I agree with you, null. I used to visit this site a lot to see comments and whatnot, but now, it's just all Dick here Dick there, hijacking a lot of threads with his nonsense.
If you can not prepare basic electrical, mechanical, and plumbing plans for a single family residence, you do not have the competency to practice architecture. I will request that you voluntarily surrender your license to the licensing board, IMMEDIATELY.
Richard this shows how very little you know about the practice of architecture. I can name dozens of registered architects who can be lead designer on an airport, or a skyscraper, or a campus plan, or a hospital, and not a one of them could do a residential plumbing plan without specifically referencing the code requirements of that particular jurisdiction. The point is that as a registered professional one is smart enough to know what one doesn't know, then will figure out how to learn it and understand how it fits into all the hundreds of other requirements.
----------------------------
To the original poster:
mtdew, when you said your friend bought an old house I figured it was a fixer upper, not a half a million dollar house! Heavens, your friend can afford you to charge him a decent fee. For reference, when I did residential remodel that typically included kitchen remodels in the range of $120,000 we charged a 10% fee, but that was for full services from making existing conditions sets to finish selection to CA.
Not sure about the MEP thing, but am certain that a 10% fee to a profession that can’t define what it does, and subcontracts 90% of what they are hired to do - maybe should change its name to “broker”. Guess I wouldn’t mind an hourly rate of $150/hour to someone who promised not to do anything.
Richard it appears you're trying to use HUD Section 8 regulations to set architectural fees. That is very, very strange, even for you. Unless you're being paid through HUD or a similar agency, there is no regulatory connection between your fees and your clients' income.
You're a 34-year old man living in poverty in your parents' attic - you've got no business giving advice on fees. None. No excuses.
What ever happened to making some progress with your own career prospects? I was trying to break tasks into tiny bite-sized non-anxiety inducing manageable pieces for you, and you didn't even get to Day 2.
Oct 21, 15 11:53 am ·
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kjdt,
Judges can simply waive their magic 'gavel' and strike down debts if they think the debts causes hardship to the client because it would take up too much of their income to do so.
Aluminate... there is. There are case laws and a body of other laws. Have you heard of bankruptcy procedures and how debts (which is what our fees are considered) and those can be stricken down which is a form of relief in bankruptcy proceedings. Individuals can declare bankruptcy. There are multiple avenues that clients can do to get out of having to pay debts (including fees).
Fees can not be so large in proportion to the income of the client that you have no chance in hell in collecting your fee from the client. Remember, there are no loans and other financial assistance for projects of any kind that can be used to pay for design services. They have to pay that out of pocket. That is one of the problems since banking regulation changes in lending practices.
Donna, that is why Architects these days are not real professionals because they don't have competence. I wasn't saying they had to design electrical plans for say a school building. They would and should know how to do basic electrical planning, plumbing and mechanical. To become a certified professional building designer (NCBDC), you need to know at least basic MEP in residential as you are tested on it to some level.
Shuellmi,
Yes, if you charge a fee that is excessive to their income ratio that the payment on the fee would cause economic hardship, you can end up not being able to collect the fee because the client can go to the courts for relief of debt burden.
Richard it appears you're trying to use HUD Section 8 regulations to set architectural fees. That is very, very strange, even for you. Unless you're being paid through HUD or a similar agency, there is no regulatory connection between your fees and your clients' income.
HUD Section 8 and other data collection on median income of the area are factors in determining the fee benchmark.
If I am going to be able to collect the fee (a fee is a type of debt the client would be having), legally, the debt that I put the client under (via the design service fee) can not be such that it takes an excessive percentage of their income.
If too excessive, the client would go to courts for debt relief to get out of paying fees that consumes too much of their income to pay.
If your client is Donald Trump, then a modest house isn't going to be even 1% of his annual income.
My clients are mostly those living on modest income. There isn't many top 2%-ers in the area.
Why do you think my statement is false and inaccurate?
I asked the OP if plumbing and electrical drawings are even needed for this project? If the building dept. doesn't require them for issuance of a building permit, why do them?
I'll stick by what I said... don't charge a friend for this limited scope project.
^^Unequivocally, they are not required. I have submitted projects of similar scope WITHOUT MPE, in NJ.
So what you're telling me is your client would rather have his architectural fees adjudicated with the services of a $250/hr attorney, after signing his contract with the Professional Building Designer, than pay his fees.
Sigh...
Topics you should no longer give advice on:
Job Searches - you have no job
Portfolios - you haven't completed your own
Places to Live - you live with your parents
Law/Legal - Your legal analysis is the only thing more suspect than your architectural expertise.
This is a really shallow understanding of bankruptcy law. Setting fees on the basis of what you think won't drive your client to bankruptcy is just idiotic.
On a large project you may want to establish that your client has the financial means and credit history to make it probable that they will pay you - but you shouldn't be setting fees based on prospective clients' finances - you should be setting fees and letting the fees sort out your prospective clients.
