THE BUSINESS OF LIGHTING DESIGN™
FOUNDATIONS OF PROJECT-BASED FINANCE
Business Intelligence for Designers and Project Managers
Photo Credit: AdobeStock Sodapeaw
On 6 June, in New York City, I attended an enlightening class on the business of light, conducted by Justin Smith from the Zweig Group. Justin, an engineer who returned to school to earn his MBA, was an excellent choice to lead this effort. The session was well-attended, with 16 participants almost filling the room to capacity. Justin's presentation centered on the question: "What is it exactly that you sell?" He emphasized the importance of being able to communicate eloquently in client proposals. While every firm has experience, the challenge is to articulate what sets your services apart. Justin stressed that the opening paragraph of any proposal should focus on vision shaping, as clients are essentially buying time to realize their vision. Most proposals start with a list of tasks and associated costs, but he argued that the emphasis should be on the value provided, not just the time spent. This approach shifts the focus from selling time to selling value. He suggested that instead of a generic opening paragraph like "We are a group of people that do...," firms should aim for statements like "We develop beautiful spaces..." He emphasized that the opening
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By RANDY REID statement should reflect vision and value. To illustrate the concept of value, Justin shared a personal anecdote about seeking a cup of coffee at 3 am in Seattle when he has jetlag. At that moment, he would willingly pay $10 or even $15 for a cup of coffee due to its perceived value at that time. The key takeaway was to understand what value clients place on services and to price accordingly. He pointed out that the decision to hire a lighting designer is often an emotional one, but it is rationalized with numbers. A significant part of the class was dedicated to understanding key financial concepts: Value, Price, and Cost. Justin encouraged designers to link price to value rather than cost. For instance, international design projects might be more prestige-oriented and less price-sensitive, though this can vary by region. However, one participant who works in Mexico disagreed, saying her clients often perceive American firms as more expensive. The discussion then moved to primary expenses, particularly direct labor and other expenses. Direct labor is