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Hourly rate for Freelance Architect with 15+ years experience

laureld

I've just gone out on my own after working with a range of different firms over the last 15 years.  I have the opportunity to do contract work for another firm.  I will be overseeing a couple of interns and running a couple of large home projects.  I'm covering all my expenses, computer, health insurance, etc.  At my last job I was making about $75k per year salary.  What do you think I should charge as my hourly rate for this contract work?  I've done some work for another guy under similar circumstances for $70 per hour.  I've heard you should take your salary at an hourly rate and double it, so $70-$80 seems in the range, but if anyone else has similar experience I'd love to hear your thoughts.  I'm in Colorado.  

 
Aug 2, 17 6:43 pm

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Non Sequitur

15y exp and only 75k?

damn....

charge $100/hr minimum

Aug 2, 17 6:50 pm

If it's contract work remember you are responsible for paying your quarterly taxes yourself. Charge at least double. Or this:

$75,000/2080 hours = $36

$26 x 3 = billable rate = $108

So charge $100. Nice easy number to work with!

Aug 2, 17 9:28 pm
Rusty!

Hi Donna! The only reason I dislike your comment is because you affirm what 'Non Sequitur' said, which was super condescending of them.

Non Sequitur

my response contained only an average amount of condescension.

Hi Rusty!!! I made a math error damnation! (OK actually the math was correct, but I wrote a 2 when it should have been a 3.) I don't know how to do the math on Non Seq's amount of condescension, tho.

joseffischer

My contractor buddies are all raising their rates. Most of the lowest tier but skilled and reliable guys I know have been asking $500 a day for a few years now. All of the sudden it's $800. They rattle off material cost increases recently and say they can raise it and no one questions it.

I think we should do the same.  I agree that $100/hr has been pretty standard for a while, but I think we should up it to $150 just list inflation and tariffs if anyone complains.  See what sticks, even if they haggle back down to $120, that's a win.

arch76

laureld-

With 15 yrs experience and with the work you are describing, I would start with the $70-80 an hour, then add for the perks they will not be paying you for. If you assume three weeks paid vacation, one week sick, and the week or so of normal holidays a year, that is 5 weeks, or about 10%. If they are only paying you for work you bill versus cutting you a weekly check for being on the project for the duration of the project, then you have to assume a 75% utilization rate, and add 25%. If you need to provide your own insurance and license fees, that needs to be billed through. Are you paying these interns to work on their project, or just managing them? In either case, that will eat into your time- If you are paying them, I would tack on their fees + 10% handling fee. 

It also matters if they are paying you hourly to work on the project or asking you to give them a bid to complete a project. If it is the latter, I have found an extra 15% or so is needed to cover inevitable scope creep and time you waste waiting for them to complete tasks you need done on their end before you can do your job- this is different then the utilization above. 

You will eventually come up with a number that seems high, but is still probably 25-50% of what a firm would bill for the similar design work on the project. You just have to match their quality, and negotiate on schedule if it is only you and two interns.

Good Luck!

Aug 2, 17 9:59 pm
archinine
Most larger organizations will charge upwards of $200/hr for your experience. Charging a client $100 is a bargain rate from their prospective.

The firm you're at doesn't have to pay benefits, rent for your desk, or guarantee you future work to do...nor do they necessarily need your time to be included in profit. It will likely be billed as a consultant fee directly to the client, though this varies by company. $100 is a bargain for them as well and seems more than reasonable given your description of the work involved.

I'd do $150 for a major metro and $125 for a third tier city down. That's assuming you're licensed but not stamping anything and have specific similar experience in the sector of work to be done.
Aug 2, 17 10:41 pm
randomised

It seems quite tricky from your side, there are lots of costs to be considered that in the end will come out of your pocket if you're not careful. It seems weird to me to be overseeing their staff (interns) as an external. Who is responsible for them? What if they screw up or get injured on the job site for example, is that on you as their external supervisor or the company? Sounds to me you'll be better off with a temporary contract for the duration of those specific projects but not as a freelancer, it doesn't sound like freelance work but just regular work for which they only want to pay a (lower) freelance rate.


Also, is there an espresso machine at their office and are you allowed as a freelancer to use it, or will they charge you for it?

Aug 2, 17 11:46 pm

randomised raises many good points. Seriously, the liability question is problematic, and caffeine matters.

laureld

Thanks for all the comments!  The 2 interns are employees of the firm I'd be contracted with.  It is very much like a job, but without the security of 40 hours a week or any benefits.  I am licensed and have been for about 6 years.  I am also pretty savvy with Revit which they have heard thru the grapevine and that is part of what they are interested in is my ability to bring their interns abilities in Revit up.  So I want to make sure that I am compensated for time that I am training as well as working on the 2 projects they want me to run.  I will be clear about that and am going to propose an hourly rate.  I've also considered proposing a higher rate for Revit training sessions, or construction document general training sessions which I've done at past firms.  I know that I have been billed out at previous firms at $125 per hour.  A friend told me last night that 20%-30% profit would be good, so maybe y'all are right and $100 could be proposed assuming they could bill to their clients at $125 per hour.  I am not sure how their contracts are set up with the 2 project clients.  My fear is that I am way too high and I'll scare them off, I just don't have the experience with this type of thing.