As for the OP's friend rate: if you do give the friend a deep discount, just make sure your friend has an understanding of roughly how much that discount is. If you're charging him only a third of your usual billing rate because he's an old friend and because he'll probably refer people to you, tell him. I've run into this problem before: taking on projects for friends - they're charismatic, connected people who talk me up to their network and neighbors, that's the upside - but then I get the "taken aback" response from the neighbor when I give them a proposal to do their project at my regular rates, because "Harry told me you did his plans for $[insert friend rate here] - I know he's your friend but he said he thought it would probably only be 10% or 15% more." I've gotten better about making sure the friends understand the deal they're getting, and that I'd prefer they not disclose it, so they don't give others unreasonable expectations.
Now Richard: I thought you were going to work on your resume. Where's an outline draft?
Oct 21, 15 1:33 pm ·
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curtkram,
Have you ever had clients file chapter 11 bankruptcy on you? Guess what, debt relief regulations can shake off debts including having to pay your architectural fees.
Lets say your client makes $55,600 a year. Your fee is $50,000. You aren't going to get that fee from the client and they are not going to pay that amount. Not unless they are going to pay it over 5 to 10 years. If they had to pay that in a year, it would consume 90% of their income. They would not be able to pay for food, rent, utilities, and so forth. It would be flat out undue hardship and court judges would grant debt relief of some kind.
Interesting to note that the same person thinks the following:
Legally you cannot charge too much for professional services because judges will rule there is undue hardship to a client and alleviate their debt with a wave of their magic gavels.
Legally standard of care is irrelevant because it is something that is fabricated and not enforceable because it isn't codified as a standard.
What if Mr. Sole-practitioner put a year's worth of labor in for his $50k fee? And "alleviating" the debt now causes a "hardship" on HIS business/family? Could another judge use his Enchanted Baliff to enforce the contract?
dear fucking kanye, the stupid. balkins: walk the fuck out.
have you ever been involved with a client who claims bankruptcy and tries to avoid your fees? I have. Guess what, my employer got his piece and a whole lot of extra pocket change when his property was sold to pay off creditors. In fact, we were the first people that got paid (even before the lawyers!) because the firm I worked for had threatened to put a lien on the property itself (after I suggested as much) and the buyer wanted to buy a waiver of future claims from us. The end.
this is getting more then a little crazy. I think the OP has gotten some good advice and probably more than he bargained for. Richard can set whatever fee he feels like, no one has to take his advice.
Have you ever had clients file chapter 11 bankruptcy on you?
no
and therein ends all speculative assumptions or analogies that imply what could have happened or what might happen or 'let's just say' or 'what if' noise. it didn't happen, therefore the speculation of if it could have happened is now over and continuation of this conversation can cease to be.
You know Richard, the more I think about this idea of setting fees based on prognostications of future bankruptcy proceedings, the more I like it - but not in the way you're using it. Actually the opposite - i.e. it's great justification for setting fees higher, not lower, for a client you deem to be a risk because:
When unsecured debts are discharged in bankruptcy, it works like this: The judge classifies some types as "priority debts" - they get paid first. Those include the IRS, then things like child support and judgments against you for injury to others, etc. When/if there's any money left after payment of all the priority debts, what's left is divided up among all other unsecured debts pro rata - meaning each of those remaining creditors is paid the same percentage of the debt owed. The judge doesn't look at each debt individually and assess whether it was too high a percentage of the debtor's income. Hardship is determined by adding up all the debts, determining what percentage of the total the debtor can stand to pay, and the rest of the total is discharged.
For example, if I declare bankruptcy and, after paying all the priority debts I have 50k left to be divided among my remaining creditors, who are: my dog's stylist, to whom I owe 20k; my gardener, to whom I owe 5k, and my architect, to whom I owe 100k, then each of those creditors receives 40% of what I owe them, because my resources are only 40% of the total debt, and the rest of those debts are discharged. So my architect will get 40k, while my gardener will only get 2k. See? So my architect was smart to charge me 100k.
So Richard if you're going to continue to base your fees on your assessment of the client's propensity for filing for bankruptcy, the higher you think that likelihood is, the higher your fee should be.
Oct 21, 15 2:05 pm ·
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kjdt,
One can only charge what they can collect. I can't just charge whatever the hell I want. If I did, I would only get at best only 1-2 clients in maybe 50 year career period. The only source of finances clients have to pay me is from their personal income. The lending can only be used for construction.
It isn't just bankruptcy but any court proceeding for debt relief. If my fees takes too much of their personal income, I can lose ability to collect my fees. My fees have to be such that the client can reasonably pay or I'm f---ed in trying to collect.
It isn't like I have corporate executives to design houses for. Some of you only design for rich people but that isn't what kind of clients a 'building designer' s going to get. The rich people will hire an licensed architect because they won't balk at paying an architect's fee. People tend to look first for Architects because that is the term that they recognize cognitively. Building designer is not that common of a word used that people would think when it comes to having a building designed. They usually seek building designers after hearing somewhere about building designers by somebody and they represent us as 'cheaper options' and that puts pressure on my business to keep the fees affordable. This is because the broader market bills us as lower cost alternatives to architects.
