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Building Designer Fees and Issues.

20 days 23 Last Comment
clairev
Aug 30, 14 6:06 pm

Repost:  

The issues I've been running into is random people and Mexicans charging little to nothing for work, there's a guy a few miles away, he works at a custom millworker shop and does plans on the side, the guy charges $.20 cents a square foot. That's one, another is a guy that only charges $.25 a square foot, and with that guy, I just got a client that did the design with him, the whole plan was in one sheet, no cross sections or detailing, just your elevations, floorplan, roof plan, foundation plan and nothing else. One the worst plans I've seen lately. The plans didn't pass review for permits and many subcontractors said they were wrong. The guy calls me and that he had paid $300.00 for the plans. Like wtf. Said he really needed to sit down with me. Long story short, I met with him in my office, showed him one of my plans which consisted of 18 pages, and then charged him 2,500 dollars for design alone. The guy freaked out and told me it was way too much and that I was way too expensive. Told him thank you, walked away, then came back and asked me if I could lower the price and told him I couldn't help him at the cost he's asking for. He came back with 700 dollars which insulted me even more. 

What I do and what the other guys do can't be compare quality of plans with so much detailing and service, to se other what I call sketcher that does design work. 

 

How am I supposed to educate and obtain clients with people like that? 

This is in the great state of Texas.

 

Non Sequitur
Aug 30, 14 6:39 pm

you lost me at "Mexicans"

clairev
Aug 30, 14 6:47 pm

Illegal Mexican Nationals. (no offense to Mexicans in general, I'm part mex myself)

Ahmed Ebrahim
Aug 30, 14 6:48 pm

If you see him again tell him that the subcontractors will take from him too much money because of variations they will made because they didnt have any details in design drawings

All non- professional clients see the design works is only papers that he have to make to take the permits to start construction 

But they didnt know that design and engineering works is the core of our  works and to pay money in drawings is very little than lose money in construction because of miss coordination in drawings

clairev
Aug 30, 14 6:51 pm

Here is from a recent post I made on my fees :

For residential design, lets say a home costs my client 350,000 to build, after review, i decide i'll charge 2.5%-3% of the total, sometimes i'll come in with a fixed price per sq.ft. at around $1.50-$3.00, just on design alone. When it's a remodel or something of that sort, I go by the hour and costs range from $100-$150 per hour, usually i'll cap it. On commercial buildings my costs will be 4-5% of costs for design alone. now fyi, none of this is including structural engineering, civil engineering, soils testing, or administration, that would all be aside. I'll also throw in renderings which usually takes me 2-3 days normal 8-5 working hours at $40 an hour. Unfortunately, Sometimes i feel like i'm breaking even...

Those are my typical costs, they will vary though.

Qualify your clients. Sometimes you don't accept such clients. The point as professionals is not to serve those who can not pay you proper fees. If they can't pay you then there is no way they are going to afford to build the project. It should be a BIG RED flag. Now, did that client actually built this house? If they balk at a ridiculously low fee like $2500 then they can't afford to pay for a $400K to $600K home.  Part of the cost of building a home is to pay for the people that designs and the people that builds the home.

One thing you did somehow do partly right was you didn't back down. He came back at $700. However, part of your mistake is you didn't capitalize on that being that your service requires re-going over program because what the previous person did was outright incompetent and there is no way to know if the design really meets and address his needs as is designed. Therefore, you need to go over these matters and go over the design process. In addition, you need to go over things like structural design, building codes/engineering standards that the building needs to meet in order to safeguard life and limb of the client and anyone else. You need to educate by communicating the point that designing buildings is a public act not just to the present but also to the future. The building may still be standard after the client's life on earth is over. This is a one time investment and seldom does people get second chances because most people don't make million dollars a year income. A custom home is a once in a life time deal for majority of people so the investment matters because it is less expensive to make the changes on paper than with stick, brick & mortar. 

You need to communicate this point to the prospective client. To do this right and proper, which is what the client wants.... right? (You need to make the point and talk to their wallet in that frame of mind).

If they still can not afford to pay you, then they are not ready for professional services of architects, building designers, etc.

As professionals, we literally need to stop trying to serve those who can not afford our services except through a non-profit service like Habitats for Humanity. We are not Habitat for Humanity. We serve private citizens who can not afford our services by not serving them.

Otherwise, if you attempt to serve those who can not and will not pay you fair compensation for your time, you are doing a disservice to them and yourself by leading them on a primrose path to failure.

If they can't afford your services at fair pricing with reasonable payment plan, then they aren't going to get the loans they will need.

Professionally, we should collective shun anyone that has the financial means to pay us fairly but refuse to.

Professionally, we must value ourselves enough to not be used and abused.

You can however deliver services they can use and afford but do only that is necessary and with scope of pay. If they can afford more later... more can be done later. If they can only afford $700 then do only $700 worth of work in the package of what you offer. Don't bend over backwards for those who can not afford you without a good justifiable reason. Not everyone lost their homes to a fire or their business to a tornado or hurricane. 

