if you can get by with it -- nothing is the best. but some governmental contracts are a bit smarter than that and have you do everything including geotech reports / surveys etc. once you pass through your consultants you should make sure you mark it up 10% or so for admin cost and e&o cost [the pass through fees and them as your consultant v. the owners becomes part of the revenue basis for your firms insurance - generally 2% of your total revenue]. some agencies in chi town like the transit folks have you bill your direct cost [labor plus overhead and profit which if i remember in total cant exceed 175% of you labor rate unless you have certified audited summaries] but in addition they were allowing you to bill the computer as seperate for $75/hour. not a bad gig at the end of the day.
if your a small firm work the reim hard. include prints from local printers, xeroxes and faxes. it makes a big difference in small firms fees. the big boys are charging such high fees / billing rates i dont think they can get by with the nickle & diming. if the client requires really high e&o coverage, try to get the additional coverage also above your fee.[remember your covering most projects +-10 years after substantial completiion]. one agencie in ill requires you to have e&o to 20% of the construction cost which on a $20mil project is $4mil and way above what is really needed and the industry standard] on big projects with lots of prints, you might suggest to the client to have the printer bill them directly to save money [then u dont have to pay them, enter it into your accounting system, bill the client and wait for the money. 2-4 months lag time]
it will vary project to project, some clients will insist one way or the other [some clients want to control all consultants seperately, some clients want a single source of responsibility] i would do it based upon what i felt was best for the client [yes, i do have some ethical prinicpals, not just a greedy bastard]. but if you are starting out, perhaps keep it simple for yourself - try to get all consultants directly billed / contracted with the client. if a client wants to have a specific consultant on board that you have never worked with or dont know, it is a good reason why he should pay for it. having the consulants under you adds a layer of insulation between them and the client and you have much more control over their work and process. if you hire the consultants, make sure your agreement with them is that they get paid when you get paid. make your owner/arch agreement part of their contract and make sure the percentage of completions match your agreement with the owners [most engineers are much more agressive in pre-billing projects than architects]
also if you hire the consultants, make sure they have e&o to the limits that are required of you [in addition to general liability, works comp, etc.] and that you and the owners are both named as additional insured [they need to issue you a certificate of insurance].
I had a thought today related to fees. As I was sitting in a meeting where we were discussing our meager 7% fee I remembered my "good buddy" discount on a new pairs of shoes from a friend who runs a small retail outlet.
Got these retail $140 shoes for $70, his cost. Full 100% mark-up. Know someone else who works for big box retail where high tech equipment is often marked up 20% or more. You don't really want to know what an LCD monitor costs that retailer or you'll want to start a riot.
So my thought is our 7% fee goes for all our consultants, overhead, profit, the works. The client goes away with a quality designed and built building that will last at least 50+ years with proper maintenance.
Those shoes or my computer monitor will last a few years and then get replaced with a new one.
Why the hell do people balk at paying an architect a meager fee when they have no problem giving a retailer huge point margins on essentially disposable goods?!
Perhaps the overall percentage is not the best measure - think about the fee you are billed out at versus the firm's actual cost. The firm I work for is considered high-design (and as such, if one follows the conventional wisdom,should bill lower than say a corporate firm) but I still end up getting marked up almost 100% above my "cost" which would include my salary, office overhead, and benefits. But what's important is not the proportion of the total sale, but the volume. Car dealers also make less than 10% on each vehicle sale (excluding financing), but they make it up in when they are selling luxury cars.
From the perspective of a small firm, we do not include anything except "architectural services" in our fee (we bill a % of total construction cost). We get reimbursed for in house printing and plotting, driving miles, other travel expenses (ie. train tickets, cab fare, etc). We also charge for reimbursable expenses (marked-up 10%) for anything else including existing conditions photographs (film and processing), third-party plotting, stamps/postage, etc.
When a client requires additional liability insurance above and beyond what we carry, we require them to purchase it directly as a project policy. Since this payment goes through our office, we mark it up 10% for "administrative purposes". We have only had one client go through this process and I will say that I had to pay my lawyer much more than the 10% mark-up that I charged the client (on a pretty hefty insurance premium). But at least I have the contract language for the next time.
I never include consultants fees in my billing. As a matter of fact I have my clients go to contract with consultants directly (ie. structural engineer) so that if there is a lawsuit due to the consultants negligence, the client sues them directly as opposed to them sueing me and me sueing the engineer. This also means that I do not have to deal with the consultants accounts recievable.
Sorry if I am rambling, but it is the end of a brutal day.
I guess my frusturation last night was basically in regards to the obscene profits in the retail sector and nobody says a word. The shoes thing sets it off. They are made in China or some other Asian country by someone probably making a few bucks a day. Then they come over here and get marked up by middle man after middle man. Then when the final retailer gets it he marks it up another 100%. Finally, we as consumers, go in and don't say a word and just pay what they ask while we could hardly even think about asking for a 10% design fee.
Sure, a pair of shoes is cheap and a building is expensive but it's all relative. Knowing several people in sales of imported goods from Asian countries I know what they are making off the backs of cheap labor and duped American consumers. Is it right that sales reps are earning $250k/year or more just hocking shoes or televisions or other random Wal-Mart clutter?
I've never liked the ethics of big box retailers and for the most part I feel people working in sales are maybe just one step above politicians. I just wish the public would take a step back and think about what has more value. It's sick that more people judge weath by what you put inside your house than by the design of the house.