When it is average income citizens, making between 50% AMI to 200% AMI, I really have to be realistic about the fees I charge to their income. This would affect the scope of work, as well.
As far as checking credit history and financials, sure, if you want to pay money to check.
Yes, bankruptcy process is more convoluted and complex than I stated but there is also a point where I have to realistically be able to collect the fee. Where the client falls on the spectrum of income in relation to AMI. This reflects an index factor in determining what level of fees one can realistically charge a client. In Portland, the AMI is ~$73,900 where Clatsop county area is around $55,500-$56,000. Therefore, it is realistic that fees are likely to be around 75% of what I could realistically charge in Portland for housing projects.
Unless you market yourself only to those who earns $$125,000-150,000+ a year.... you are going to be dealing with people who don't have the extent of financial resources. In Portland, you have corporate executives in the area and with a million+ population, you have a few hundred making $250,000 or more a year.
Oct 21, 15 2:21 pm ·
·
Brud-G,
That is not what you said in the post I replied to. If you said, precisely:
If it is not required to do electrical or plumbing than don't do it.
... There wouldn't be an issue.
Oct 21, 15 2:23 pm ·
·
What if Mr. Sole-practitioner put a year's worth of labor in for his $50k fee? And "alleviating" the debt now causes a "hardship" on HIS business/family? Could another judge use his Enchanted Baliff to enforce the contract?
JeromeS,
You don't spend 2000 hours on the project if the client can only afford an $8000 to $10,000 fee spread over 3 years. That's maybe 320 hours to 400 hours on the project.
Richard- your very selective in what you choose to quote, aren't you? Go back and read the thread. BrudG asked the question and I provided an immediate answer, with direct relevance to the question, the State of NJ, AND the OP.
You proceed with one of your arm-chair, Clatsop college, philosophical waxings which distorted the issue. All of which was IRRELEVANT.
One more try: Richard most of us in this thread are reasonably successful architects with many years of experience, decent incomes, and many times your client list. If you'd shut up occasionally and stop trying to give us advice and instead listen, you might be able to achieve those three things some day. If you don't then you will live in the attic forever.
Focus on your resume and portfolio, so that you can get a foot in the door somewhere, so that you can get some real experience in a real firm, so that you can learn from doing instead of from reading wikipedia.
Oct 21, 15 2:34 pm ·
·
You know Richard, the more I think about this idea of setting fees based on prognostications of future bankruptcy proceedings, the more I like it - but not in the way you're using it. Actually the opposite - i.e. it's great justification for setting fees higher, not lower, for a client you deem to be a risk because:
When unsecured debts are discharged in bankruptcy, it works like this: The judge classifies some types as "priority debts" - they get paid first. Those include the IRS, then things like child support and judgments against you for injury to others, etc. When/if there's any money left after payment of all the priority debts, what's left is divided up among all other unsecured debts pro rata - meaning each of those remaining creditors is paid the same percentage of the debt owed. The judge doesn't look at each debt individually and assess whether it was too high a percentage of the debtor's income. Hardship is determined by adding up all the debts, determining what percentage of the total the debtor can stand to pay, and the rest of the total is discharged.
Where do you think my fee will fall in.... the ones that gets discharged? In bankruptcy, yes. I agree but that is not the only avenue where debt relief can occur. When a debt is claimed to be excessive to their income and individually will cause hardship, a judge will assess based on case law about debts deemed as hardship as well as statutory and regulatory laws. They check to see if the debts exceeds a certain percentage of income and in relation to their necessities like housing, utilities, etc.
There is a variety of regulation to inform a point where debts are deemed to cause undue hardship. For example, loans debt payments are not to exceed income beyond a certain percentage or it will be deemed to cause hardship. Where a type of debt is not defined by specific regulations, a Judge can infer what percentage of income will be considered hardship by that of those that are defined by regulation. If the debt exceeds that, various types of debt relief options exists including discharging types of debts.
If the client can not reasonably stand to pay because you are charging an $250 an hour to design a kitchen remodel and milking away 200 hours to design a remodeled kitchen that is maybe 10' x 10'. It would be disgusting that one would charge a person that makes maybe $50,000 a year.... $50,000 to design a remodel of a kitchen and expect them to pay it all in 1 year.
It would be asinine and a Judge would discharge that debt in part or in full.
"It isn't like I have corporate executives to design houses for. Some of you only design for rich people but that isn't what kind of clients a 'building designer' s going to get. The rich people will hire an licensed architect because they won't balk at paying an architect's fee. People tend to look first for Architects because that is the term that they recognize cognitively. Building designer is not that common of a word used that people would think when it comes to having a building designed. They usually seek building designers after hearing somewhere about building designers by somebody and they represent us as 'cheaper options' and that puts pressure on my business to keep the fees affordable. This is because the broader market bills us as lower cost alternatives to architects."