We can't be sympathetic just because they are poor and bend over backward. If they can't afford then they should stay with renting until they can.

Remember, you're not a charity so don't be such a good samaritan that you will do anything and ben over backwards to do anything with no pay. The idea of altruism to a fault is death to business when they don't reciprocate with the same degree of altruism.

Too many people in this world are vipers who wants everything for nothing. That is a one-sided perspective and that is no good for us as professionals.

Carrera
Aug 30, 14 6:56 pm

Clairev, Well…here you are again. Framing this one around the cost/value of house plans is a bit tepid for me. I suppose everything here is about dealing with people but people building houses for themselves smells “general public” to me……nobody besides Costco knows what to do with these people. Do what you must - I’m sure Richard can figure something out.

You gave a figure of $350,000 construction cost. Don't forget that there is another 35%+ in contractor overhead & profit, misc. fees and so forth. Then there is your fee, the engineer/consultants, land surveyor, geotech, etc.

This home would cost the client in project cost (not counting land acquisition cost) over $500,000. We are talking closer to $525,000. 

How many hours will it take you to prepare project program and all pre-design services? How much time will it take you prepare schematic designs? Design development? Code review? Structural design including foundation design? Framing plan? Construction document as a whole. Tally up the estimate of hours? What is the duration of design service to permit issuance? How much operation costs are you accruing during that time frame? How much other projects and income are you receiving concurrently? How much costs in printing and equipment costs? Tally up the cost, throw in about a 10-20% padding to the costs to include some variables.

How much total cost are you going to accrue to deliver your services. Then you need to take taxes into account so you charge enough that you'll have contribution margin and net profit at the end of the day. You should have some rough maximums figured in for taxes. This way, you don't have to worry about not having cash to pay your taxes when you need to. It is all part of business accounting. Your services needs to cover the business costs otherwise, you are not making money. 

Carrera,

Some people think custom design services is just a product like a stock plan. The reason stock plans are cheap (more for Clairev then you Carrera) is that it is sold and used multiple times. Custom homes are one time designs not mass produced commodities. 

Some people just can not afford us. If they can't then they are ready for our design services. They are not client material.... not yet. They are not ready to be served in this capacity. This is why banks don't lend to people who can not afford to pay their loans at the time they applied. At least, the good ethical banks. Loan is a service and the good banks wants to make sure they are credit worthy. The client needs to get there financial house in order and be ready or it will just be a disaster.

By us not serving them now, they have time to get things in order so when they can be ready, they can use our services. 

clairev
Aug 30, 14 7:20 pm

Give me your insight on all this Carrera. I'm interested to know. Sincerely. I am going to cease selling stock plans. I'll stick to custom design. 

I'll comment on the stock plans part. If I were to do design and sell stock plans, I need repeat sales of the particular plans for each design to pay for itself. If the plans are used only once, it doesn't make sense. Stock plans in themselves are not bad or evil. However, it doesn't aid people in perceiving custom design as just a commodity and not a service. It may make things harder for you to get the prices for custom design work because of cognitive confusion and inability of most people distinguishing stock plan (commodity) with custom design (services). 

In addition, stock plans are the least environmentally sustainable form of designing buildings because the plans are not used where its original design vision which may not really exist on earth.  

To help understand stock plans. Stock plans is like software development. You can think of the design process of stock plans like the R&D/Software development cycle. This may cost a bit in your time (which is money) and your material/operational costs. Once the 'plans' or 'software' (the PRODUCT) is made then you need to sell in a level of volume to pay for itself in the market. At typically $250-750 for a stock plan, it will typically require 15-30 sales to pay for itself. In regards to software, its typically in the $30 to $100 price tag and would require considerable volume to make break even point. 

It's basically the break even principle.

From that point on, it's profit. If you don't sell in quantity on the stock plans, you would be investing too much without the return on investment.

In custom design, each project must make the return on investment for that project. ROI must be meet with each project. The goal is to exceed the ROI and in turn make your profits.

It needs to be done in a timely manner.

wurdan freo
Aug 30, 14 8:05 pm

What's wrong with random people and Mexicans competing against you? Not to mention you CAN hire an Architect from India for $3/hr to produce your custom design on a web site like e-lance. You are competing with Mexicans... and Indians, Russians, Chinese, Argentinians, etc. Build a better business or find a different line of work. Or maybe go find the intern/drafting "Let's Start a Union!" thread and post there. 

If you keep competing against the bottom of the bucket, that's what people will think of your services. 

clairev
Aug 30, 14 9:04 pm

Illegal aliens in the United States providing design work. That's what's wrong. 

Carrera
Aug 30, 14 9:14 pm

Clairev – “Just when I thought I was out, they pulled me back in” – Michael Corleone

I don’t know Clair; I think that stock plans are a good path for a semi retail environment. The problem with most all sources of stock plans is the foundation plans are never right and “Stephanie” always wants to change something. Offering stock plans can be a good way to make some cash with almost 99% wanting/needing changes…is where you come in. Nobody can put a retail comparative number on what you are going to charge for that. Think you should reconsider.

