Any one can charge astronomically less but it doesn't mean good sense. As for liability, building designers can be subject to serious liability. Where I am, there is clear language to support bringing actions against any person that designs buildings. Maybe, where you are at, you might have lax laws that needs more rigor and accountability. Good building designers won't complain. They can rise to the rigor. There are those who just suck or just stupid about fees. You might consider at least adopting a version of ORS 12.135 and incorporate into your state's laws. There's a process of making into a bill and borrowing from it. If someone follows prescriptive code path, the costs to design can be a bit lower. With regards to a prospective client and the nature of the work involved, it is definitely not one of those kinds of projects you do for some b.s. $1-2 per sq.ft. pricing. You would be an idiot if you did. Just the foundation system, alone would not be your common shallow foundation systems and would involve an engineer's involvement and likely geotechnical work involved. This is one of those projects that I wouldn't rely solely on myself but I can do preliminary level basing on similar projects near by as a general guide but there will be definite need for specific specifications requirements and such from a competent engineer familiar with deep foundation systems. So that alone brings the project to a more sophisticated level which I would be willing to do with appropriate engineering consultants that would be needed because this isn't the kind of stuff even a licensed architect should do without engineering consultants. The standard of professional care would advise prudence. Professional liability insurance carriers would likewise advise prudence by using qualified professional engineers. It isn't the first time that such projects are designed by a building designer that involves professional engineers in this kind of project even though it is a house in the vicinity of the area.

For the project of this prospective client, it is likely to be in and around 5% to 10%, maybe up to about 12-15% when the aggregate amount of my services and engineering consultants would be. My portion is almost certainly going to be over 3.5% of the project budget. Likely to be anywhere between 3.6% to 7.5% but can be more, all of which involves engineering consultants and still details to be determined which will reflect the actual amount. I am also looking at how much engineering consultants involvements will be and I would likely be charging more overall if I did all the structural and MEP stuff.... everything minus geotechnical stuff which I would NEVER do. I can make educated guesses but you don't rely on it for technical submissions. The liability and the pain in the rear those may be, would be something I want to do or risk. Deep foundation systems are not something to do without engineers in a Seismic Zone D (elements of the project would be subject of OSSC not the ORSC because of deep foundation systems that would be needed to be utilized. ORSC (Oregon amended IRC) is good for shallow foundation systems of conventional nature not stuff like piles or other non-conventional foundations). If you done projects with piles and potentially over water, you would certainly agree. 1% or less is just asinine for projects like this. There is also stuff like HOA design review, City design review involving multiple overlapping requirements. Potential EPA/DEQ stuff that would be involved and have to be addressed. I want to be both fair and reasonable to the client as well as myself yet have room to factor in engineering consultants. The amount of work I have to do with regards to the project which has its own above average complexities and involvement of engineering consultants, it would not be worth it to me to be charging 1% or less. I would be losing money on the project and end up making nothing. So the short answer in this case, is, you have to be an idiot to charge 1% or less on project like this. It is kind of idiotic for any project, in my opinion.

No one building designer or architect is alike. What do you bring to the project at a particular price point? How does it compare to what the competitor offers AND delivers? It is more than just what they may sort of offer in bland generic terms for the contract. It is what is involved in delivering all the deliverables. In a project with a prospective client, (if client is secured) the project will involve a lot of work and it isn't just going to be construction documents. It is the various deliverables that needs to be prepared for the various stakeholders, design reviews, etc. At a point, I am not giving a shit about trying to be lower in price than all the others out there. There are cheaper folks who will deliver less because they will not be encouraged to put the effort when their pay divided by labor involved drops to minimum wage or less. They cut corners and skip things they should be doing and deliver less thorough deliverables in order to keep the total hours down so they aren't working effectively under minimum wage. They wouldn't be working 60-80 hours a week for a 15-30 weeks on the project for the pay of 40 hours a week at minimum wage for 8 weeks. For me to put 600-1800 hours on a project, I have to charge a fair amount to make it worth my time. A lot of idiots don't know how to calculate billed rate from that of direct labor rate or how to build together a fee calculating indirect labor costs, overhead, and profit and material & supply costs associated with the project. It isn't all that different than it is for contractors except our material expenses are considerably smaller but you still need to calculate those things. You need to account for things to be a functional business. A lot of idiots probably don't even have a business license at any level. I call them idiots because they don't know what they are doing. This doesn't mean they have to remain idiots. They can change their way but at what cost to themselves and at what potential harm did they do to their client and public...hmmm.

