How to be competetive in pricing? 7

[CANeng11]

Just wondering if there are any strategies to determine if you are competitive in pricing in your market? Our company is a small, mostly residential, structural firm doing renos, customs, and spec homes. We would love to know what others in our area are charging to see if we are greatly below everyone else or on par.

Any tips?

 

[SteelPE]

Who are your typical clients... home owners or architects. If you are dealing with repeat clients (architects) then you may want to ask them where you fall in relation to your competitors. You may have more luck if you don't ask for specific numbers, but rather if you are above or below your competition.

I find my proposal exploding as of late. My clients tend to be "shocked" by my numbers. I believe this has caused me to lose quite a few projects. However, for some reason, the projects I am working on tend to require way more of my attention then they should (ie, the time associated with projects is much larger than what it used to be/should be). I believe this is causing my proposal explosion.

 

[Ron247]

Lump sum or hourly rate? Something I am really good at and fast, $150/hr. minimum. Something I am mediocre at and slow, $100/hr. Get the picture? What is your value in the area you are competing in?

Problem solving project? You can really undersell yourself there. Sometimes our most valuable work occurs in the first 2 hours. See a solution that is $40k less than anyone else has come up with, what do you charge? Hourly rate x 2 hours = bad idea.

 

[SteelPE]

FYI the section I was referencing was in relation to mislocation of piles and can be found in section 1810.3.1.3 of the IBC.

 

[NorthCivil]

>our most valuable work occurs in the first 2 hours

This more than anything. An engineer to crunch the number is a dime a dozen. An engineer that can put together a neat pile of work with excellent drawings and minimal errors is rare, but still just a commodity.

An engineer who can walk into a concept meeting, drive the design in a direction from the early stages that results in a smooth running project for all parties he affects, is the golden boy. If you wow a client/project team on that front, you can charge double the competition, even with average designs.

 

[MotorCity]

If you frequently lose projects to your competition, you're probably charging too much. For small residential and commercial stuff, pricing is usually the main consideration. Usually the only thing homeowners are concerned with when it comes to engineering services is cost.

 

[Sparweb]

The following assumes that you have some opportunity to negotiate the scope of the job. With some clients you work this out together, with other clients the scope is all written down and you have to to absolutely all of it...

One way I'm experimenting with to help close the deals with shoe-string-budget clients is to divide the projects into "essential" and "nice-to-have" parts. The core of the quote has the essential stuff, and the options are quoted separately. The client can more easily swallow the cost of the essentials, making the deal more likely to close. I give them some time to later add in the options, but not too much, and certainly not after we've packed up to go home.

It takes a bit extra work to quote the nice-to-have stuff because the price for it stands out on its own.
Make sure you have a narrative for each part of the project, especially the core, so that you can clearly discuss how you view the essentials as not sub-divisible.

If you wow a client/project team on that front, you can charge double the competition, even with average designs.

Not when bidding for guvvermint contracts.

http://www.sparweb.ca

 

[Ron247]

Ditto SparWeb. The results of a AE study I looked at one time stated that the #1 thing experienced clients are looking for is someone who can understand "their Needs and Wants". This includes Time, Cost and Quality. You have to be able to identify them and know which category they fall in. Inexperienced Clients are looking for Cost. They do this until one day they realize they were focused on the wrong thing. The 2nd thing the experienced Client was looking for was "your ability to Solve their Problems or Achieve their Goals".