed before she finished the sentence. That was more than any of my friends was making at the time. But after the meeting my supervisor said, "you should have asked for more." But the point is, they had an open position, they just didn't know it. In this world, you have to give value before you get value. Please note that anyone who has ever followed this particular piece of advice has landed a job in a matter of a month or two!


2. Contact Companies That You Want to Work For. If you've ever hired someone, you most likely know the hiring dilemma. You hire someone because things are too busy and you need more staff. But when you are so busy, it's almost impossible to take time to write an ad, review countless resumes, conduct interviews, call references, and make some sort of decision. That's why I say that the majority of open positions are not advertised. Many times there is a job waiting for you at a company you want to work for. Call them and tell them what you can do for them and how it will benefit their company.


3. Bypass the HR Department.  There are so many applicants out there right now that most HR Departments are getting flooded with resumes (many of them better than yours). But how many of those resumes get reviewed by decisions makers? Your best bet is to spend maybe fifteen minutes finding out exactly who makes hiring decisions for marketing positions. Then contact those people directly. In the worst case scenario, you will look like a go getter.


4. Don't Take Silence For an Answer. From my experience, decision making is often the biggest area of procrastination for those who hire. We don't have a crystal ball to see into the future, so if you don't work out...it is going to be our fault. If one of the applicants showed some initiative and called to prompt us to hire, it would make our decision much easier. But guess how many people call once after an interview? Maybe one or two. Guess how many people call multiple times after an interview? It is very rare for a person to do that (heck you don't want to bug the decision maker). Unfortunately, their thinking is terribly flawed. After I interviewed with Syska Hennessy, I must have called 20 times. I left multiple messages, not with HR but with the decision maker. And I called and I called until I got him. And they hired me. It is very hard to tell a marketer that exhibits that kind of tenacity that you won't hire them. 


5. Help Your Network. Yes, everybody tells you to work your network when looking for a job. And although that is good advice, the problem is that you rarely have contact with your network and have not maintained relationships with people you have worked with in the past. In all honesty, this probably contributed to you getting laid off in the first place. A strong network of people who are willing to help you out is the best job search tool money can buy. But you can't expect them to help you if you do nothing for them. Keep up with your contacts, show them that they are important and that you care, and above all else make sure you help everybody everyday (yes, that's where the title of this site comes from). I got hired for my job not because I sent in an application; not because I saw an open position; not because I wowed them with my good looks and charm. I did none of those things. I got my job because a contact of mine got a hold of my resume and placed it on the decision maker's desk. And consequently, I spent the next five years making that guy's professional life as easy as I could.  And not too long ago he said to me, "if you ever need a job, I'll get you one in a second." And I believe him.

 Mike and Bobby are the most popular watermelon salesmen in the city. Each weekend they travel to the country and buy watermelons from the local farmers at 50 cents per melon. They load up their truck with watermelons and head back to the city. During the weekdays, they sit by city hall with a big sign that reads, “Watermelons: 2 for $1!!!” After a few months of this, the two boys wonder where all the profits went. Bobby says, “I know the solution. We need a bigger truck!”

This may seem like a silly story, but it is one that Certified Public Accountants tell when they describe how many businesses today operate. As Marketers and Business Developers, you may become involved with providing pricing details to clients. Unfortunately, there are many types of services and pricing strategies in this industry. It can sometimes get confusing.

While you may not be the expert on what your firm’s services should cost, you should at least try to make sure that you are not selling your firm’s watermelons for anything less than cost. Before you can do this, you need to understand the different pricing elements, structures and pitfalls.

Elements of Pricing

The following are common elements of pricing that you should be familiar with:

• Rates = What you charge the client for your time
• Overhead = The cost of doing business
• Audited Overhead = The costs of doing business allowable (usually under the FAR Act (Part 31) )
• Fee = A percentage mark-up for profit
• Escalation = A percentage mark-up for cost increases in later years
• Multiplier = Pricing based on a multiple of a rate
• Clarifications/Assumptions = The “knowns” and “unknowns” that you based your pricing on
• Reimbursable Expenses = Expenses the are passed on the client like printing, faxes, etc. Some firms take a 10% on all reimbursable expenses. Depending on your client, travel may be considered a reimbursable expense.

Pricing Formats 

 The pricing format you provide a client will most likely be based on the type of service and the preferences of your client. Here are some of the pricing formats you might use.

Hourly Rates

A common pricing format within the consulting world is the hourly rate. There are different types of rates that you might want to understand.

Published Rates

Most firms have published rates. These are the rates you charge for each discipline or employee category. For example, you may charge $80/hr for a CAD Operator. That does not take into account how much each CAD Operator makes. It’s just a price that your firm agreed is reasonable for that discipline. Published rates take into account the cost of doing business and are usually developed with an eye towards realizing a profit.

Actual Rates

Actual rates are what people actually get paid. If Sue’s gross pay is $2,000/week then she probably gets paid $50/hr. Therefore, $50/hr is her actual rate.

Blended Rate

Another kind of rate you may see is a blended rate. This is when you provide one rate for a variety of categories. If your Project Manager’s rate is $100/hr and your Designer’s Rate is $80/hr, you may end up using a blended rate of $90/hr. The idea is for the Designer to do most of the work, which will make the job more profitable.