Why did we start talking about architect's fees compared to a building designer's fees when the OP is an architect asking about how to charge for his services to a friend who can afford a $500k house?
...
RWCB, PBD. That's why.
Oct 21, 15 2:53 pm ·
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Funny thing kjdt,
They can discharge debts also individually. Some gets totally dicharged. Some gets partial. Certain debt relief can be on individual debts like going to a court to discharge a debt that causes financial hardship. Student loans for example by law like a lot of loans, the payments may not exceed a certain percentage of income or it causes hardships. That very regulation that defines a point where financial hardship is legally defined to occur can be used to determine is other kinds of debts that are not regulated by a codified law to determine if a debt payment exceeds capacity of a debtor to pay back such a loan and that can be discharged or reduced.
Therefore, my fees have to fall within that capacity. If you know of loans, grants or other financial assistance that clients can use to pay for design services, it would be great to know. During the recession, a lot of those things disappeared like overnight.
This is why I have to figure a way for my fees are reasonably within capacity of the client to pay. I may do payment plans up to 5 years but 5 to 10 or more years of invoicing and trying to collect is more problematic than its worth. The longer the payment plan, the more administrative management over projects after the projects had been completed. Collecting fees after the project is built gets really hard because clients will balk at paying after the project is completed because to them when the project is complete, they are complete in their responsibility to pay. We both know it isn't the case unless they are paid up in full but we both know this kind of thinking makes collecting payments a challenge that ends up costing more.
The risks maybe higher but seriously, I can't just charge so much more than the competition that is also pricing low.
Richard, student loan payments have income-sensitive caps. Section 8 rent has income-sensitive caps. Those have nothing to do with laws pertaining to discharge of most types of unsecured personal debt. In most circumstances, with most types of debt, you simply cannot go to court and have those individual debts discharged.
If a client signs a contract, and I do the work, whether it's for 1% of his weekly income or 90% of his annual income, the only way that gets discharged is through bankruptcy or debt mediation. Unless I specifically agree to accept a lesser amount in order to discharge the debt, it does not get adjudicated down to a lower number, or discharged, on an individual basis. There are several types of bankruptcy, but it has to go through one of them to be discharged - and when that happens it is dealt with as I explained above. If there are any resources remaining after the "priority" debts are paid, ALL the other debts are addressed pro rata. There is no mechanism by which a client can go to court and have my fee, on its own, reduced or discharged by a judge on the basis that it represents too high a percentage of the client's income.
As for student loans: it worries me that you think they are discharged on the basis of hardship. When you put student loans on an income-sensitive plan, you pay based on a percentage of your income - and under some plans the loans stop accruing interest for the first few years of the plan. After the interest-free period expires, interest continues to accrue, and is capitalized. After 20 or 25 years some of the income-sensitive plans do discharge any remaining balance. However, the amount that's discharged is treated as taxable income in that year.
Example: say you have 40k in loans now and you're below the poverty line and not required to pay anything per month. For about 3 years you pay nothing, and no interest is even accruing. After 3 years you can still pay nothing per month it if you're still below the poverty line, or maybe you're making enough money now to pay something each month, based on 10% or 15% of your income (depending on which income-sensitive program your loans are on) - but now the interest is accruing because your interest-free time is up, and it's capitalizing at a much faster rate than you're paying. So when your 20 or 25 years are finally up the total remaining balance is now $132,000, through the magic of compounding interest - and you think "great! I'm finally free!" - But that year that the remaining balance is finally discharged, you will be taxed on the 132k as income. It doesn't just disappear.
Sure, you can declare bankruptcy at that point - but IRS debts are priority debts, 100% collectible, with no time limits, unless the IRS agrees to settle. If not they can garnish your wages for the rest of your life.
This is why you need to get a job, so you can start paying off your loans, so you're not in the situation of still having no income and no real experience 20 years from now when you get the tax bill on the 132k.
"Way out west there was this fella... fella I wanna tell ya about. Fella by the name of Richard Balkins. At least that was the handle his loving parents gave him, but he never had much use for it himself. Mr. Balkins, he called himself "The Professional Building Designer."
Wouldn't the simplest answer to the OPs question is to get a substantial deposit on the job beforehand and additional payments as the job progresses? There will likely be several substantial changes as a result of what is found during removal of the existing kitchen and bath, no?
If you are good at something, never do it for free.
People tend to commit more to things they pay for. They assign value to things they pay for. When they don't have that commitment and assigned value, they tend to make decisions more whimsically because there is no perceived cost. It'll cost you like crazy, but not them.
I didn't think we could get any further off track on this topic after getting derailed on building designers vs architects and incomes in parts of Oregon vs. New Jersey ... but then SBID comes in talking about interior designers in the UK and laws (also presumably for the UK) allowing them to design engineering systems.
How to charge for a Kitchen & Bath renovation
You can't legally charge a fee that would cause a hardship?
