Loss leaders and free work: Does giving away the store ever make sense for AEC practitioners?

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Should architects, engineers or contractors ever take on work at "loss leader" prices to attract and build business? The answer, generally, is "no".

Scott Butcher‘s recent Engineering News-Record blog post — Work without pay: Good for architects, engineers and contractors — addresses the challenging question: Should you discount heavily your services, or even give them away for free, to win new clients?

Most of the authorities cited by Butcher provide an emphatic “no” , but there are exceptions. Modest “quick hit” conceptual designs (without complete drawings) may be okay to demonstrate capacity and vision, and in some cases, bidding low or offering free services may provide the way to break into a new market where you don’t have the recent credentials or experiences. And there is at least one observation about the plight of an architectural practice during a recession:

Although there are certainly firms out there employing the loss leader strategy, some have had more success than others. In the height of the Great Recession, firms were using this approach as a stopgap just to “keep people busy” and trying to mitigate their losses – losing $20,000 on a project seemed like the better course of action than losing $120,000 from having staff sitting around, totally unbillable.
The answer it seems, is it may be okay to budget some conceptual design and perhaps a quick bit of free advice as marketing overhead, but you need to think strategically and certainly avoid circumstances where your worth is defined by the price rather than the value you deliver.
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