Loaded Rate

Your loaded rate is the (Actual Rate + (Actual Rate * Overhead %) + Fee. State governments often ask for loaded rates. However, when providing loaded rates, it is important to have an understanding of overhead.

Overhead

Here is where things get a little tricky. Often you need to have an outside accounting firm audit your overhead rate based on what the Federal Government allows under its FAR Act. Most clients will pay all or a portion of your audited overhead costs. The calculation for overhead is usually (Direct Labor + Fringe Benefits) ÷ Allowable Costs = Overhead. Sometimes this is calculated as a percentage and sometimes as a multiplier.

Field Overhead

When you are proposing people to work in the field, you will provide a field overhead. When you are in the field, the client is not expected to pay for the worker’s desk back in the office. This number is usually lower than the home office overhead.

Home Office Overhead

Your home office overhead is the allowable costs related to working from your office. A sample overhead might be 160% of the actual salaries. This takes into account costs like rent, electricity, furniture, administrative salaries, etc. Some agencies will cap your overhead. They may decide that they are only paying 113%. That leaves you eating 47% of your audited overhead costs.

Real Overhead

As noted above, your overhead is often based on what the FAR Act will allow. Remember that lunch you took a client to? That is not allowable and ends up being categorized as a disallowable cost. Most marketing costs are disallowable. To get your real overhead you need to recalculate by adding in the disallowable costs. The way I look at it is Actual Rate + (Actual Rate * Real Overhead%) = Break Even Point. If your firm’s Real Overhead is 185% and Sue’s salary is $50/hr, then you should theoretically charge her at $142.50/hr to cover your costs.

Fees

Your fee is what you take on top of everything else to make a profit. For example, your standard fee might be 15%. You may even be taking an administrative fee of 10% off of your subconsultant’s cost estimate, even though they already have their own fee built into that price. Fees may be set by the client or your firm, depending on the situation.

Escalation

Most of us are hoping for a big raise this year. That’s because we work hard and our firms base their businesses on the fiscal year. Construction projects are different. One project could last for several years. So how do you account for raises and increased costs? The answer is escalation. This is a percentage increase you will add every year. This is another area that agencies like to cap. I’ve seen escalation capped as low as 0-2%. If your CEO announced that raises were capped at 0-2% this year, how long do you think it would take before a riot broke out in the office?

Pricing Strategies

Here are some of the ways you might put your price together (i.e. pricing strategies): 

Cost Plus

You may be asked for Cost Plus pricing when working for government agencies. This means your cost (actual rate + overhead costs) + something. Here are some examples:

Cost Plus Award Fee/Cost Plus Fee

This is your typical “cost plus” work. Here you are taking a fee (like 10%) on your hours. For each hour you bill, you add 10% onto your cost. This is often known as a “loaded rate.”

Cost Plus Fixed Fee

In a cost plus fixed fee environment, you are getting a fixed fee for the work. This amount doesn’t deviate based on the number of hours you spend on the job. The fee is usually paid out in equal payments over the course of the contract period.

Cost Plus Incentive

This type of cost plus job provides for an incentive based fee to be determined at the end of the job, based on parameters such as target cost and target completion date.

Lump-Sum/Fixed Price

Often in the design field you will be asked for a lump-sum price. You talk to your project managers and write a proposal that says “We will design your building for $500,000.” But don’t send that proposal just yet. There is something that your project managers may not have told you.

When you give a lump sum price, it is important to have a complete understanding of the scope of work you plan to accomplish. And it is even more important to know the scope of work you do not plan on accomplishing. For example, how many meetings do you plan on attending? Will you be performing construction administration/construction observation once the project starts construction? Are you expected to participate in the commissioning of the systems? These are the questions you will answer in your Clarifications/Assumptions.

Clarifications/Assumptions

Most pricing is based on some assumptions. You may typically attend one meeting per month. But each client will expect different things from you. So it is important for you to write down the assumptions your price is based on. This is especially important in the area of Lump Sum/Fixed Price. If you don’t do this, you may be giving the client more than you originally intended. Always try to clarify as much as possible with the client and incorporate that information in your scope of work. Any other assumptions you made need to be addressed in the proposal’s Clarifications/Assumptions section. It is also a good idea to think about what other services you can provide the client. There may be an opportunity to offer some additional services that will add value to your client’s objectives.

Multiplier

You may hear your boss say, “Price this at a 3.0 multiplier.” That often means three times the worker’s actual rate. So if you pay Sue $50/hr, then you have to think of her time as $150/hr. Even if Sue’s published rate is $110, to reach that 3.0 multiplier, you are going to need to use $150 in your calculation.

Not-To-Exceed

Not-To-Exceed means just that. You are not going to charge the client more than the agreed-upon amount. If it costs you twice as much to deliver the agreed-upon scope, that is your problem.

Conclusion/Making a Profit

As stated earlier, your break even point is your Actual Rate + (Actual Rate * Real Overhead %). To get this Real Overhead you will probably need to look at your audited overhead statement and calculate the number yourself. Once you have this number, you can compare what you are charging to your break even. However, keep in mind that the overhead is based on last year’s numbers so that could change from year to year. But it is still a good benchmark. Pricing out professional services can seem like a challenge. But in the end, it’s kind of like determining how much you are selling the watermelons for.

*This is excerpted with permission from the publisher of SMPS Marketer. Read More about author, Matt Handal, in our About The Authors section.