Undercut Resistence: 3 Ways To Avoid Getting Undercut As An Architect

Few things are more frustrating than learning that you’ve lost a project because another firm offered a lower fee.

You think to yourself:

• Was our fee too high?

• How are they making any profit with that fee?

• The clients are just going to end up paying for additional services.

• Do the clients not realize that our services are better? Or do they not care?

And this self/firm-reflection is a normal part of the process. But the problem comes later on. Sometimes it happens the first time you get undercut. Sometimes it happens the tenth time.

Eventually, most architects will begin feeling so unsure that they lower their fees and start focusing on price to compete.

But this only hurts the firm and the industry. It devalues your firm, lowers your profit margin, and makes it significantly more difficult to run a healthy practice. Plus, it attracts the wrong clients for the wrong reasons. Firms end up with generic projects for crappy clients that burnout and frustrate their team. Lowering fees also contributes to the commoditization of architectural services in general (which is already exacerbated by RFPs, but that’s a topic for another day). No bueno on all fronts.

Ultimately, it’s important to understand why you’re getting undercut and losing based on price. By definition, this is the only way to get undercut:

The value of your services appears equal to that of your competitors.

Put yourself in the mind of the client. Every firm seems to offer the same solution and, since there’s no differentiation between each firm, the client simply chooses the lowest fee. Why wouldn’t they do that?! It would be crazy for them to spend more money than they have to for the same service.

Knowing this, you only have two options to compete:

1. Lower your fee. (As we know, this is the route most architects will take)

2. Better communicate your value and differentiation. (Welcome to Growthitect!)

So rather than lowering your fee, you need to double down on your differentiation and value proposition. Make your value so clear and obvious that your fee is easily justified.

Here’s 3 ways to prevent getting undercut on projects that you deserve:

01 // Focus on your transformation statement

Your transformation statement helps you stand apart from your competition and position your firm for your ideal client. Here’s the template:

1. We help [X] design/create [Y] with/out [Z].

2. We design/create [Y] for [X] with/out [Z].

For example:

• We design sustainable home additions for growing families without going over budget.

• We help private tech companies create modernized office space in under 6 months.

• We create powerful learning environments for newly-funded school districts through community involvement.

Check out this previous tactic for a more in-depth, step-by-step approach to creating the best transformation statement.

When used correctly, these statements position your firm as the ONLY option that is specifically suited for their situation. Why? Because you “design sustainable home additions for growing families without going over budget” and your competitors “design beautiful spaces” - if you’re a growing family, which statement will speak to you best?

Ideal position = achieved. Moving on.

02 // Study your market differentiation

The transformation statement helps you to position your firm in the market, but you still have to be able to specifically describe your differentiation in detail.

High-quality clients do their research. They explore all their options and meet with multiple firms. And why shouldn’t they? They’re making a big decision and putting a lot of money on the line, so they want to be sure that they’re choosing the right architect and firm.

And as you chase high-quality clients, you must be able to discuss how you compare to your market and your competitors.

It’s not enough to show your work and say “we’ll design something that’s better than anyone else” because design cannot be your differentiation. Architects are trained to understand the nuances and differences in design, most clients are not. Meaning they won’t see and understand those differences in the same way that you do.

I suggest the “different not down” method (DND) for discussing your competitors with your clients. You don’t want to bash your competitors - that’s not a good look. But you want to use questions about your competitors to further solidify your fit for the client.

The concept is simple. When your client brings up a competitor…

1. Compliment their strength: “ABC Architects has a great focus on modern design.”

2. Introduce your competitive differentiation: “We’re a bit different because we focus on clear communication with stakeholders, which is why 95% of our projects are completed on time.”

3. Redirect with a related open-ended question: “How important is it to you that the project is completed within your 12-month timeline?”

The homework on your end is to understand #2 - your competitive differentiation - for each of your primary competitors. If you have a DND statement for each competitor, then you can flawlessly address your market differentiation with every client.

Market differentiation = locked in. Moving on.

03 // Make clients feel important

The vast majority of financial decisions are made with emotion rather than logic. Feelings drive favor. As humans, we’re hardwired to find comfort and trust our gut, especially when money is on the line.

• We prefer to buy our cars from the same salesperson or dealership.

• We spend a lot of time finding the right realtor to help guide our home buying experiences.

• We even go back to restaurants over and over just to see the bartender, waiter, or waitress that always gets our order right.

When something makes us feel important, we stick with it.

And clients are no different. You need to make your clients feel special and important so that they’re naturally drawn to work with you.

Here’s three ways to do this:

1. Build rapport at the beginning of every client meeting with the research, ask, and relate methodology.

2. Dive deep into client pain points to understand superficial pains, the impact of those pains, and how those pains can be relieved.

3. Ask open-ended questions with the right tone, flow, and frame to increase your likability.

I challenge you to try and NOT make your clients feel special by doing these things. I think it’s impossible 😏

TL;DR

Getting undercut sucks. But what sucks more is lowering your fees because you feel like it’s the only option.

Instead, double down on your value proposition by:

1. focusing on your transformation statement

2. studying your market differentiation

3. and making your clients feel important.

You will clearly justify your value and clarify your difference.

If you do all of these things and the client doesn’t choose you, then you can rest-assured that they weren’t the right fit for you anyways 🙂

Goodbye, undercuts! 👋