Apparently there's something I'm not getting, any advice would be appreciated. Recently a client approached me wanting a proposal to do a small restaurant addition. The addition is about 700 SF and all brick. They also want a 20x20 outdoor patio (raised 30" off the ground), a 15x15 receiving dock enclosed for an office, and some interior remodel in the existing portion of the restaurant. They will also need a redesign and construction of an entrance canopy. I took a number from Means of 250 / SF and added for remodel, etc. and came up with an approximate ballpark of 185,000. According to Means the national average for a fee is 7% for a total fee of $12,950. I am really wanting the work so I cut it by 50% to $6,500 for full construction documents, code review, renderings, meetings and sealing the drawings. When I met with them they told me that they really liked me and wanted to work with me but when they got the price they are not returning phone calls. We really hit it off so I don't think it's personal but all price related. Does my number seam unreasonable? I don't get it, any advice would be appreciated.
I would have told them the sacrifice you took for their benefit first.
Second I would explain the cost of construction and some of the process.
Third CALL THEIR BUTTS BACK! I 'D WANT THAT PROJECT and explain the situation on funds and see if they are willing to talk and are they currently looking for other architects?
Before they got the price they told me that they were not even going to consider shopping my number around (although I wish they would then maybe they would understand how cheap I am working) because they wanted to work with me. I typed up a four page proposal letter stating all anticipated scope and a drawing list which included 13 drawings. In the letter I explained the national average fee and the ball park figure etc. so I would think they would understand.
I agree with won and done Williams that some clients are just cheap and to move on. Just was curious about what the forum thought as far as if my price was too excessive or not because this is the second time this has happened to me in a weeks time. The time before I gave a proposal to do a permit set of house plans for a builder who needed them sealed. I quoted 3,500 for full drawings and seal and never heard from him again. Trying to get a small practice off the ground. Not sure what else I can do as I'm practically giving the work away.
Don't cut your prices like that! In my experience you will always face a high percentage of these types of projects that just go nowhere. Cutting your price, in my experience doesn't usually help, either they have planned for the fee or not, a few thousand here and there usually doesn't make the difference or effect the percentage of work you sign. What it does do however is kill your profit margin on any projects that you do get.
Basically plan on chasing a lot of jobs, writing a lot of LOA's.and only getting a small percentage of those jobs. Don't chase the work by lowering your fee from the beginning. If they come back needing a little something to sweeten the deal then you can knock some fee off but let them demand that first. You're killing yourself by lowering your fee first. Play the percentages negotiate only when your actually negotiating against someone.
Good luck. Plan on loosing a lot more jobs this way! It's normal and healthy.
Great advice, thank you. Get this she has since e-mailed me freaking out about the fee. I am completely at a lost for words. What does this lady want from me? O well, I guess you can't win them all, ha, ha.
I guess she has no idea about what is involved. I guess she expects me to do everything, which includes foundation design, shear wall design, sizing the roof structure and detailing the existing to new connections, and seal the drawings for a few thousand dollars. I wonder if McDonalds is hiring, ha, ha. Maybe they want to pay me in hamburgers like won and done Williams suggested.
let them shop around...some numbers will come in higher than yours others will be cheaper, they might go with the cheapest number, which will most likely be some rando draftsman on craigslist...they will do a shitty, incomplete, design which just means the owners will pay the difference in fees 10 fold in change orders down the road. Explain it to em.
I just spoke with the city plans examiner who has been working with them. Apparently they complained to him about my fees being to high. He told them to get another quote. Good luck finding someone who would put their seal on a drawing done in crayon. He told me that they will probably come back to me once they realize that my price was dirt cheap. I will tell them to shove their restaurant addition where the sun doesn't shine.
Business is business, you don't want to piss people off.
If they think your fee is high, wait until they see some construction costs.
If they come back to you, you are honor bound to stick to your absurdly low offer. Raising the fee makes you look bad - it's called bait and switch. If you don't want to do it tell them you are too busy. But if they can wait ... you can either string them on until they give up or offer to bump your another job for a premium. :)
If they want to go ahead and you want to do it, get paid up front for each phase and stop work the second you're done. Don't release anything without a cleared payment in full. Be sure to have a clause in you agreement detailing a good rate for extras, keep rigorous track of them, and bill them regularly.
If, if, if ... Probably nothing will happen, but it's amusing in a sad sort of way to prepare yourself for dealing with schmucks (Yiddish version).
That you have to do this is another reason this profession sucks.
Also: raise your fees. There is only room to negotiate if you don't start at the bottom.
Well, I'm probably the cut rate architect here. I try to gauge my prices three ways before I quote - $/PSF, $/hr & $ per construction cost. I probably would have ended up slightly lower than you but not at half. I'm also trying to get a practice off the ground but feel I have to compete on price as well as quality. I do raise the prices every quarter. I might have to reduce them once winter comes but right now they are going up.