Its because you are comparing a comodity based retail business with a service industry. Most service based businesses cannot charge a 100% mark-up, I cannot think of any. But we don't have to worry about inventory, retail space rents, theft, etc.
For a closer comparison that always makes me cringe is the profit and overhead that the general contractors (that I work with) charge. Typically they mark-up the project 21% (10% profit, 10% overhead). In addition they are putting the job foreman and labor rates into General Conditions (which they mark up as well). This would be akin to me pulling out my project architects billing rates on top of my architectural fees.
I realize that GC's are at greater risk than architects in terms of managing working capital, but the fees that they collect seem out of whack to what I collect (and my fee is north of 15%) and I have spent about a year on a project before the GC even looks at it.
Yes, I see the difference between commodity based retail and service based design. I would argue that their liabilities are covered by insurance much like ours is. That's beside the point.
Yes, GC's can get some healthy profits too but I don't think they are near what a retailer can get away with.
The point that I wanted to make is that it's sad how we as architects have to fight tooth and nail to get a decent fee while people don't even think to ask what kind of profit a retailer might be making off a disposable good.
Everyday people bargain over big ticket items - cars, homes, etc. in an attempt to "get a deal." All the while they think nothing of the profts that the retailing giant is making while they fill their shopping cart up.
i choosed this thread because of it's title.
here is the situation;
from now on i am going to start charging people for going to their house and discussing their potential addition, remodeling or new construction for x amount of dollars per hour and to be applied towards the overall fees if project becomes a reality. 250$ minimum.
i am frankly tired of going people's homes and naturally leaving one or two ideas behind and never hear from them again. not even a thank you.
there is no free initial consultation time from me anymore.
Electricians do it, why shouldn't you? Perhaps it would be an easier sell if you promised a deliverable at the end of the consultant - like a sketch. Then you could charge $500.
there is nothing called free consultation. Just because you don't make a dime doesn't mean it isn't something the can't cash behind your back. Which unfortunately happened to me.
Right before grad school I had a decent project in the hills designed around a hillside. I was going about 6 weeks without a single note added to my bank account. Eventually I walked after the client said that I should be happy for the experience and not want compensation.
Anyway he took the preliminary perspectives to draftsman to compile so he could build. Well needless to say the project got started and couldn't get finished.
So all that to say fight for your rights...your fees are what ultimately define your relationship with your clients (potential or otherwise)
consultants sometimes. never printing, mileage, stamps, UPS, etc. Sometimes we break entitlements or CA out separately. Never include surveys, testing, estimates, etc. Sometimes we end up doing some interior design and 3-d modeling, marketing material even if not stated in our contract.
orhan, i agree, but how about taking this track instead; don't talk ideas, listen to what they want, then lay the mojo down on them, that way at least you're in the door and if you or they don't like the conversation, you are not out an idea, your time is not wasted, you are not waiting for a phone call, and they know the terms. i think if you pose even a modest fee for the conversation, they could be offended and you would not have an opportunity to develop some early rapport. not to mention even if they did pay, you could offer up some ideas that they didn't have before they called and they could have their daughter "the drafter" work up some plans...
get foot in door, leave them with little tangible ideas, foster a relationship, get job??
I've been in practice for a long time. During that time I've had professional relationships with quite a few doctors, lawyers, accountants, engineers, management consultants, etc. I've never once received a "free" professional consultation - nor did I expect one.
You can't be abused in this way without your willing participation. While I suppose there's always going to be some architect somewhere willing to give away free work, it's not necessary and it demeans our beloved profession.
Orhan Ayyüce - you're doing the right thing. I hope you don't have to suffer as a result of your decision.
blue, i beg to differ, free consultations happen, but they are really a kind of get to know you deal, not really a working meeting, but i think establishing a rapport and trust is always a good thing. i look at this way, Orhan seems to be coming at it because of some negative experiences, moving in the complete opposite direction seems to be responding to the bad. modifying and meeting halfway seems like a good compromise.
there's a difference between a "meet and greet, marketing meeting" and a "working, problem-solving session" - rapport can be established without giving away free samples.
that is what i am saying, and that is what my first post noted. don't give it away, meet for coffee and see if you are compatible. i think this profession is a bit schizoid when it comes to dealing with real people, we either cheapen ourselves by downward negotiating our fee or alienating ourselves because of bad client relations. why not take a Buddhist path and educate, give something back, that way even if the potential client walks away, they won't go to a "drafter" or builder, but perhaps to another architect that they CAN develop the relationship that suits them.
i see. beta, i understand what you are saying. i would do that if the phone call is coming from a former client's friend and also coming from a potential clients who has seen some work and seriously considering me to work on their projects. then i usually go to see the context, meet them to check with personality competability, start building a rapor, discussing the fee etc. those people i don't have any problem and more than 50% of the time they become a real client.
but there is this other crowd who get your name from less intimate and close sources and usually fishing for ideas and competable fees from different architects/designers/contractors. you go to their house, and they start to ask you what would you do with this and what would you do with that? and it is very easy to tell them the obvious things from architect's eye not even thinking they never visualized any of it. these type of people start to build a concensus about what they can do with their plans and after that they give the job to a contractor who "includes" the plans in the package. usually with the word "free plans" attached to contractors' ad. basically they are not really sincere about hiring you but they know about the carrot technic and apply it to several architects they are also interviewing. it is done in disgusting proportions here in los angeles and there are also this first project starters who are willing to do "anything" to get that project.
such as, they know the people in building department, they know all the contractors, loopholes, they know the neighborhood, they know and they know.
i think when i sense this type of a call (not hard to detect after many years) i will ask them a hourly rate for giving them some configuration and information about how to go about developing the project (not the design just the precedure). if i am committing my 2 hours to them, they should commit some compensation for me. afterall, it is their house improvement and my time.
i heard from some collegues that people take you more seriously when you ask compensation for your time. if they want second or third back up bid/idea/whatever from me by meeting me in their house, hey i think they should pay.