I agree with you, null. I used to visit this site a lot to see comments and whatnot, but now, it's just all Dick here Dick there, hijacking a lot of threads with his nonsense.
I just can't help it, I have to weigh in here:
If you can not prepare basic electrical, mechanical, and plumbing plans for a single family residence, you do not have the competency to practice architecture. I will request that you voluntarily surrender your license to the licensing board, IMMEDIATELY.
Richard this shows how very little you know about the practice of architecture. I can name dozens of registered architects who can be lead designer on an airport, or a skyscraper, or a campus plan, or a hospital, and not a one of them could do a residential plumbing plan without specifically referencing the code requirements of that particular jurisdiction. The point is that as a registered professional one is smart enough to know what one doesn't know, then will figure out how to learn it and understand how it fits into all the hundreds of other requirements.
----------------------------
To the original poster:
mtdew, when you said your friend bought an old house I figured it was a fixer upper, not a half a million dollar house! Heavens, your friend can afford you to charge him a decent fee. For reference, when I did residential remodel that typically included kitchen remodels in the range of $120,000 we charged a 10% fee, but that was for full services from making existing conditions sets to finish selection to CA.
"Legally, one can not charge a fee that is so disproportionate that it would cause hardship to the client..."
Bullshit. No such law.
schizophrenia is a bitch
Not sure about the MEP thing, but am certain that a 10% fee to a profession that can’t define what it does, and subcontracts 90% of what they are hired to do - maybe should change its name to “broker”. Guess I wouldn’t mind an hourly rate of $150/hour to someone who promised not to do anything.
Sigh.
Richard it appears you're trying to use HUD Section 8 regulations to set architectural fees. That is very, very strange, even for you. Unless you're being paid through HUD or a similar agency, there is no regulatory connection between your fees and your clients' income.
You're a 34-year old man living in poverty in your parents' attic - you've got no business giving advice on fees. None. No excuses.
What ever happened to making some progress with your own career prospects? I was trying to break tasks into tiny bite-sized non-anxiety inducing manageable pieces for you, and you didn't even get to Day 2.
kjdt,
Judges can simply waive their magic 'gavel' and strike down debts if they think the debts causes hardship to the client because it would take up too much of their income to do so.
Aluminate... there is. There are case laws and a body of other laws. Have you heard of bankruptcy procedures and how debts (which is what our fees are considered) and those can be stricken down which is a form of relief in bankruptcy proceedings. Individuals can declare bankruptcy. There are multiple avenues that clients can do to get out of having to pay debts (including fees).
Fees can not be so large in proportion to the income of the client that you have no chance in hell in collecting your fee from the client. Remember, there are no loans and other financial assistance for projects of any kind that can be used to pay for design services. They have to pay that out of pocket. That is one of the problems since banking regulation changes in lending practices.
Donna, that is why Architects these days are not real professionals because they don't have competence. I wasn't saying they had to design electrical plans for say a school building. They would and should know how to do basic electrical planning, plumbing and mechanical. To become a certified professional building designer (NCBDC), you need to know at least basic MEP in residential as you are tested on it to some level.
Shuellmi,
Yes, if you charge a fee that is excessive to their income ratio that the payment on the fee would cause economic hardship, you can end up not being able to collect the fee because the client can go to the courts for relief of debt burden.
thus spake the basement troll.
.
Richard it appears you're trying to use HUD Section 8 regulations to set architectural fees. That is very, very strange, even for you. Unless you're being paid through HUD or a similar agency, there is no regulatory connection between your fees and your clients' income.
HUD Section 8 and other data collection on median income of the area are factors in determining the fee benchmark.
If I am going to be able to collect the fee (a fee is a type of debt the client would be having), legally, the debt that I put the client under (via the design service fee) can not be such that it takes an excessive percentage of their income.
If too excessive, the client would go to courts for debt relief to get out of paying fees that consumes too much of their income to pay.
If your client is Donald Trump, then a modest house isn't going to be even 1% of his annual income.
My clients are mostly those living on modest income. There isn't many top 2%-ers in the area.
Balkins,
Why do you think my statement is false and inaccurate?
I asked the OP if plumbing and electrical drawings are even needed for this project? If the building dept. doesn't require them for issuance of a building permit, why do them?
I'll stick by what I said... don't charge a friend for this limited scope project.
^^Unequivocally, they are not required. I have submitted projects of similar scope WITHOUT MPE, in NJ.
So what you're telling me is your client would rather have his architectural fees adjudicated with the services of a $250/hr attorney, after signing his contract with the Professional Building Designer, than pay his fees.
Sigh...
Topics you should no longer give advice on:
Job Searches - you have no job
Portfolios - you haven't completed your own
Places to Live - you live with your parents
Law/Legal - Your legal analysis is the only thing more suspect than your architectural expertise.
This is a really shallow understanding of bankruptcy law. Setting fees on the basis of what you think won't drive your client to bankruptcy is just idiotic.
