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Re: General business questions

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No Flame, I agree with you. The evolution of offices that lease their space
has been to downsize for over twenty two years. They started with cutting
back on inventories (manufacturing offices), then smaller cheaper rentals,
lower energy costs. Finally, they cut back as much of the overhead as
possible that they started to cut back on employees and benifits in order to
preserve annual profit margins and satisfy investors. It was only a matter
of time before the unemployed engineer would start to have the advantage
over larger offices. Cost cutting can only continue until you have nothing
left to cut.
These companies have cut back to preserve profit to a degree that an all
time record of people are starting their own competing firms and businesses.
They are starting out with the same degree and level of skils, have the
proper tools and can do the job without paying for employees, office
overhead, benifits. Essentially (for those who like to get even)
independents will have essentially laid off conventional offices - leaving
the market open for those in private practice.
Why shouldn't the individual do what the larger offices can't - have greater
profit margin with lower overhead? As the office reaches a point of no
return where there is only profit or managerial salaries and bonus to cut,
the independent engineer will have the advantage. He can do the same job
with the same tools and be far more profitable than the offices. This is the
opportunity for the independent to finally take the fat that they deserve.
Independents will ultimately need to compete with one another, but I feel
confident that prices will level off to a general acceptable fee without
price fixing. We see this every day in the items that we buy which are all
priced within a few dollars of each other. If we cut into this profit margin
now, we leave no room later down the road for when the market is glutted
with competition. Therefore, there is no reason why independents should not
take advantage of capitalism and put as much profit in their pockets as they
can until the market tightens once again.
This appears to be the era of the Independent.
Dennis Wish PE

-----Original Message-----
From: Jeff Smith <smthengr(--nospam--at)sirius.com>
To: seaoc(--nospam--at)seaoc.org <seaoc(--nospam--at)seaoc.org>
Date: Friday, February 06, 1998 11:47 AM
Subject: Re: General business questions


>I have heard some objections on the list about discussing fee, maybe due to
>some legal issues. But here I go anyway. I don't feel that home base
offices
>should necessarily charge any less than average fees by offices. In
general,
>low overhead practices (i.e. home business) which charge much less than
>office practices leave clients confused over the huge differences in fees
>for the same work. To each his/her own, but by charging low fees you will
>find that the word gets out and you will continually be working for clients
>who are only looking for the bottom line...the old "engineers as a
commodity
>syndrome". If you don't have any work the natural tendency is to give a
>lower fee to assure work. Having an adequate fee will allow the engineer
the
>time necessary to do better work and it will ultimately benefit the
>profession. I would much rather loose a few jobs, maybe work less but earn
>the same amount at the end of the year. It is not unusual to have fee
>proposals range 200-300% for small and residential jobs.
>
>Yesterday, I discussed fee structure for a housing job a colleague was
>bidding. He was used to larger commercial jobs. His fee, which I agreed was
>appropriate, was twice what the client was looking for. Needless to say he
>did not get the job. Same old story. Flame on!
>
>Regards,
>Jeff Smith
>
>
>
>
>