People value what they pay for. The higher the price, the higher it is esteemed. And rarely has this been proven untrue.
Orhan has the right idea, and I've taken the same approach since being burned a few time with freelance work where I take the hours to look over the project, find out about they're working style, quote a price and then never hear from them. My best client actually paid me for our first meeting and travel to his office, and stiil expects me to add that in to my invoiced hours.
in another thread a week or so back, quizzical posted the following note, which seems germane to this thread:
'the concept discussed above is the "blind purchase" in which the buyer doesn't really know how to assess the value of the goods or services being acquired and therefore uses "price" as a surrogate for "value" - the acquisition of a diamond or the hiring of a brain surgeon falls into the category of a "blind purchase" for most of us.
I find that this concept has only limited utility in our world. most clients - at least in the commercial and institutional world - hire design firms often and have enough knowledge to draw meaningful distinctions about value and quality - or, they think they do. this creates an upper limit on the fees that can be charged in that world.
however, when we charge way too low a rate for our services, I do believe the client - any client - will discount, to a degree, the value of the advice or recommendation received.
so, what to do. as i've written elsewhere on this forum, we always must deliver a high quality service that responds fully to the client's requirements (not ours) and learn how to sell (negotiate) fees related to that service that accurately reflect both our costs and the value of what we do."
Orhan, you are doing the right thing by charging — it screens for the serious. I got tired of tire-kickers a few years ago. At that time, I started telling phone callers that I would meet them for free for up to one hour in my office, if they would bring photos, site plan, and full project info. Most balked, so I did not waste time and was able to finish ongoing projects.
In the past, every time I broke the policy of charging for out-of-office visits, I was rewarded with no-pay jerks who picked my brain (25+ years experience) but did not pay. Not willing to admit or think about why it took me more than a quarter-century to figure this out.
Now, I charge a range of between $500 (min) and $750 to visit a site and meet with a client to have my brain picked for a couple hours.
Only once was I really swindled, when a father-son team played a game. The son said, on my arrival, "My dad's on the way." As is usual practice, I said I needed to wait on payment before proceeding, but Son began to talk and I listened and responded. When we were done, Son's phone rang, and he said, "Oh Dad got in a traffic jam." So I waited. Dad arrived in the newest Porsche (not the Boxster), shook my hand, explained he "forgot" his checkbook, would I take AmEx? (Yes, like on the spot in my car. My firm accepts MC & Visa, but not like that.) After many phone calls, he personally, actually picked up (sounded p.o.'d), and heard my explanation that he should pay. Time will tell.
We have been providing our design consultation service for residential customers for 7 years now. We find that the clients who are paying us to come in respect or ideas better. We find more problems when we don’t charge this up front. However, with the residential side tanking around here the demand has not been as great.
How are firms typically determining their architectural fees these days? Percentage of construction cost? Cost per square foot? Actually crunching hours?
I'm out on my own, doing small to mid-size commercial (typically tenant buildouts, around 1,000 to 5,000 s.f.). Back when I was in a firm, I recall that the rule of thumb was 3-5% for large commercial, 5-7% for medium commercial, 7-10% for small commercial, and 8-12% for residential (though I've heard of firms locally charging as much as 18% for residential). Since my projects are smaller, I usually try to crunch the actual numbers of hours I anticipate, and then compare that to the % of construction cost and/or cost per s.f. (typically in the $3.00 to $3.25 per s.f.). Do those ranges sound in line with what everyone else is using these days?
Also, with the above percentages/methods, what do you all consider as "basic services"? Schematic, DD, and CD's only? What about As-Builts on a renovation project? What about CA? I've had projects in the past where the clients did not want CA or just minimal CA on an as-needed basis. More and more, I am pushing to include CA in my main scope as I feel like it is most beneficial for all parties involved. But I can't remember if CA gets included in those percentage estimates for basic services or if it would be in addition to those percentages.
Also, for the small firms or sole proprietors out there - do you typically try to run projects hourly or fixed fee? If you do hourly, what do you bill yourself out at? I'm billing my hourly rate at $85/hr right now (12 years experience, licensed for 6 years, self-employed for 3 1/2 years). Previously, I had been in small to mid-sized boutique firms (25 people or less) and the principals billed themselves out at $125/hr, $110/hr, or $95/hr. However, these principals have between 5-15 years more experience than I have. Though, I have an interior designer friend of mine who is out on her own who has a similar number of years of experience as myself and her hourly rate is $150/hr!
Also, in response to earlier questions, reimbursables are always billed separate from my fee and I bill cost + 10%. I don't bill for in-house 8 1/2x11 prints or faxes. Anything bigger than that gets sent out to be printed and gets billed as a reimbursable.
