Monday, June 20, 2011

PSMJ Resources Inc. Finds that A/E Billing Rates Decreased in 2010 as Firms Fell Victim to Pricing Pressure

Vital information was derived from PSMJ’s newly released 2011 Fees and Pricing Benchmark Survey

PSMJ Resources, Inc., the premier management consulting firm for the A/E/C (architecture/ engineering/construction) industries, today announced that billing rates for most management positions either held steady or decreased during 2010 and 2011 after increasing in 2006, 2007, and 2009.

From the Principal level all the way down to Junior Engineer, A/E billing rates were down or flat in 2010. This comes after a steady climb since 2006, according to the latest data in the 2011 A/E Fees & Pricing Benchmark Survey from PSMJ Resources, Inc. Slowing market conditions and increasing competition appear to have many firms succumbing to pricing pressure from clients and competitors.

One example of the downward slide in billing rates is at the top Principal level. After a run up from $170/hour in the 2007 survey to $183 in the 2010 survey, Principals billed at a median rate of just $178 according to the 2011 survey. It should be noted that a particular survey reflects the median billing rates for the preceding year.

One of the most common initial reactions to a sluggish market is to reduce fees. “It is just the instinctual reaction to assume that reduced fees will create increased demand.” states David Burstein, P.E., Senior Consultant with PSMJ. “But, that isn’t always the case and this type of strategy can actually end up be quite detrimental to the firm’s financial health. The key is to develop a long-term pricing strategy that identifies where a firm may be severely underpricing their most valuable and unique services.”

Complete details on the latest fee data for the A/E industry can be found in PSMJ’s 2011 A/E Fees & Pricing Benchmark Survey.

To learn more about the keys to a long-term and sustainable pricing strategy along with the latest insight in effective risk management, PSMJ has packaged an intensive two-day program designed specifically for A/E firm leaders interested in achieving lasting profitability. Reducing RISKS, Raising PRICES, & Negotiating Better Contracts will be offered at five locations this summer; July 14-15 in Atlanta, July 21-22 in Toronto, August 4-5 in Denver, August 18-19 in Chicago, and August 25-26 in Seattle. Get more information now, or call 1-800-537-PSMJ to register today!

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