Your price is not out of line, but you might consider what service you offer for the price.
Miles gave some great advice. It's hard to discipline yourself to follow his scheme exactly, but you've got to try your best. Keep good records, don't overshoot the phases, etc.
Now, as far as pricing a job....
First of all, $250/SF for a commercial job sounds real low unless you're in a rectangular state (i.e., the Midwest or something). Out her in Cali, I can barely do a house for that money.
Second, I do a similar thing to what Gruen does to arrive at a fee... Consider it from all three angles; SF, hours, and percentage of cost. Lately, I've been using percentage of construction cost as my primary guidepost. I consider myself a bit of a 'discount' guy... I like to get my client's total design fees to below 6% of estimated construction cost. That includes everyone; Myself, structural, M/E/P, energy, etc. I usually end up at about 4% for myself, and 2% to cover everyone else.
It's tempting to try to low-ball to get the job, but it always turns out to be a disappointment, as I've found then cheap clients often turn out to be the most demanding clients, and once you're 'in it' the only escape is completion. I've got one job right now that is a perfect example of that... I bid it too low and it's been a real albatross.
Another thing to consider is that if your price is too low on a job where a client has expectations to see a higher price, your low-ball bid might be the thing that scares them off! When I get a bid from a contractor that's 'to good to be true', I'll generally reject it, as my assumption is that they weren't paying attention to their pricing which is a big red flag in accepting a bid. I've got a pretty good feel for what certain things cost, and an expectation of what kind of prices I'll see.
Price the job fairly for yourself AND the client, and you'll get jobs that pay you adequately when your price is accepted, and weed out cheapskates that will just be a pain in the ass and unprofitable for you.
If you get 20% of the jobs you make a proposal on, you're doing good. If your conversion rate is higher than that, you're working too cheap.
If the client is going to low ball your fee, he or she does not have access to capital or financing to complete the project and probably will never have access to capital or financing. Don't even bother getting started with this type of client; it's not worth your time.
[I've always found it strange how architects have a hard time heeding this advice. I've seen at multiple offices principals wasting time on what are obviously deadbeat shysters. I don't know if it's an innate optimism or absolute cluelessness of the development process.]
Don't drag yourself down even further or you'll be stuck for eternity working for 50% or less and you'll have to take extra shifts flipping the burgers in a restaurant you designed.
Mar 25, 14 11:29 am ·
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Advice
Apparently there's something I'm not getting, any advice would be appreciated. Recently a client approached me wanting a proposal to do a small restaurant addition. The addition is about 700 SF and all brick. They also want a 20x20 outdoor patio (raised 30" off the ground), a 15x15 receiving dock enclosed for an office, and some interior remodel in the existing portion of the restaurant. They will also need a redesign and construction of an entrance canopy. I took a number from Means of 250 / SF and added for remodel, etc. and came up with an approximate ballpark of 185,000. According to Means the national average for a fee is 7% for a total fee of $12,950. I am really wanting the work so I cut it by 50% to $6,500 for full construction documents, code review, renderings, meetings and sealing the drawings. When I met with them they told me that they really liked me and wanted to work with me but when they got the price they are not returning phone calls. We really hit it off so I don't think it's personal but all price related. Does my number seam unreasonable? I don't get it, any advice would be appreciated.
I would have told them the sacrifice you took for their benefit first.
Second I would explain the cost of construction and some of the process.
Third CALL THEIR BUTTS BACK! I 'D WANT THAT PROJECT and explain the situation on funds and see if they are willing to talk and are they currently looking for other architects?
Before they got the price they told me that they were not even going to consider shopping my number around (although I wish they would then maybe they would understand how cheap I am working) because they wanted to work with me. I typed up a four page proposal letter stating all anticipated scope and a drawing list which included 13 drawings. In the letter I explained the national average fee and the ball park figure etc. so I would think they would understand.
I agree with won and done Williams that some clients are just cheap and to move on. Just was curious about what the forum thought as far as if my price was too excessive or not because this is the second time this has happened to me in a weeks time. The time before I gave a proposal to do a permit set of house plans for a builder who needed them sealed. I quoted 3,500 for full drawings and seal and never heard from him again. Trying to get a small practice off the ground. Not sure what else I can do as I'm practically giving the work away.
Don't cut your prices like that! In my experience you will always face a high percentage of these types of projects that just go nowhere. Cutting your price, in my experience doesn't usually help, either they have planned for the fee or not, a few thousand here and there usually doesn't make the difference or effect the percentage of work you sign. What it does do however is kill your profit margin on any projects that you do get.
Basically plan on chasing a lot of jobs, writing a lot of LOA's.and only getting a small percentage of those jobs. Don't chase the work by lowering your fee from the beginning. If they come back needing a little something to sweeten the deal then you can knock some fee off but let them demand that first. You're killing yourself by lowering your fee first. Play the percentages negotiate only when your actually negotiating against someone.