As for consultants, they are also separate from my architectural fee. Most of the time, I try to have the consultant contracted directly to the owner, but I have had a few clients recently that have insisted that they be contracted through me. I billed the consultant's time and reimbursables directly to the client at cost though I know some people charge another 10% on top of that. In lieu of adding the 10% surcharge, I do *try* to factor in a sufficient amount of coordination time with the consultant into my fee.
Thanks in advance for your feedback! It can be hard for us sole-proprietors to stay in the loop on things, so everyone's comments really are appreciated!
In what region/state of the country are you located? Larger city (central or suburban?) or smaller urb? This affects architect compensation.
Another factor is the presence (or absence) of building and life safety codes and the level of enforcement of those codes, as well as professional practice acts that may or may not require that certain professionals (i.e., architects & engineers) prepare the designs and documents.
I charge anywhere from 3.5% to 6.5% for most work - it is that little because I am doing this on the side with minimal resources and fully explain this to the clients. Also I only take 2 max projects a year.
I'm in Atlanta - so, major metropolitan city in the Southeast. Building/Life Safety/Code Review is always essential for my projects and I usually include that in my basic services - either rolled into Conceptual or Schematic.
Most of my work is tenant buildout - typically not requiring structural, and MEP is often design-build. But, when a project requires consultants for engineered drawings - either for the city, project, or client's request - I try to have them contracted directly to the owner, and do not include consultants fees in my percentage estimates for basic services.
metamechanic - that's a tough one - in the past I used to put down picking finishes, light fixtures, bidding/negotiation and CA as add-service on an as-needed basis. But, more and more, I am trying to make those all part of my basic services and trying not to budge on that, simply because in the end, I feel like it's in the best interest of the project and everyone involved.
For my small commercial projects, finishes and lighting are really huge design components and things I don't want to give up any more (assuming it's a "design" project).
And CA - if I've got a contractor involved who I know and trust, I don't necessarily feel like I need to be part of their contract negotiation and reviewing pay apps, but I do want to be involved in going out to the site, answering questions, clarifications, reviewing samples, and doing punch lists.
Bidding/Negotiation - that's one that I do still try to keep as add-service simply because we don't always know how many contractors we will need to bid to and how much VE the client is going to be needed, etc. But if they are going to be bidding, I do try to make sure I'm included in that process (again, for the "design" projects).
When I do include CA or Bidding/Negotiation in my fee (whether for a fixed fee project or an hourly but giving estimated ranges), these days I try to put in some specific criteria/assumptions - X number of hours, X number of site visits, X number of bidding contractors - and specify that anything over that amount will be billed as add-service. I do everything I can to run things efficiently, but there are often situations beyond our control (and certainly things that can't be anticipated back when we're bidding the project), either because of the owner or contractor, that rack up additional hours and I want to try to make sure I can get compensated for that.
Each project is a little bit different though. The projects that are more "design" projects (and thus, more of my babies), I try to push for as much involvement as possible. For more bread-n-butter projects, there is more leeway for less involvement. For instance, I just did a commercial buildout for a national retailer - they already had a prototypical design including finishes and lighting. I basically had to do code review, as-builts, and adapt the design to the current location. Because they were utilizing a contractor that had built out some of their previous locations, I had very very minimal CA, and no involvement during pricing.
Maybe it's just cause I've only been out on my own a few years, but it really does feel like every project tends to present some unique situation/conditions that always makes estimating my fees a bit challenging. This one will be a renovation and need as-builts, that one will have another design consultant involved who will end up causing me more time and headache, this one we're not even sure is possible to meet code, that one the developer is going to be the contractor too, this one they just want design and no CD's, that one we have consultants, this one we don't, that one has incredibly challenging existing conditions, this one has all sorts of unique programatic requirements requiring extensive research... ahhh... the trials and tribulations... :)
Most of us have a standard hourly rate (mine's $150), and some have assistants' rates stepping all the way down to around "fi'tty buck". How many of us have figured our overhead, compensation, and costs to be sure our own rates are accurate?
What was your last hourly pay? You earned that for each hour worked, around 40 per week, right? (heh) Probably had 32 -36 hours productive per week or somebody hollered at you, remainder was "admin". Now that you're a principal, carefully check your time, and you probably have only 25% - 50% billable (i.e., productive, probably on the lower-to-middle of that). The remainder is overhead time (bookkeeping, taxes, marketing, supervising staff or contractors/consultants on non-tech matters, etc. — themselves more overhead), but you still have to spend it to keep your firm alive. Plus, you have to pay the costs of your space, your CAD & production tools, and so forth, even if it's a bedroom in a rented loft — this is the "office overhead" you've always heard about.
Add the overhead time costs of yourself, staff, & contractors to the office overhead, plus the direct personnel expense of your own compensation (i.e., salary, benefits, cost of vacation, holidays, personal time, etc.); next divide this by the actual number of hours you can bill to clients; the product is your hourly rate. Scary, huh?
We usually round this up to some nearby figure so clients don't think we're strange loners for trying to charge 'em $147.19 an hour, but that's the math of how our rate is reached. Crazy how I hear of those so often who charge rates around what they made (5 years ago) plus say 15% for self-employment tax, plus a tiny bit more "just in case", say maybe up to a total of around $70-75 an hour, then cap their hours, quaking at the bluster of some GC who wants to ensure as few details as possible to tie him down. Sound familiar?
When you are marking up your consultant fees, is this something that you list on your invoice with the original fee and markup or is it just baked into the fee? I'm curious what the thoughts were on disclosing markups to the clients.