I never swam in the custom home market but I did have to do a lot of cottages and custom homes for the CEO’s I worked with. What I found most revealing about the experience is that there was always sexual intrigue involved, almost 90%. One CEO’s wife found love letters of a tryst he was having in St. Louis and paid dearly with a $1.5 million remodel. Another CEO got found out that he was “playing with boys” and that one cost him about $500k (he got off cheap), another poking his secretary and this one went Carte Blanche and ran into the millions. We had a base design that he squirmed at but agreed…then at every juncture I would offer up expensive alternatives and she would say “I want that”, then I’d go to the CEO with the change order and he’d say “Hell-no!”. Then I’d have to go back to the wife and say “He said no”, then she would say “Just a minute” and disappear into another room….coming back minutes later saying “he said go ahead” ……and the list goes on. Almost in every case the CEO was dipping it somewhere and the house job was the “revenge”. Imagine working in that environment.

There are two segments of custom, one is just someone not wanting to work off a plan book…this market is filled with “the public” and people named “Stephanie” and I’d hold up a wooden cross to those. The second are the people with real money looking to do something special and different…these people have seen good design and will pay for it and have friends that have had the experience and know what the cost is…these people are not lurking around in adobe huts with dirt floors looking for Jose or Carlos…..but you need a portfolio and reputation/following to do this. Stay at the bottom or at the top and stay out of the middle.

ps – Being a woman it will likely not happen but if you guys go top custom be prepared for the “invite”. There is something about shagging your architect that plays into the whole fantasy…..books written about it…look at Wright and Mies (Smiling).

 

jla-x
Aug 30, 14 11:08 pm

A van of Mexicans just got busted at the border...they were smuggling in house plans.  There were also dozens of other plans seized in a raid.  They suspect that Mexicans drew them because there were cars drawn on the lawn in plan.  Also there were details of chili pepper lights  everywhere.  

Clairev,

Foreigners don't even have to come to the U.S., illegally. They can work all out of India or China in the digital age when things are in digital format.

Heard of e-submission of submittal documents?

clairev
Aug 31, 14 12:09 am

lol @ jla-x, yes, but this is different, these people are offering plans and are also fake plan stamping some documents. So that's one in part of the issue. The other is they are here, illegally, in the united states working and taking our jobs away. 

If they are fake stamping and you have proof.... you report them to TBAE.

You can also report then to INS if you have proof and information about where they are. 

boy in a well
Aug 31, 14 2:04 am

can we just burn this thread?

its a gross insult to the profession.

The issues at hand be it illegal aliens or those charging ridiculously low fees is a real factor and it degrades residential and light commercial building design where we should be able to make substantially more than minimum wage.

We also need to not serve clients not able to pay us fair compensation for our services because it is a disservice to ourselves and to the client. The most basic permit set consisting  of 7 to 15 sheets. A very basic set at 1/4" = 1'-0" scale on 24x36 sheets just costs too much in labor expense (yes, pay yourself as if you were an employee to your business as you go.) The rest on top.... like a profit share, you pay yourself as bonuses or dividends or similar arrangements while leaving enough so the business can grow and one can hire employees if necessary.

The reason most building design businesses don't have employees because they don't charge enough in order to build capital so one can have employees. A race to the bottom feeders isn't good for business.

The lesson is good for others, too. It is the point where if you are a building designer and not seeking a license to not race to bottom feeding. In addition, it may help as a business to not rely solely on one service such as building design (or architectural services for those licensed) because market demand for design services fluctuates and you need other services to survive and keep cash flow from bottoming out and living several months with no pay. When you own & run a business, you don't get unemployment for no work in connection with your business.

Non Sequitur
Aug 31, 14 8:18 am

jla-x, glad you could make me chuckle with that post on a lonely sunday morning in the office.

gruen
Aug 31, 14 10:54 am

Whenever a potential client starts fretting about my cost at an initial meeting and/or suggested that I should give them a bargain price because they might give me future work, loads of red flags go up & the price goes up cuz I know they will be a difficult client.

Carrera
Aug 31, 14 12:01 pm

I agree with gruen. Also, if a person wants to talk about what a service will cost before asking about what the service will be, I would first stop them in their tracks, take control of the conversation and redirect them into the correct order. If they persist to focus on cost THEN the red flag goes up.

It’s like going to a job interview and starting your pitch with how much money you need before telling them what you do. Someone like that has some kind of serious malfunction and needs a doctor not an architect.

Gruen, remember The Worlds Three Biggest Lies? Here are the Top 10 Lies by Clients at Interviews:

  1. “I have more work coming”
  2. “Money is not a problem”
  3. “This project will put you on the map”
  4. “You can make money on this project”
  5. “You will get everything you need right on time”
  6. “Our marketing team will be very supportive”
  7. “I’m not going to be involved in your design decisions related to esthetics”
  8. “We share common interests”
  9. “We have a budget and a deadline”
  10. “You are the most important person in my project”

I love the way you lie.

I love the way you lie.

Eminem ft. Rihanna

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