On a large project you may want to establish that your client has the financial means and credit history to make it probable that they will pay you - but you shouldn't be setting fees based on prospective clients' finances - you should be setting fees and letting the fees sort out your prospective clients.
As for the OP's friend rate: if you do give the friend a deep discount, just make sure your friend has an understanding of roughly how much that discount is. If you're charging him only a third of your usual billing rate because he's an old friend and because he'll probably refer people to you, tell him. I've run into this problem before: taking on projects for friends - they're charismatic, connected people who talk me up to their network and neighbors, that's the upside - but then I get the "taken aback" response from the neighbor when I give them a proposal to do their project at my regular rates, because "Harry told me you did his plans for $[insert friend rate here] - I know he's your friend but he said he thought it would probably only be 10% or 15% more." I've gotten better about making sure the friends understand the deal they're getting, and that I'd prefer they not disclose it, so they don't give others unreasonable expectations.
Now Richard: I thought you were going to work on your resume. Where's an outline draft?
curtkram,
Have you ever had clients file chapter 11 bankruptcy on you? Guess what, debt relief regulations can shake off debts including having to pay your architectural fees.
Lets say your client makes $55,600 a year. Your fee is $50,000. You aren't going to get that fee from the client and they are not going to pay that amount. Not unless they are going to pay it over 5 to 10 years. If they had to pay that in a year, it would consume 90% of their income. They would not be able to pay for food, rent, utilities, and so forth. It would be flat out undue hardship and court judges would grant debt relief of some kind.
Interesting to note that the same person thinks the following:
I thought it was Back to the Future Day today. Is it really Opposite Day instead?
What if Mr. Sole-practitioner put a year's worth of labor in for his $50k fee? And "alleviating" the debt now causes a "hardship" on HIS business/family? Could another judge use his Enchanted Baliff to enforce the contract?
dear fucking kanye, the stupid. balkins: walk the fuck out.
have you ever been involved with a client who claims bankruptcy and tries to avoid your fees? I have. Guess what, my employer got his piece and a whole lot of extra pocket change when his property was sold to pay off creditors. In fact, we were the first people that got paid (even before the lawyers!) because the firm I worked for had threatened to put a lien on the property itself (after I suggested as much) and the buyer wanted to buy a waiver of future claims from us. The end.
balkins, seriously, shut the fuck up.
this is getting more then a little crazy. I think the OP has gotten some good advice and probably more than he bargained for. Richard can set whatever fee he feels like, no one has to take his advice.
Have you ever had clients file chapter 11 bankruptcy on you?
no
and therein ends all speculative assumptions or analogies that imply what could have happened or what might happen or 'let's just say' or 'what if' noise. it didn't happen, therefore the speculation of if it could have happened is now over and continuation of this conversation can cease to be.
You know Richard, the more I think about this idea of setting fees based on prognostications of future bankruptcy proceedings, the more I like it - but not in the way you're using it. Actually the opposite - i.e. it's great justification for setting fees higher, not lower, for a client you deem to be a risk because:
When unsecured debts are discharged in bankruptcy, it works like this: The judge classifies some types as "priority debts" - they get paid first. Those include the IRS, then things like child support and judgments against you for injury to others, etc. When/if there's any money left after payment of all the priority debts, what's left is divided up among all other unsecured debts pro rata - meaning each of those remaining creditors is paid the same percentage of the debt owed. The judge doesn't look at each debt individually and assess whether it was too high a percentage of the debtor's income. Hardship is determined by adding up all the debts, determining what percentage of the total the debtor can stand to pay, and the rest of the total is discharged.
For example, if I declare bankruptcy and, after paying all the priority debts I have 50k left to be divided among my remaining creditors, who are: my dog's stylist, to whom I owe 20k; my gardener, to whom I owe 5k, and my architect, to whom I owe 100k, then each of those creditors receives 40% of what I owe them, because my resources are only 40% of the total debt, and the rest of those debts are discharged. So my architect will get 40k, while my gardener will only get 2k. See? So my architect was smart to charge me 100k.
So Richard if you're going to continue to base your fees on your assessment of the client's propensity for filing for bankruptcy, the higher you think that likelihood is, the higher your fee should be.
kjdt,
One can only charge what they can collect. I can't just charge whatever the hell I want. If I did, I would only get at best only 1-2 clients in maybe 50 year career period. The only source of finances clients have to pay me is from their personal income. The lending can only be used for construction.
It isn't just bankruptcy but any court proceeding for debt relief. If my fees takes too much of their personal income, I can lose ability to collect my fees. My fees have to be such that the client can reasonably pay or I'm f---ed in trying to collect.
It isn't like I have corporate executives to design houses for. Some of you only design for rich people but that isn't what kind of clients a 'building designer' s going to get. The rich people will hire an licensed architect because they won't balk at paying an architect's fee. People tend to look first for Architects because that is the term that they recognize cognitively. Building designer is not that common of a word used that people would think when it comes to having a building designed. They usually seek building designers after hearing somewhere about building designers by somebody and they represent us as 'cheaper options' and that puts pressure on my business to keep the fees affordable. This is because the broader market bills us as lower cost alternatives to architects.