Feb 17, 24 11:30 am ·
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Architect's fees
What do most of you (or your firm) include with the architect's fees?
Consultants, printing, etc. ? Everything? Nothing?
if you can get by with it -- nothing is the best. but some governmental contracts are a bit smarter than that and have you do everything including geotech reports / surveys etc. once you pass through your consultants you should make sure you mark it up 10% or so for admin cost and e&o cost [the pass through fees and them as your consultant v. the owners becomes part of the revenue basis for your firms insurance - generally 2% of your total revenue]. some agencies in chi town like the transit folks have you bill your direct cost [labor plus overhead and profit which if i remember in total cant exceed 175% of you labor rate unless you have certified audited summaries] but in addition they were allowing you to bill the computer as seperate for $75/hour. not a bad gig at the end of the day.
if your a small firm work the reim hard. include prints from local printers, xeroxes and faxes. it makes a big difference in small firms fees. the big boys are charging such high fees / billing rates i dont think they can get by with the nickle & diming. if the client requires really high e&o coverage, try to get the additional coverage also above your fee.[remember your covering most projects +-10 years after substantial completiion]. one agencie in ill requires you to have e&o to 20% of the construction cost which on a $20mil project is $4mil and way above what is really needed and the industry standard] on big projects with lots of prints, you might suggest to the client to have the printer bill them directly to save money [then u dont have to pay them, enter it into your accounting system, bill the client and wait for the money. 2-4 months lag time]
thanks, so are the consultants usually part of the architects fees?
what is e&o?
error & ommisions insurance aka profeesional liability insurance.
it will vary project to project, some clients will insist one way or the other [some clients want to control all consultants seperately, some clients want a single source of responsibility] i would do it based upon what i felt was best for the client [yes, i do have some ethical prinicpals, not just a greedy bastard]. but if you are starting out, perhaps keep it simple for yourself - try to get all consultants directly billed / contracted with the client. if a client wants to have a specific consultant on board that you have never worked with or dont know, it is a good reason why he should pay for it. having the consulants under you adds a layer of insulation between them and the client and you have much more control over their work and process. if you hire the consultants, make sure your agreement with them is that they get paid when you get paid. make your owner/arch agreement part of their contract and make sure the percentage of completions match your agreement with the owners [most engineers are much more agressive in pre-billing projects than architects]
also if you hire the consultants, make sure they have e&o to the limits that are required of you [in addition to general liability, works comp, etc.] and that you and the owners are both named as additional insured [they need to issue you a certificate of insurance].
TED - I hope you don't mind, but I sent you an email with one additional comment/question.
Thanks again for your input.
I had a thought today related to fees. As I was sitting in a meeting where we were discussing our meager 7% fee I remembered my "good buddy" discount on a new pairs of shoes from a friend who runs a small retail outlet.
Got these retail $140 shoes for $70, his cost. Full 100% mark-up. Know someone else who works for big box retail where high tech equipment is often marked up 20% or more. You don't really want to know what an LCD monitor costs that retailer or you'll want to start a riot.
So my thought is our 7% fee goes for all our consultants, overhead, profit, the works. The client goes away with a quality designed and built building that will last at least 50+ years with proper maintenance.
Those shoes or my computer monitor will last a few years and then get replaced with a new one.
Why the hell do people balk at paying an architect a meager fee when they have no problem giving a retailer huge point margins on essentially disposable goods?!
Sorry for the rant but our society is whacked!
What gets me is that people have no problem paying 6-7% realtor fees, then complain about paying the same in architect fees.
Perhaps the overall percentage is not the best measure - think about the fee you are billed out at versus the firm's actual cost. The firm I work for is considered high-design (and as such, if one follows the conventional wisdom,should bill lower than say a corporate firm) but I still end up getting marked up almost 100% above my "cost" which would include my salary, office overhead, and benefits. But what's important is not the proportion of the total sale, but the volume. Car dealers also make less than 10% on each vehicle sale (excluding financing), but they make it up in when they are selling luxury cars.
From the perspective of a small firm, we do not include anything except "architectural services" in our fee (we bill a % of total construction cost). We get reimbursed for in house printing and plotting, driving miles, other travel expenses (ie. train tickets, cab fare, etc). We also charge for reimbursable expenses (marked-up 10%) for anything else including existing conditions photographs (film and processing), third-party plotting, stamps/postage, etc.
When a client requires additional liability insurance above and beyond what we carry, we require them to purchase it directly as a project policy. Since this payment goes through our office, we mark it up 10% for "administrative purposes". We have only had one client go through this process and I will say that I had to pay my lawyer much more than the 10% mark-up that I charged the client (on a pretty hefty insurance premium). But at least I have the contract language for the next time.
I never include consultants fees in my billing. As a matter of fact I have my clients go to contract with consultants directly (ie. structural engineer) so that if there is a lawsuit due to the consultants negligence, the client sues them directly as opposed to them sueing me and me sueing the engineer. This also means that I do not have to deal with the consultants accounts recievable.
Sorry if I am rambling, but it is the end of a brutal day.
I guess my frusturation last night was basically in regards to the obscene profits in the retail sector and nobody says a word. The shoes thing sets it off. They are made in China or some other Asian country by someone probably making a few bucks a day. Then they come over here and get marked up by middle man after middle man. Then when the final retailer gets it he marks it up another 100%. Finally, we as consumers, go in and don't say a word and just pay what they ask while we could hardly even think about asking for a 10% design fee.