Good luck. Plan on loosing a lot more jobs this way! It's normal and healthy.
LOL Restauranteurs are the worst. Even worse than garmentos.
Advice? Don't help someone cut your throat.
Great advice, thank you. Get this she has since e-mailed me freaking out about the fee. I am completely at a lost for words. What does this lady want from me? O well, I guess you can't win them all, ha, ha.
LOL....I bet they want to pay you in Cash....at half the price. Plus they want you to thow in the Handicapped Access Ramp for free.
I guess she has no idea about what is involved. I guess she expects me to do everything, which includes foundation design, shear wall design, sizing the roof structure and detailing the existing to new connections, and seal the drawings for a few thousand dollars. I wonder if McDonalds is hiring, ha, ha. Maybe they want to pay me in hamburgers like won and done Williams suggested.
let them shop around...some numbers will come in higher than yours others will be cheaper, they might go with the cheapest number, which will most likely be some rando draftsman on craigslist...they will do a shitty, incomplete, design which just means the owners will pay the difference in fees 10 fold in change orders down the road. Explain it to em.
turds.
I just spoke with the city plans examiner who has been working with them. Apparently they complained to him about my fees being to high. He told them to get another quote. Good luck finding someone who would put their seal on a drawing done in crayon. He told me that they will probably come back to me once they realize that my price was dirt cheap. I will tell them to shove their restaurant addition where the sun doesn't shine.
Business is business, you don't want to piss people off.
If they think your fee is high, wait until they see some construction costs.
If they come back to you, you are honor bound to stick to your absurdly low offer. Raising the fee makes you look bad - it's called bait and switch. If you don't want to do it tell them you are too busy. But if they can wait ... you can either string them on until they give up or offer to bump your another job for a premium. :)
If they want to go ahead and you want to do it, get paid up front for each phase and stop work the second you're done. Don't release anything without a cleared payment in full. Be sure to have a clause in you agreement detailing a good rate for extras, keep rigorous track of them, and bill them regularly.
If, if, if ... Probably nothing will happen, but it's amusing in a sad sort of way to prepare yourself for dealing with schmucks (Yiddish version).
That you have to do this is another reason this profession sucks.
Also: raise your fees. There is only room to negotiate if you don't start at the bottom.
Your price is not out of line, but you might consider what service you offer for the price.
Craigr,
Miles gave some great advice. It's hard to discipline yourself to follow his scheme exactly, but you've got to try your best. Keep good records, don't overshoot the phases, etc.
Now, as far as pricing a job....
First of all, $250/SF for a commercial job sounds real low unless you're in a rectangular state (i.e., the Midwest or something). Out her in Cali, I can barely do a house for that money.
Second, I do a similar thing to what Gruen does to arrive at a fee... Consider it from all three angles; SF, hours, and percentage of cost. Lately, I've been using percentage of construction cost as my primary guidepost. I consider myself a bit of a 'discount' guy... I like to get my client's total design fees to below 6% of estimated construction cost. That includes everyone; Myself, structural, M/E/P, energy, etc. I usually end up at about 4% for myself, and 2% to cover everyone else.
It's tempting to try to low-ball to get the job, but it always turns out to be a disappointment, as I've found then cheap clients often turn out to be the most demanding clients, and once you're 'in it' the only escape is completion. I've got one job right now that is a perfect example of that... I bid it too low and it's been a real albatross.
Another thing to consider is that if your price is too low on a job where a client has expectations to see a higher price, your low-ball bid might be the thing that scares them off! When I get a bid from a contractor that's 'to good to be true', I'll generally reject it, as my assumption is that they weren't paying attention to their pricing which is a big red flag in accepting a bid. I've got a pretty good feel for what certain things cost, and an expectation of what kind of prices I'll see.
Price the job fairly for yourself AND the client, and you'll get jobs that pay you adequately when your price is accepted, and weed out cheapskates that will just be a pain in the ass and unprofitable for you.
If you get 20% of the jobs you make a proposal on, you're doing good. If your conversion rate is higher than that, you're working too cheap.
Best wishes... Hope things work out for you.
Another piece of advice learned from experience:
If the client is going to low ball your fee, he or she does not have access to capital or financing to complete the project and probably will never have access to capital or financing. Don't even bother getting started with this type of client; it's not worth your time.
[I've always found it strange how architects have a hard time heeding this advice. I've seen at multiple offices principals wasting time on what are obviously deadbeat shysters. I don't know if it's an innate optimism or absolute cluelessness of the development process.]
Don't drag yourself down even further or you'll be stuck for eternity working for 50% or less and you'll have to take extra shifts flipping the burgers in a restaurant you designed.
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