When it is average income citizens, making between 50% AMI to 200% AMI, I really have to be realistic about the fees I charge to their income. This would affect the scope of work, as well.
As far as checking credit history and financials, sure, if you want to pay money to check.
Yes, bankruptcy process is more convoluted and complex than I stated but there is also a point where I have to realistically be able to collect the fee. Where the client falls on the spectrum of income in relation to AMI. This reflects an index factor in determining what level of fees one can realistically charge a client. In Portland, the AMI is ~$73,900 where Clatsop county area is around $55,500-$56,000. Therefore, it is realistic that fees are likely to be around 75% of what I could realistically charge in Portland for housing projects.
Unless you market yourself only to those who earns $$125,000-150,000+ a year.... you are going to be dealing with people who don't have the extent of financial resources. In Portland, you have corporate executives in the area and with a million+ population, you have a few hundred making $250,000 or more a year.
Brud-G,
That is not what you said in the post I replied to. If you said, precisely:
If it is not required to do electrical or plumbing than don't do it.
... There wouldn't be an issue.
What if Mr. Sole-practitioner put a year's worth of labor in for his $50k fee? And "alleviating" the debt now causes a "hardship" on HIS business/family? Could another judge use his Enchanted Baliff to enforce the contract?
JeromeS,
You don't spend 2000 hours on the project if the client can only afford an $8000 to $10,000 fee spread over 3 years. That's maybe 320 hours to 400 hours on the project.
Richard- your very selective in what you choose to quote, aren't you? Go back and read the thread. BrudG asked the question and I provided an immediate answer, with direct relevance to the question, the State of NJ, AND the OP.
You proceed with one of your arm-chair, Clatsop college, philosophical waxings which distorted the issue. All of which was IRRELEVANT.
One more try: Richard most of us in this thread are reasonably successful architects with many years of experience, decent incomes, and many times your client list. If you'd shut up occasionally and stop trying to give us advice and instead listen, you might be able to achieve those three things some day. If you don't then you will live in the attic forever.
Focus on your resume and portfolio, so that you can get a foot in the door somewhere, so that you can get some real experience in a real firm, so that you can learn from doing instead of from reading wikipedia.
You know Richard, the more I think about this idea of setting fees based on prognostications of future bankruptcy proceedings, the more I like it - but not in the way you're using it. Actually the opposite - i.e. it's great justification for setting fees higher, not lower, for a client you deem to be a risk because:
When unsecured debts are discharged in bankruptcy, it works like this: The judge classifies some types as "priority debts" - they get paid first. Those include the IRS, then things like child support and judgments against you for injury to others, etc. When/if there's any money left after payment of all the priority debts, what's left is divided up among all other unsecured debts pro rata - meaning each of those remaining creditors is paid the same percentage of the debt owed. The judge doesn't look at each debt individually and assess whether it was too high a percentage of the debtor's income. Hardship is determined by adding up all the debts, determining what percentage of the total the debtor can stand to pay, and the rest of the total is discharged.
Where do you think my fee will fall in.... the ones that gets discharged? In bankruptcy, yes. I agree but that is not the only avenue where debt relief can occur. When a debt is claimed to be excessive to their income and individually will cause hardship, a judge will assess based on case law about debts deemed as hardship as well as statutory and regulatory laws. They check to see if the debts exceeds a certain percentage of income and in relation to their necessities like housing, utilities, etc.
There is a variety of regulation to inform a point where debts are deemed to cause undue hardship. For example, loans debt payments are not to exceed income beyond a certain percentage or it will be deemed to cause hardship. Where a type of debt is not defined by specific regulations, a Judge can infer what percentage of income will be considered hardship by that of those that are defined by regulation. If the debt exceeds that, various types of debt relief options exists including discharging types of debts.
If the client can not reasonably stand to pay because you are charging an $250 an hour to design a kitchen remodel and milking away 200 hours to design a remodeled kitchen that is maybe 10' x 10'. It would be disgusting that one would charge a person that makes maybe $50,000 a year.... $50,000 to design a remodel of a kitchen and expect them to pay it all in 1 year.
It would be asinine and a Judge would discharge that debt in part or in full.
"It isn't like I have corporate executives to design houses for. Some of you only design for rich people but that isn't what kind of clients a 'building designer' s going to get. The rich people will hire an licensed architect because they won't balk at paying an architect's fee. People tend to look first for Architects because that is the term that they recognize cognitively. Building designer is not that common of a word used that people would think when it comes to having a building designed. They usually seek building designers after hearing somewhere about building designers by somebody and they represent us as 'cheaper options' and that puts pressure on my business to keep the fees affordable. This is because the broader market bills us as lower cost alternatives to architects."