Sure, a pair of shoes is cheap and a building is expensive but it's all relative. Knowing several people in sales of imported goods from Asian countries I know what they are making off the backs of cheap labor and duped American consumers. Is it right that sales reps are earning $250k/year or more just hocking shoes or televisions or other random Wal-Mart clutter?
I've never liked the ethics of big box retailers and for the most part I feel people working in sales are maybe just one step above politicians. I just wish the public would take a step back and think about what has more value. It's sick that more people judge weath by what you put inside your house than by the design of the house.
Its because you are comparing a comodity based retail business with a service industry. Most service based businesses cannot charge a 100% mark-up, I cannot think of any. But we don't have to worry about inventory, retail space rents, theft, etc.
For a closer comparison that always makes me cringe is the profit and overhead that the general contractors (that I work with) charge. Typically they mark-up the project 21% (10% profit, 10% overhead). In addition they are putting the job foreman and labor rates into General Conditions (which they mark up as well). This would be akin to me pulling out my project architects billing rates on top of my architectural fees.
I realize that GC's are at greater risk than architects in terms of managing working capital, but the fees that they collect seem out of whack to what I collect (and my fee is north of 15%) and I have spent about a year on a project before the GC even looks at it.
Anyway, thats my rant for the day.
Yes, I see the difference between commodity based retail and service based design. I would argue that their liabilities are covered by insurance much like ours is. That's beside the point.
Yes, GC's can get some healthy profits too but I don't think they are near what a retailer can get away with.
The point that I wanted to make is that it's sad how we as architects have to fight tooth and nail to get a decent fee while people don't even think to ask what kind of profit a retailer might be making off a disposable good.
Everyday people bargain over big ticket items - cars, homes, etc. in an attempt to "get a deal." All the while they think nothing of the profts that the retailing giant is making while they fill their shopping cart up.
i choosed this thread because of it's title.
here is the situation;
from now on i am going to start charging people for going to their house and discussing their potential addition, remodeling or new construction for x amount of dollars per hour and to be applied towards the overall fees if project becomes a reality. 250$ minimum.
i am frankly tired of going people's homes and naturally leaving one or two ideas behind and never hear from them again. not even a thank you.
there is no free initial consultation time from me anymore.
am i doing the right thing?
Electricians do it, why shouldn't you? Perhaps it would be an easier sell if you promised a deliverable at the end of the consultant - like a sketch. Then you could charge $500.
there is nothing called free consultation. Just because you don't make a dime doesn't mean it isn't something the can't cash behind your back. Which unfortunately happened to me.
Right before grad school I had a decent project in the hills designed around a hillside. I was going about 6 weeks without a single note added to my bank account. Eventually I walked after the client said that I should be happy for the experience and not want compensation.
Anyway he took the preliminary perspectives to draftsman to compile so he could build. Well needless to say the project got started and couldn't get finished.
So all that to say fight for your rights...your fees are what ultimately define your relationship with your clients (potential or otherwise)
consultants sometimes. never printing, mileage, stamps, UPS, etc. Sometimes we break entitlements or CA out separately. Never include surveys, testing, estimates, etc. Sometimes we end up doing some interior design and 3-d modeling, marketing material even if not stated in our contract.
orhan, i agree, but how about taking this track instead; don't talk ideas, listen to what they want, then lay the mojo down on them, that way at least you're in the door and if you or they don't like the conversation, you are not out an idea, your time is not wasted, you are not waiting for a phone call, and they know the terms. i think if you pose even a modest fee for the conversation, they could be offended and you would not have an opportunity to develop some early rapport. not to mention even if they did pay, you could offer up some ideas that they didn't have before they called and they could have their daughter "the drafter" work up some plans...
get foot in door, leave them with little tangible ideas, foster a relationship, get job??
I've been in practice for a long time. During that time I've had professional relationships with quite a few doctors, lawyers, accountants, engineers, management consultants, etc. I've never once received a "free" professional consultation - nor did I expect one.
You can't be abused in this way without your willing participation. While I suppose there's always going to be some architect somewhere willing to give away free work, it's not necessary and it demeans our beloved profession.
Orhan Ayyüce - you're doing the right thing. I hope you don't have to suffer as a result of your decision.
blue, i beg to differ, free consultations happen, but they are really a kind of get to know you deal, not really a working meeting, but i think establishing a rapport and trust is always a good thing. i look at this way, Orhan seems to be coming at it because of some negative experiences, moving in the complete opposite direction seems to be responding to the bad. modifying and meeting halfway seems like a good compromise.
there's a difference between a "meet and greet, marketing meeting" and a "working, problem-solving session" - rapport can be established without giving away free samples.
that is what i am saying, and that is what my first post noted. don't give it away, meet for coffee and see if you are compatible. i think this profession is a bit schizoid when it comes to dealing with real people, we either cheapen ourselves by downward negotiating our fee or alienating ourselves because of bad client relations. why not take a Buddhist path and educate, give something back, that way even if the potential client walks away, they won't go to a "drafter" or builder, but perhaps to another architect that they CAN develop the relationship that suits them.
i see. beta, i understand what you are saying. i would do that if the phone call is coming from a former client's friend and also coming from a potential clients who has seen some work and seriously considering me to work on their projects. then i usually go to see the context, meet them to check with personality competability, start building a rapor, discussing the fee etc. those people i don't have any problem and more than 50% of the time they become a real client.