The way I will calculate the fees, would actually involve a more complex process but I would have to factor an amount high enough that I can practically double the estimated hours and still make more than minimum wage by my labor rate part being significantly higher than minimum wage as its billed hours so I might actually exceed my estimated billed hours in total work involved but still need to make enough that it doesn't feel like I am working at chinese sweatshop rates. I didn't go to college and all that to be working like Chinese sweatshop laborers. I can feel willing go the extra mile with the client in my deliverables and not totally screw myself. That is the important part for me to get the work done with quality and be able to put the time needed to do it not just some slap it together over 1-2 week kind of b.s. Especially on the prospective project.

How does your office determine what to charge if not using construction cost as a basis for determining project complexity? Genuine question in hopes of learning

We determine the number of hours required for each phase and multiply that by our blended rate $/hr. Blended means an average $/hr based on the ratio of staff level efforts. Int des might be $120/hr while junior tech is $100/hr while I’m $150/hr etc. You mix all that up and out comes a number. Simple commercial fit up get lower $/hr but high end residential get top.

Another benchmark I personally use is an average of 8hr per drawing sheet. This works very well in repeat revit commercial projects when I am in charge. Previous similar project had 30 sheets, then this very similar one will need a minimum of 240hr at $150 per for just CD phase. Project could be 10million or 10 thousand, the effort is still the same.

Fees should be based on value delivered, not cost or effort. The only place cost comes into it is calculating your P&L / EBITDA at the end of the quarter or year. As an example, if you go down to your local car dealer to buy a car, you want to know what your are getting for your money and whether that's a good deal for you. You don't care how long it took them to build the car (unless they make you wait for delivery, which is strictly a negative criterion).

GW, our clients don't get hours expected next to our proposals. They get a lump sum with a set of deliverables. We use time spent to get to that lump but we never divulge the process to the clients.

Did you say 8 hours per sheet? Or 80?

8. And that’s for repeat (or similar) commercial projects. CD phase only and where I am the one doing the work.

I feel like sometimes we spend 8 hours on a singlev detail, nevermind a sheet.

Some sheets, you might spend less time. When N.S. is talking repeat or similar work where he already has the common details and stuff so it's pretty straight forward, you might get some sheets done in maybe 1-2 hours but other sheets takes more. When you make custom details that have not been reused, those sheets you can add additional hours for those sheets. It's a math of sum, build in some float into your estimate, and factor a profit margin and you got a fee that you can rely on if there isn't major headache which is where you can build into the contract terms that some things outside of scope or beyond the terms on deliverables would be billed additionally as additional services or something along the lines.

We use a combination of several methods to determine fee 

1. % of construction
2. fee per sf based on past projects (this requires a lot of data an spreadsheets)
3. complexity of the job

We'll then compare the fee each of the three methods and use it a guide for to actual fee.  It's important to note that the majority of our firms work is in the $20 million construction range.  Every few years we get a $150 million project.   A bit of an interesting finding, % of construction seems to be too low nearly every time.  

I agree. Several considerations before arriving at a number that makes sense. Where possible, fair to the client but importantly, addresses your needs in the business. First things first, you (referring to the OP) need to get to grips with running a business. You are a business when you are working as an independent contractor for a client versus working as an employee of a architectural firm. A business is a business whether it is 1 person or 1000+ person firm. RULE 1 of ANY business is to generate revenue. A 1 person firm is more like a n+1 firm. Not only are you to put money in the pocket of the owners and employees for the time and energy so they can do things like living, paying bills, buy food, etc., but you are also to put money in the business's bank account. Even if they are not separate actual bank accounts (you should have a separate bank account for the business from that of the personal), with good accounting, you can do so. 

Once you start making good money and a steady flow of work, set up a separate account for the business funds. While it can initially be a personal checking account for a sole-proprietorship, it should be a separate from the account of your personal self so the funds are not co-mingled. Easier to actually do accounting at the very least. Accounting is part of the basics of running a business. At least, basic accounting but as you get things more sophisticated, you would need to have a more robust system of accounting and all.

These are just aspects of your job. It isn't just drawing pictures and making specifications. Some of these hours are not stuff you can directly bill the client hour for hour, minute for minute. You need to build that into the billed rate to account for the fact that you might only have $1000-1500 hours of billed work for around 2000-2400 hours of total hours of work. (Utilization rate principle)

One good internal measure of whether or not you are setting your fees appropriately is NRPP (Net Revenue Per Person). That's before-tax revenue retained AFTER paying subconsultants, etc., divided by the number of employees. If you are doing a good job setting fees and working efficiently, that number should be over $200K. If it's under $150K, you are in trouble - either not charging enough or carrying too many people on staff.

Total employees in a firm or total employees working on the project?

