Price vs Cost

February 9, 2017

 I just spent the last 3 days trying to close a prospective client who wanted to have his house built in a mid level subdivision in the south. I received an email inquiry from him thru my webpage

 

I spent the last 3 days introducing myself, my background, my works and basically sharing my experiences. I gave him references to other clients I had worked with and I was hoping he would call them as I am confident that talking to my old clients could only be beneficial to my pitch. Being an internet inquiry, I was trying to differentiate myself from other architects (I’m sure he was talking to other architects) by trying to provide more value to the client.

 

He submitted a layout of how he wanted his house to be like and he was asking for a design & construction quotation after that. Trying to be helpful, I warned him of the pitfalls of the method he was trying to do. He was asking for quotation with only a layout as reference, no measurements, no finishes, no detail. He didn’t even have a perspective to show how the house would look like. I advised him that the proper way to go about this was to have an architect complete the design and construction drawings first before he started asking for bids. In short, he was vulnerable to abuse and I was giving him professional advice on how to protect himself and the investment he was going to make in his new house.

 

After this I felt I was beginning to gain his trust, we exchanged more than 30+ emails in 3 days as I was trying to explain and advise him on the process of starting his project. I gave him a work schedule, fee schedule and even the qualities he needed to look for in the professional he was going to hire. I gave him an updated bill of materials that he could use to evaluate bids; in short I was giving good value and felt that we could work well together.

 

Finally, he invited me for a meeting, I knew that he was interviewing several architect/builders but I was confident, I felt we clicked and I felt that I had displayed enough value and that he would definitely choose me.

 

I however was being presumptive, the last team before me gave him an offer he could not refuse, without any drawings and details they gave him a bid with an amount that was very low and that basically gave the design drawings for free. By the time I faced him, his mind was already made up that my pitch was rendered useless. The battle to pitch value over price didn’t work.

 

These are the type of contractors that I warn people about, locking in a price without any drawings to bind them with is like writing someone a blank cheque. They can give you substandard generic materials and they would still be within their rights as no contract drawings compel them to provide any better.  They will have  all the cards and the client being a layman won’t even know until the final product is completed. He doesn’t know it yet but it’s quite likely that he won’t be happy in the end. I mean at the end of the day, construction is a business, and those types of contractors are still out to make a profit.

 

This leads me to my current gripe. As a professional I try to deliver value for money, I try to serve my clients as professionally as possible. However, all this effort seems useless once the battle becomes a price war. I try really hard not to position myself as a cheap architect as I want to be recognized for quality and not just being the least expensive consultant out there.

 

 

However to the eyes of the client, price is a big consideration and it reminds me of a story I heard from American author/speaker Zig Ziglar on price and cost. He told a story of a time when he brought his 6 yr old son to the bike store to buy him a bike, they were presented with 2 bikes, Bike 1 was a Schwinn bike at $64.95 and the other bike, Bike 2 a discount bike at $34.95. Naturally they bought the cheaper bike, however 30 days later they had to come back to replace the handle bars ($4.50),  then 3 months later, they had to come back to have the sprocket apparatus replaced ($15.00), then 1 month later the bearings broke and it was going to cost another ($5.00). At this point they threw in the towel and decided to buy the Schwinn bike priced at $64.95. The discount bike was only used for a total of 6 months while the Schwinn bike was used and loved by his son for more than 10 yrs.

This story shows that price is different from cost, just because you see a less expensive price tag on the onset, doesn’t mean that it won’t cost you more in the end. This is what I strive for, as Zig Ziglag said, “They may beat me on price, but no one beats us on cost. “

 

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