but there is this other crowd who get your name from less intimate and close sources and usually fishing for ideas and competable fees from different architects/designers/contractors. you go to their house, and they start to ask you what would you do with this and what would you do with that? and it is very easy to tell them the obvious things from architect's eye not even thinking they never visualized any of it. these type of people start to build a concensus about what they can do with their plans and after that they give the job to a contractor who "includes" the plans in the package. usually with the word "free plans" attached to contractors' ad. basically they are not really sincere about hiring you but they know about the carrot technic and apply it to several architects they are also interviewing. it is done in disgusting proportions here in los angeles and there are also this first project starters who are willing to do "anything" to get that project.
such as, they know the people in building department, they know all the contractors, loopholes, they know the neighborhood, they know and they know.
i think when i sense this type of a call (not hard to detect after many years) i will ask them a hourly rate for giving them some configuration and information about how to go about developing the project (not the design just the precedure). if i am committing my 2 hours to them, they should commit some compensation for me. afterall, it is their house improvement and my time.
i heard from some collegues that people take you more seriously when you ask compensation for your time. if they want second or third back up bid/idea/whatever from me by meeting me in their house, hey i think they should pay.
For one project, the principal nominated me to be Landscape Architect. (Like I really know what I'm doing.) La la la, make shit up, la la la.
People value what they pay for. The higher the price, the higher it is esteemed. And rarely has this been proven untrue.
Orhan has the right idea, and I've taken the same approach since being burned a few time with freelance work where I take the hours to look over the project, find out about they're working style, quote a price and then never hear from them. My best client actually paid me for our first meeting and travel to his office, and stiil expects me to add that in to my invoiced hours.
in another thread a week or so back, quizzical posted the following note, which seems germane to this thread:
'the concept discussed above is the "blind purchase" in which the buyer doesn't really know how to assess the value of the goods or services being acquired and therefore uses "price" as a surrogate for "value" - the acquisition of a diamond or the hiring of a brain surgeon falls into the category of a "blind purchase" for most of us.
I find that this concept has only limited utility in our world. most clients - at least in the commercial and institutional world - hire design firms often and have enough knowledge to draw meaningful distinctions about value and quality - or, they think they do. this creates an upper limit on the fees that can be charged in that world.
however, when we charge way too low a rate for our services, I do believe the client - any client - will discount, to a degree, the value of the advice or recommendation received.
so, what to do. as i've written elsewhere on this forum, we always must deliver a high quality service that responds fully to the client's requirements (not ours) and learn how to sell (negotiate) fees related to that service that accurately reflect both our costs and the value of what we do."
Orhan, you are doing the right thing by charging — it screens for the serious. I got tired of tire-kickers a few years ago. At that time, I started telling phone callers that I would meet them for free for up to one hour in my office, if they would bring photos, site plan, and full project info. Most balked, so I did not waste time and was able to finish ongoing projects.
In the past, every time I broke the policy of charging for out-of-office visits, I was rewarded with no-pay jerks who picked my brain (25+ years experience) but did not pay. Not willing to admit or think about why it took me more than a quarter-century to figure this out.
Now, I charge a range of between $500 (min) and $750 to visit a site and meet with a client to have my brain picked for a couple hours.
Only once was I really swindled, when a father-son team played a game. The son said, on my arrival, "My dad's on the way." As is usual practice, I said I needed to wait on payment before proceeding, but Son began to talk and I listened and responded. When we were done, Son's phone rang, and he said, "Oh Dad got in a traffic jam." So I waited. Dad arrived in the newest Porsche (not the Boxster), shook my hand, explained he "forgot" his checkbook, would I take AmEx? (Yes, like on the spot in my car. My firm accepts MC & Visa, but not like that.) After many phone calls, he personally, actually picked up (sounded p.o.'d), and heard my explanation that he should pay. Time will tell.
send a bill in a certified envelop
Orhan,
We have been providing our design consultation service for residential customers for 7 years now. We find that the clients who are paying us to come in respect or ideas better. We find more problems when we don’t charge this up front. However, with the residential side tanking around here the demand has not been as great.
Check out our website http://www.designstudio-c.com/residential/res_design.htm for our verbage.
Good luck!
dsc_arch,
that is exactly what i was thinking about. thanks a million!
dsc_arch -- that verbage's really quite good -- thanks for sharing.
How are firms typically determining their architectural fees these days? Percentage of construction cost? Cost per square foot? Actually crunching hours?
I'm out on my own, doing small to mid-size commercial (typically tenant buildouts, around 1,000 to 5,000 s.f.). Back when I was in a firm, I recall that the rule of thumb was 3-5% for large commercial, 5-7% for medium commercial, 7-10% for small commercial, and 8-12% for residential (though I've heard of firms locally charging as much as 18% for residential). Since my projects are smaller, I usually try to crunch the actual numbers of hours I anticipate, and then compare that to the % of construction cost and/or cost per s.f. (typically in the $3.00 to $3.25 per s.f.). Do those ranges sound in line with what everyone else is using these days?
Also, with the above percentages/methods, what do you all consider as "basic services"? Schematic, DD, and CD's only? What about As-Builts on a renovation project? What about CA? I've had projects in the past where the clients did not want CA or just minimal CA on an as-needed basis. More and more, I am pushing to include CA in my main scope as I feel like it is most beneficial for all parties involved. But I can't remember if CA gets included in those percentage estimates for basic services or if it would be in addition to those percentages.