Not sure about the espresso machine... :)

Aug 3, 17 8:11 am
joseffischer

If you're going to be a Revit trainer instead of an architect, you need to be charging IT rates, not architect rates. Minimum $300 per hour.

mightyaa

"$75,000/2080 hours = $36

$26 x 3 = billable rate = $108

So charge $100. Nice easy number to work with!"

The problem with this is that is how you might charge a client.  The "x3" is the overhead factor (rent, taxes, downtime, etc.). btw; normal OH factors in our business run about 2 - 2.5.  What that lacks is that the firm you will be working for still has that OH factor and still need to make a profit from you.  Sending $108/hr * 2080 means a $224,640 salaried employee... So.... LOL.  Good luck with that.  

I get $50/hr as contract here in Denver working full time, using their equipment, at their office (24 years of experience).  It equates to about $95k once you account for holidays and sick leave.  I also get bonus's.  It's on the cheap side (realistically I know it needs to be around $70), but the counter point of that is now that I've been here a couple years and have slowly entrenched into the management, the culture, and processes and it is full time (essentially a real employee).  Not so much "at will contract" since getting rid of me or replacing will throw a few projects into disarray as they transition. It places me in a good position now to ask for that raise.  I should also note that I have other income streams too.

The downsides.  Medical insurance is through my wife, but I need to carry disability since there isn't workmans comp.  If you go for any loan, you'll need 2 years of backup as self-employed, otherwise you are a high risk.  Taxes; hold about 25% and save every single receipt as a write off- food, parking, mileage, etc.  You could get trick and use a lot more tax loopholes.  General liability; An option, but if something goes wrong, they could turn on you.  And for you; software.  That's about $6k annually if you get everything.  Try to negotiate them to provide for you. 

Tint is also someone you should talk to.  She did contract here in Denver too.

Aug 3, 17 11:01 am
won and done williams

I agree. I think a multiplier of 3 is very high for a one-person shop. Project your annual earnings (income), subtract your overhead (business expenses), and see if what is left over seems like a fair level of compensation for your market. For what it's worth, I've charged $70/hour for consulting work for years now. New clients I take at $80-$100/hour. The rate generally is adjusted with the client's ability to pay. Larger companies or public work I charge a higher rate; smaller businesses, non-profits, or individuals I charge a lower rate.

won and done williams

Oh wait a second, I missed that you will be doing this work for another firm, not a private client. Basically that means that the firm you are contracting with will need to bill out your time at a multiplier between 2.5-3. If you bill $70/hour, they will need to bill your time at $175-$210/hour which seems unreasonable for the level of work that you are providing. (Those are mid-market principal rates.) Keep in mind who you are working for. Freelancing to another firm, I'd say your rate is closer to $40-$60/hour.

laureld

Won and done,

I don't think the 2.5-3 multiplier would apply to someone who is paying for all of their own expenses and working out of their home, would it?  I thought that was a multiplier for an office employee, which is why I used to make $36 per hour, x3 is pretty close to what I was billed at, although as some have pointed out I was probably undercompensated at the time.  I think a more appropriate way to think about it is that they are making pure profit over whatever they bill me out as since I incur no expense to them.

won and done williams

Only a small percentage of a business's overhead expenses are directly related to a specific employee. I've found that most employees directly cost about (1.3x) their salary. This includes their payroll taxes and benefits. The rest of the overhead expenses are office rent, admin, insurance, non-billable hours, etc., i.e. costs that have little or nothing to do with any specific employee. The business still has its overhead to cover and those expenses are typically incorporated into the billable hourly rate. It's not pure profit. My guess is they are hiring you on contract to avoid having to take on the additional expenses of hiring an actual employee.

joseffischer

Yeah, for consultants it's whatever the consultants' bill is +10%... so what you'd really want to know is how much they bill out their stars at your level. Is their hotshot getting billed at $150/hr? Then ask for $136 to be equivalent. The firm still makes their money.

tintt

I have worked for several different firms as both contract and freelance over the past 2 years as well as for other clients like real estate developers and contractors. Freelance means for hire, like a mercenary. Contract means 1099 employee. In both, you are self employed and pay your own overhead which varies and you need to consider how much it is. What you are doing sounds like contract work, not freelancing. I have about 10 years of experience and charge $50-85 an hour depending on what the work is and who it is for and where I am at in terms of what my level of responsibility is. I've charged as a lump sum too and have made up to $100 an hour. I've also made less that way but got more work that way too that is averaging out ok. I only have CAD to pay for (not Revit) and work from home so my expenses aren't too high. One of the things I consider in giving an hourly rate is how easy the money is coming in for me. For example, if I am out there getting my own gigs I must charge more because I have to cover the cost of my efforts to do so. This is why I charge more for private clients or developers. If I'm working for another architect who is feeding me work consistently and with less friction to get the work, I charge less because I don't have costs or time associated with going to get it. To me, $70-80 an hour sounds ok. $100 -- IDK, you better have some skills... but maybe you do... 

