Anchoring: How To Justify Your Fee As An Architect

Anchoring bias is no joke.

It’s one of the most powerful and prevalent biases.

Chances are that you’ve made a purchase influenced by anchoring bias within the past few days. And due to its subconscious nature, you don’t even know that it happened. Pretty crazy, right?

So what is it?

Anchoring Bias

Anchoring bias is our tendency to be influenced by the first piece of information that we see or hear.

It’s the reason:

• Retail stores put their most expensive items at the front of the store → By the time you get to the back of the store after seeing a $500 suit, that $150 sweater doesn’t seem so bad.

• On Sale items leave the original price tag so that you can still see it next to the sale price → Everybody loves to see how much money they’re “saving”.

• Wine bars always have those 1 or 2 bottles for $$$$ on the same list as a $40 bottle of wine → It may be more than what you’d pay at the grocery store but it’s less than that $600 bottle at the top of the list.

It’s so powerful that it even works if the first bit of information you see has no relation to the purchase you’re considering. For example, the numbers that result from rolling a dice or spinning a wheel can skew your perception of price. (Read it for yourself.)

Our brains are wild. 🤯

So what’s all of this mean for you, the architect?

As a professional that wades heavily in the waters of expectations, figures, and financials, it’s worth considering how anchoring bias impacts you and the way your clients perceive your work.

01 // If you’re unsure, aim high

How often do you get asked, “Can you just give me an estimate?”

Ha! All the time right?!

Sometimes you’re able to avoid it with a general response about how it depends on specifics so it’s difficult to say. But other times? You’re so caught in the moment that you toss out a number that you think is accurate. Then days or weeks later you’re told that your estimate was low and someone is upset about it. (We’ve all been there.)

If you spend $10k after a $7k estimate, you’re not thrilled. But if you spend $10k after a $13k estimate, you’ll feel like you got a deal.

Likewise, a client will hate if a project that is estimated to take 8 months actually takes 10 months to complete. But they’ll be ecstatic if their original estimate was 12 months.

So here’s the deal: If you’re estimating anything, aim high.

02 // Don’t shy away from big numbers

Logically, you may think:

“I don’t want to barrage them with a bunch of numbers before introducing the fee.”

But the science says otherwise.

Imagine that you are the client and you don’t hear ANY numbers while the architect is presenting their proposal. Then, all of a sudden, they say:

“Our fee is $250k.”

$250k?! That’s A LOT of money! And I’m already spending a boatload!

But what we know from anchoring bias is that the order of those numbers matters.

“We estimate that the total cost of your project will be $2.2 million. The GC will charge around $300k and our fee is $250k.”

$250k? That seems reasonable relative to the other costs.

The fee stayed the same but the perception changed.

The context of your numbers makes a difference.

TL;DR

Anchoring bias is a powerful and common influence.

Awareness of the order and context of information presented can change the way that information is perceived.

If you’re unsure, aim high. And don’t shy away from big numbers!