Why did we start talking about architect's fees compared to a building designer's fees when the OP is an architect asking about how to charge for his services to a friend who can afford a $500k house?
...
RWCB, PBD. That's why.
Funny thing kjdt,
They can discharge debts also individually. Some gets totally dicharged. Some gets partial. Certain debt relief can be on individual debts like going to a court to discharge a debt that causes financial hardship. Student loans for example by law like a lot of loans, the payments may not exceed a certain percentage of income or it causes hardships. That very regulation that defines a point where financial hardship is legally defined to occur can be used to determine is other kinds of debts that are not regulated by a codified law to determine if a debt payment exceeds capacity of a debtor to pay back such a loan and that can be discharged or reduced.
Therefore, my fees have to fall within that capacity. If you know of loans, grants or other financial assistance that clients can use to pay for design services, it would be great to know. During the recession, a lot of those things disappeared like overnight.
This is why I have to figure a way for my fees are reasonably within capacity of the client to pay. I may do payment plans up to 5 years but 5 to 10 or more years of invoicing and trying to collect is more problematic than its worth. The longer the payment plan, the more administrative management over projects after the projects had been completed. Collecting fees after the project is built gets really hard because clients will balk at paying after the project is completed because to them when the project is complete, they are complete in their responsibility to pay. We both know it isn't the case unless they are paid up in full but we both know this kind of thinking makes collecting payments a challenge that ends up costing more.
The risks maybe higher but seriously, I can't just charge so much more than the competition that is also pricing low.
You are not a competition to anybody, so don't worry!
Richard, student loan payments have income-sensitive caps. Section 8 rent has income-sensitive caps. Those have nothing to do with laws pertaining to discharge of most types of unsecured personal debt. In most circumstances, with most types of debt, you simply cannot go to court and have those individual debts discharged.
If a client signs a contract, and I do the work, whether it's for 1% of his weekly income or 90% of his annual income, the only way that gets discharged is through bankruptcy or debt mediation. Unless I specifically agree to accept a lesser amount in order to discharge the debt, it does not get adjudicated down to a lower number, or discharged, on an individual basis. There are several types of bankruptcy, but it has to go through one of them to be discharged - and when that happens it is dealt with as I explained above. If there are any resources remaining after the "priority" debts are paid, ALL the other debts are addressed pro rata. There is no mechanism by which a client can go to court and have my fee, on its own, reduced or discharged by a judge on the basis that it represents too high a percentage of the client's income.
As for student loans: it worries me that you think they are discharged on the basis of hardship. When you put student loans on an income-sensitive plan, you pay based on a percentage of your income - and under some plans the loans stop accruing interest for the first few years of the plan. After the interest-free period expires, interest continues to accrue, and is capitalized. After 20 or 25 years some of the income-sensitive plans do discharge any remaining balance. However, the amount that's discharged is treated as taxable income in that year.
Example: say you have 40k in loans now and you're below the poverty line and not required to pay anything per month. For about 3 years you pay nothing, and no interest is even accruing. After 3 years you can still pay nothing per month it if you're still below the poverty line, or maybe you're making enough money now to pay something each month, based on 10% or 15% of your income (depending on which income-sensitive program your loans are on) - but now the interest is accruing because your interest-free time is up, and it's capitalizing at a much faster rate than you're paying. So when your 20 or 25 years are finally up the total remaining balance is now $132,000, through the magic of compounding interest - and you think "great! I'm finally free!" - But that year that the remaining balance is finally discharged, you will be taxed on the 132k as income. It doesn't just disappear.
Sure, you can declare bankruptcy at that point - but IRS debts are priority debts, 100% collectible, with no time limits, unless the IRS agrees to settle. If not they can garnish your wages for the rest of your life.
This is why you need to get a job, so you can start paying off your loans, so you're not in the situation of still having no income and no real experience 20 years from now when you get the tax bill on the 132k.
"Way out west there was this fella... fella I wanna tell ya about. Fella by the name of Richard Balkins. At least that was the handle his loving parents gave him, but he never had much use for it himself. Mr. Balkins, he called himself "The Professional Building Designer."
Wouldn't the simplest answer to the OPs question is to get a substantial deposit on the job beforehand and additional payments as the job progresses? There will likely be several substantial changes as a result of what is found during removal of the existing kitchen and bath, no?
If you are good at something, never do it for free.
People tend to commit more to things they pay for. They assign value to things they pay for. When they don't have that commitment and assigned value, they tend to make decisions more whimsically because there is no perceived cost. It'll cost you like crazy, but not them.
SBID, there is no such thing as an interior architect. Stick to picking out fabric patterns and organizing cubicles.
I didn't think we could get any further off track on this topic after getting derailed on building designers vs architects and incomes in parts of Oregon vs. New Jersey ... but then SBID comes in talking about interior designers in the UK and laws (also presumably for the UK) allowing them to design engineering systems.
SBID was a spambot assembling posts out of fragments of other posts. Sometimes I think RWCB, PBD is one too.
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