You can do that both ways but for different purpose. You can look at it from project perspective but should also look at it from total business revenue over a year or prorated for a time period (monthly, quarterly, semi-year cycles, and annual). Adjustments in the formula and the amount above that gwharton said. I believe that is on the annual. If you want to know what it should be for each month, $150 to 200K+ figure divide by twelve. The NRPP is best used for assessing overall operations of the business (firm) not just project but you can use it or a similar formula to see if you got the project team size and staff appropriately and probably should be used with multiple other metrics for the respective purposes.

Yearly revenue divided by total employees makes sense. Using that metric a 12 person firm would need to have a total revenue between $1.9 and $2.4 million.

Exactly right. The "net multiplier" you probably hear thrown around alot by firm managers is a related calculation: Net Operating Revenue divided by Direct Labor Cost (e.g. Payroll). That number should ideally be 3.0 or higher, though many firms struggle to get over 2.4. Again, this tells you two things in relationship to one another: do you have enough revenue coming in, and are you working effectively? The first is a fee and contract thing in addition to be a measure of overall work pipeline. The second is an operational efficiency metric.

One thing that has always bothered me is when management says to be 'more efficient'. I know you're not implying this gwhaton, but many managers use that as a means to say 'work overtime for free'. 

Would you have any examples of means to improve efficiency that you see most architects not doing?  Serious question - I'd enjoy your ideas on this!  

I can only be so efficient.  I've found that having a utilization factor of over 85% to be nearly impossible for more than a month straight.  

I prefer not to think in terms of efficiency, but effectiveness. That may sound like splitting hairs, but it's an important distinction. Efficiency is about optimizing work processes. Effectiveness is about maximizing value delivered. We target 75% implied utilization for our staff (implied, because we don't actually track hours). That means three quarters of what our people are working on during a typical week should be delivering value (or work product if you want to look at it that way) toward delivery milestone requirements. The other quarter of their work is assumed to be dealing with random stuff that comes up, overhead crap, and other non-project things.

As a core operating principle, the emphasis on effectiveness and results directly connects to revenue. You can't bring in revenue until you can bill for work delivered. So .... deliver the work in a timely fashion to the quality level you promised. As soon as you do that, you can send them a bill, get paid, etc. Therefore, the operational issue becomes: how do we deliver that work to that level in that time frame with the resources we have available to do it? And how does the projected revenue balance against the cost of committing those resources over that time? It's really not any more complicated than that, though if you are using effort-based accounting to track it all, those time reports can fool you into thinking you are over- or under-committing, or that you are accruing revenue when you actually are not.

As for "what architects are currently not doing" to be more effective, that's a pretty long list. Some major items are: not being systematic about how they do design, not taking advantage of modern technology for streamlining technical design and documentation, poor quality control on design and documentation, work processes that focus effort on non-value items rather than value delivery, etc., etc.

One of my biggest pet peeves when I was still doing the fee-for-service consulting thing, was the built-in assumption with time-based accounting (time cards, basically) that effort is a variable cost. The vast majority of architecture employees are paid salary, not hourly. So we have to pay them no matter what they are doing or for how long. 

Treating the hours they spend as a variable cost creates perverse results. For instance, I once had a project manager during the Downturn tell me his projects were still profitable ... because no hours had been "spent" on them and thus they were not incurring any "cost." At the same time, no work was getting done, no value delivered to the client, and thus no revenue from billing was coming in. And we still had to make payroll. 

Another example: it's fairly common for architecture firms to record hours spent from timesheets as a direct cost in their accounting systems, which then have to be "written off" every month if they can't be directly billed to a client or account because otherwise the books won't balance. This is a horrifying accounting practice, which results in the appearance of gigantic monthly financial losses to anybody who follows normal accounting practices. 

I once saw a firm with more committed work than they had people to accomplish, who were actively hiring for more than a dozen positions, be forced to LAY OFF STAFF by the bank which provided their credit line (which they used for liquidity to make payroll), for the sole reason that they were claiming large monthly write-offs of unbilled "cost" hours in order to balance their books. These were not real costs. They were an accounting mirage resulting from treating hours as a direct, variable cost rather than a resource management abstraction. And it resulted in multiple, very busy people losing their jobs at a time when they were desperately need to do work.

TL;DR - Match resource commitment to value delivered in order to hit revenue milestones.

