Charging for design advice

In a recent blog – The China Syndrome – I discussed a problem that a client had identified of customer development support. The problem being encountered is that traditionally working with a customer on prototype development had been an essential part of the marketing plan; using expertise and knowledge to provide a solution through using their products. Once the product had been demonstrated at a test level then volume sales could follow thanks to this earlier specification work. It is or was a familiar business model using technical sales activity to build a specification so that boxed goods products could then be supplied for the volume production needs through distribution networks. Of course holding ‘spec’ has always been an issue, but now with the massive price difference between product produced in China and in home based factories not only are buyers switching, but the price and margins are destroyed. It leaves companies like our client with the knowledge but without a means of charging for this expertise. I return to this subject because another client, this time operating in the building services sector, has a similar problem. Here prospects might recognise they have a problem but need help in identifying its exact nature before selecting and installing products that will provide a solution. The design support required does not stand the cost of a specialist consultant but typically calls for a site visit leading to a report and recommendation for supply and fix. The real issue they have to confront is that the design advice is essential to a successful outcome, but not traditionally chargeable as it is part of the quotation process. The question now is can this be made chargeable. This is where marketing to build trust in the brand can create an environment where the relationship created in the specification phase carries over to the implementation where a price premium for the safe option can be traded against the risk of using a remote low cost supplier. It only takes a container to go over board in the South China Sea and suddenly the supply line comes to an abrupt halt and what does that do for reputation of a carefully nurtured brand?