Aug 3, 17 2:24 pm
whistler

Billing rate should typically be approx 2.5 - 3 times your wage.  However, if you are working for somebody else, where you don't have the overhead and expenses of a business owner then  2 times is about right.

Aug 3, 17 2:45 pm
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Aug 3, 17 2:55 pm
oaks

HELLO laureld -

Just curious what price you landed on for hourly charge and what has worked for you with contracting?

I am currently in the same research phase of understanding what to charge for contracting. I have the same level of experience. Am located in Montana. Very similar job responsibility.

Apr 4, 18 4:38 pm
jla-x

I do mostly residential landscape and charge 100 per/hr.  I do everything flat fee, but that’s usually where it lands give or take a little.  I’ve had projects that I underestimated and got around 50$ per/hr, but generally...

Apr 4, 18 4:45 pm
bmmiller

Didn't notice it mentioned but assume you are licensed.  Is that correct?

Sep 19, 18 3:37 pm
bmmiller

I see you are licensed.  I'm wondering how would being unlicensed affect the fee, assuming all else is the same?

Sep 19, 18 4:59 pm
thisisnotmyname

For most, unlicensed usually means a much lower rate. The client will have pay someone else to stamp the work.

RickB-Astoria

I concur with "thisisnotmyname" for employment situations regarding projects requiring an architect stamp. While the architect or record in contract with the firm may bill out a base hourly rate and bill as if he or she did the whole project himself or herself but then use lower rate employees to maximize profit but in high competition, this is usually not quite the case. In reality, the ability to use lower rate employees and bill out more competitive in a myriad of calculated schemes and calculate out a profit margin (as a good business man/Principal should). 

Part of factors of the lower rate is when you are unlicensed, you don't typically make the design decisions. You propose design solutions. The AOR makes the decision and takes the responsibility and inherent liability for the project. The unlicensed employee would be at a lower rate. HOWEVER, the more responsibility the unlicensed person has on the project, the more pay per hour he or she would get compared to an entry level designer/drafter.

There isn't a hard rule but this is a common rule of thumb. As an independent building designer, you might negotiate a higher bill rate when your project doesn't require an architect and you could have comparable pay level with a good portfolio of past projects, willing clients, etc.

bowling_ball

I'm having a hard time understanding the logic of all of this. If this person is freelance and paying their own overhead, own taxes, etc, why would they be considered as anything other than a consultant at the typical local market rate?  As a freelancer, they can get let go at any time as well.


My partner is an architectural photographer and charges more than I'm billed out at, as a licensed architect. She has expenses like advertising, equipment, rent, insurance, printing, etc etc etc that all add up, and need to be paid before she can pay herself.  A freelance architect should do the same, no?


Unless I'm missing something. ...?

Sep 20, 18 2:22 am
RickB-Astoria

Everything here is particularly true. Even some highly regarded building (unlicensed) designers may be able to bill out at a higher rate than many architects. 

davidcastello

I work from a home office. I like to calculate everything per year. So I'll calculate annual expenses per year, basically anything you pay to keep the business running on the daily. Then divide that by 2080 which is the normal hours worked annually. Subtract time off or whatever you need at your discretion but remember that will impact the billable rate at the end. I include the usual 2 week vacation so my billable hours are actually 2040 per year because I build in a 2 week vacation for myself. Remember that that is assuming you're billing out 100% of your time so if you think you'll have downtime, some people choose to include that as overhead, at least firms do in order to make up for unbillable hours for direct labor to a project. This depends on your workload though. I wouldn't recommend building in nonbillable hours if youre only doing 2 small/medium projects a year bc this will send your billable rate through the roof. But if you have steady work, and can count on regular projects throughout any given year it's good practice and is ethical within reason. After calcing your overhead per year, divide per hours worked (or anticipated to work) and you get your overhead per hour. Add that to your hourly payed rate (the hourly rate you would actually pay yourself) and you can safely get an estimate on your hourly billable rate. Depending on the size and overhead of the business, you can expect to bill out 50-100 USD pretty comfortably as a sole practitioner working steady projects throughout the year from a home office. Assuming you are experienced and can take a project through all phases of production. Make sure you invoice to include taxes. I made the mistake early on of not accounting for these and took some hits but it makes a huge difference. Also, materials like prints and photoreproductions can be invoiced so include those as well. Be prudent and honest in your overhead costs as they don't need to be justified to your clients, but they will impact your competitiveness in the market. Of you're doing one-off jobs now and again, I'd stick with stipulated/negotiated fees or per sq ft rates. I do cost per sheet for CDs in some estimating instances. I hope this helps.

Nov 1, 18 12:35 am

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