I agree. We have to be considering what we are doing and charging with relative norms of competent & comparable services offered AND delivered. I emphasized the AND for the OP. It really does matter if we deliver. We just know, these low ballers are just not delivering the same for the price. Informing and educating the client on the difference in what they are getting. What do they get in the deliverables. How does it compare. A welder can demonstrate and show a $15 an hour weld job versus a $45 an hour weld job and the quality of work the higher rate or price delivers. We should do something akin to that in some fashion to justify your price. What are you providing for your price compared to what the other is providing for their prices? Communicate in terms a consumer can grasp. Every American is a consumer minded public. We are instituted in our consumer culture and institutions of a consumer mindset. That's the language they grasp not archi-school babble. People have a mathematic consumer mindset. Translate value into dollars and cents and value otherwise you are talking a foreign language they don't have a clue in comprehending.

True; different people have different levels of efficiency and productivity, but if I put 350 hours into a project, my clients are getting more service than someone designing a house in 50 hours. I can design a house in 50 hours but not with much client input, looking at alternative designs and details, providing full, customized specs and details, etc..

I could design anyone anything in 50 hours. Most of the designs wouldn't be very good, meet code, comply with zoning regulations, meet the owners needs, or not fall down.

I might have to borrow the line about buying a bicycle and hoping for a Lexus.

Right. The point is the difference between the effort required for competent work compared to incompetent work. We are professionals so we need to work on a professional level of work. That requires a requisite amount of work. I understand that some individuals are more efficient or effective with their time than others but it just not going to vary all that much. Professional services are more than just making drawings. Scope of work is something that is the main variable but there is those that do it with professional quality and those that don't. 

It could work. However, you'd need to not only be able to convince your client to pay the additional services fee, but also take the time to do so. In projects like you've mentioned this will probably lead to a court case.

In addition, you could get a reputation of being 'cheap' and 'difficult' to work with.  Ironic.  

In my opinion it's better to not go after projects like that and simply have a well defined scope of services in your contract.

Yeah, nickel and diming your way through a project is a guaranteed way to lose that client forever, if they don't try to sue you in the meantime.

this is normal actually , think high end ( Starchitect design...gosh / hate this word) ..the scope of services would be limited to SD,DD then collaborator architect(s) would pick up the rest...( crumb )

desperate…. If your client doesn’t want to pay… good riddance is all I can say….

We got a call today from a client who was disputing a tax charge of $39.xx. From a time zone 10 hours away. I can't wait to get rid of this guy.

I've found that super-limited scope + adds is hard to do in real life. The repeated requests for additional services you have to make as the client gradually wakes up to what they really need scope-wise usually makes them uncomfortable and friction often results.

I used to do a fair amount of what I called consulting, basically providing very limited service, often to owner/builders but also to architects and sometimes builders. 100% of the time it was impossible to plan how much time I would need, as every question I answered would result in two more questions; answering each of those would result in four additional questions, ad nauseum. And it always had to be done on short notice because they wouldn't know what questions they had until they got to that phase. And they made tons of mistakes because they didn't have the full picture (along with an abundance of confidence and a dearth of funds). I still get requests almost daily. I turned down two yesterday and two this morning.

I've been doing a lot of medical office lately, per our contract CA is all an Add Service. Certainly makes shop drawings more bearable lol.

Which Jurisdiction? Is the facility publicly funded? In Cali public contract work requires CA as a basic service I believe.

bulgar probs did the new hayes davidson site. clown show

SFR not a profit center? Bro, u r doing it wrong.

Depends on the client. If you SFR is say $400k you'd better be doing very basic drawings and design for the 4% fee you're going to get. ;)

then I'm glad I'm only an employee doing super fun high end SFR. I'll let my boss know he's doing it wrong for the last 40 years, but he's on vacation in Cabo right now.

Who would check this website when not in the office, let alone on vacation? ;)

Success in SFR appears to depend a lot on the levels of wealth and taste in the location that you practice in.

to be fair, architecture was never about dwellings, it was always for gods and rulers, and sometimes it feels that way with the fauna I've had to deal and their desires.

I've never had a wealthy person or a god as a client - probably never will.  ;)

It's not as fun as it sounds.

The wealthy or the godly? Dose it depend of the god? I've heard those Greek gods can be a handful.

Gods are just labels. No different than a king but basically a god is just no different than a minnow distorted into a whale. Anyone perceived as superior or above them can be perceived as a god. A god is just a person or being or thing worshipped. Today's your god isn't a necessarily a person. When I say worship, I don't mean going to a building and sing songs. I am talking about love and reverence for and the power it has over you. So maybe your god is green and papery. As for almighty and supreme being, that is something that it is possible, all religions and cults have it wrong on. God in that sense is the universe and beyond. Maybe we are such sub-atomic (speaking in relative terms of scale) microbial life living within it and the universe is just one single cell. Maybe that is the supreme being for we could not live without for our very existence stems from the body we are all inhabitants of. Yet, we do not have a face to face personal relationship with in the since like you may have with your friends but that you see the Supreme being every day but not the whole but just what you can see of the Supreme being.

All these other 'gods' are just that, people of the past that held an elevated state of idolized status that strangely turned into fiction. Donald Trump is a 'god' to some wacky individuals but is no more powerful than you and I. Just that some people just worship him for some strange and delusional reason. Sifting through all the 'gods' to get to the true supreme being means to stop listening to the public noise and nonsense, ultimately. Stop idolizing people and things is a start. Applying a filter from all the bullshit.

40% of the US believes in a magic sky daddy that tells them what to do . . . .

40%? that number appears shockingly low to me.

Whoops! It's 70% believe in some type of god. 40% believe in Christian version of god. Sorry for the confusion.

.

Chad Miller I've never had a wealthy person or a god as a client - probably never will. ;) gwharton It's not as fun as it sounds.

Wealthy and godly are quite close these days of late crony capitalism, look at bezos or musk - working for them can be very stressful because they think they're the only worthy people on the planet and all the other people you interact with are second grade, you don't have any other projects and you have to be available 24/7 - I deleted my cell phone from my email signature, but it's hard to say no when they ask you directly.

Oh, I've had clients like you describe JCL-1 without them being super wealthy or godly. I've fired a few.

yeah, when you don't have the means, acting like that is just being a douche.

Even when you have the means acting like that is still just being a douche.

of course, but they make you an offer you can't refuse...

I was asked once by a wealthy someone to do a project that I found unethical. I refused. No idea if the person was actually wealthy or just implied they where.

I have a couple of personal theories I developed over the course of working with a bunch of really wealthy/powerful people as their architect for various kinds of things. The first is what I like to call the Client Richter Scale. Basically, how much does the ground shake when they walk? 

Like the seismic scale, this is logarithmic, not linear. The difference between one level and the next is an order of magnitude in money and power. So on a scale of 0 to 10, a zero is somebody who has basically no resources or influence on other people (homeless, essentially). 

A 10 is someone with essentially unlimited resources and enormous power. There are maybe a handful or two of these people in the whole world. What we normally think of as billionaire titans of industry (Elon Musk) are not among them. At the level of 10s, we are talking about people who personally own entire countries and probably have direct command over substantial military organizations as well as huge economic resources. 

Everyone else is somewhere in-between. The higher up the richter scale you are working, the more demanding the client and the work. The relationship and work process is also very different. At the level of 8s and above, contracts start meaning very little and personal service plus delivering whatever is requested becomes paramount.

My other personal theory is that wealth does not corrupt per se. What money is, is a force multiplier for personality. The more money you have, the less you are obligated to inhibit your beliefs or behavior to conform to what other people think about you in order to get along in society and do stuff. The money frees you to be more purely yourself, whatever that might be for good or ill. 

So if a kind-hearted person becomes a billionaire, it can result in enabling the creation of a great benefactor of society. On the other hand, a person who is kind of a jerk becoming a billionaire can easily enable the creation of King Assh*le of the Universe. 

The money allows the inhibitions and barriers to behavior to drop away, freeing the personality to express in more pure and extreme forms. In a society such as ours, where sociopathy is highly rewarded, that results in a lot of sociopaths getting rich and being able to exercise their sociopathy more freely. That is not a good thing. Incentives matter.

Not coincidentally, the same principle applies to old age. The older people get, the less inhibited they tend to be about behaving according to their nature or personality. They distill: becoming more purely themselves over time.

A douche is a douche, regardless of how much money and influence you have.

A douche with a billion dollars tends to be a significantly bigger problem than a douche can barely afford gas.

an unknown douche is just a problem for his close circle, a douche with money is a problem for all of us.

True. Then again, a douche with access to firearms can still do a lot of damage to a lot of people.  

How do you solve the douche problem, entirely? While you ponder that, can we return back to topic more in a manner that instructional?

The douche problem seems to be the direction this thread has gone. Sorry.

We need common-sense douche control.

I've been thinking about this since we started this convo; My other personal theory is that wealth does not corrupt per se. What money is, is a force multiplier for personality. Except when they're born into wealth, a lot of times, money becomes their only personality.

This is probably the wealthy client gwharton is thinking of https://youtu.be/PYTlG9JWhl4?feature=shared

MbS qualifies as a 10 on the Client Richter Scale, yes.

In regards to the douche problem: If you act like a douche then you get punched in the face. The only way to stop a douche is with a bigger douche.

Side note:  MbS sure looks like they need to be metaphorically punched in the face, repeatedly.