Also, for the small firms or sole proprietors out there - do you typically try to run projects hourly or fixed fee? If you do hourly, what do you bill yourself out at? I'm billing my hourly rate at $85/hr right now (12 years experience, licensed for 6 years, self-employed for 3 1/2 years). Previously, I had been in small to mid-sized boutique firms (25 people or less) and the principals billed themselves out at $125/hr, $110/hr, or $95/hr. However, these principals have between 5-15 years more experience than I have. Though, I have an interior designer friend of mine who is out on her own who has a similar number of years of experience as myself and her hourly rate is $150/hr!
Also, in response to earlier questions, reimbursables are always billed separate from my fee and I bill cost + 10%. I don't bill for in-house 8 1/2x11 prints or faxes. Anything bigger than that gets sent out to be printed and gets billed as a reimbursable.
As for consultants, they are also separate from my architectural fee. Most of the time, I try to have the consultant contracted directly to the owner, but I have had a few clients recently that have insisted that they be contracted through me. I billed the consultant's time and reimbursables directly to the client at cost though I know some people charge another 10% on top of that. In lieu of adding the 10% surcharge, I do *try* to factor in a sufficient amount of coordination time with the consultant into my fee.
Thanks in advance for your feedback! It can be hard for us sole-proprietors to stay in the loop on things, so everyone's comments really are appreciated!
In what region/state of the country are you located? Larger city (central or suburban?) or smaller urb? This affects architect compensation.
Another factor is the presence (or absence) of building and life safety codes and the level of enforcement of those codes, as well as professional practice acts that may or may not require that certain professionals (i.e., architects & engineers) prepare the designs and documents.
I charge anywhere from 3.5% to 6.5% for most work - it is that little because I am doing this on the side with minimal resources and fully explain this to the clients. Also I only take 2 max projects a year.
I'm in Atlanta - so, major metropolitan city in the Southeast. Building/Life Safety/Code Review is always essential for my projects and I usually include that in my basic services - either rolled into Conceptual or Schematic.
Most of my work is tenant buildout - typically not requiring structural, and MEP is often design-build. But, when a project requires consultants for engineered drawings - either for the city, project, or client's request - I try to have them contracted directly to the owner, and do not include consultants fees in my percentage estimates for basic services.
metamechanic - that's a tough one - in the past I used to put down picking finishes, light fixtures, bidding/negotiation and CA as add-service on an as-needed basis. But, more and more, I am trying to make those all part of my basic services and trying not to budge on that, simply because in the end, I feel like it's in the best interest of the project and everyone involved.
For my small commercial projects, finishes and lighting are really huge design components and things I don't want to give up any more (assuming it's a "design" project).
And CA - if I've got a contractor involved who I know and trust, I don't necessarily feel like I need to be part of their contract negotiation and reviewing pay apps, but I do want to be involved in going out to the site, answering questions, clarifications, reviewing samples, and doing punch lists.
Bidding/Negotiation - that's one that I do still try to keep as add-service simply because we don't always know how many contractors we will need to bid to and how much VE the client is going to be needed, etc. But if they are going to be bidding, I do try to make sure I'm included in that process (again, for the "design" projects).
When I do include CA or Bidding/Negotiation in my fee (whether for a fixed fee project or an hourly but giving estimated ranges), these days I try to put in some specific criteria/assumptions - X number of hours, X number of site visits, X number of bidding contractors - and specify that anything over that amount will be billed as add-service. I do everything I can to run things efficiently, but there are often situations beyond our control (and certainly things that can't be anticipated back when we're bidding the project), either because of the owner or contractor, that rack up additional hours and I want to try to make sure I can get compensated for that.
Each project is a little bit different though. The projects that are more "design" projects (and thus, more of my babies), I try to push for as much involvement as possible. For more bread-n-butter projects, there is more leeway for less involvement. For instance, I just did a commercial buildout for a national retailer - they already had a prototypical design including finishes and lighting. I basically had to do code review, as-builts, and adapt the design to the current location. Because they were utilizing a contractor that had built out some of their previous locations, I had very very minimal CA, and no involvement during pricing.
Maybe it's just cause I've only been out on my own a few years, but it really does feel like every project tends to present some unique situation/conditions that always makes estimating my fees a bit challenging. This one will be a renovation and need as-builts, that one will have another design consultant involved who will end up causing me more time and headache, this one we're not even sure is possible to meet code, that one the developer is going to be the contractor too, this one they just want design and no CD's, that one we have consultants, this one we don't, that one has incredibly challenging existing conditions, this one has all sorts of unique programatic requirements requiring extensive research... ahhh... the trials and tribulations... :)
Most of us have a standard hourly rate (mine's $150), and some have assistants' rates stepping all the way down to around "fi'tty buck". How many of us have figured our overhead, compensation, and costs to be sure our own rates are accurate?
What was your last hourly pay? You earned that for each hour worked, around 40 per week, right? (heh) Probably had 32 -36 hours productive per week or somebody hollered at you, remainder was "admin". Now that you're a principal, carefully check your time, and you probably have only 25% - 50% billable (i.e., productive, probably on the lower-to-middle of that). The remainder is overhead time (bookkeeping, taxes, marketing, supervising staff or contractors/consultants on non-tech matters, etc. — themselves more overhead), but you still have to spend it to keep your firm alive. Plus, you have to pay the costs of your space, your CAD & production tools, and so forth, even if it's a bedroom in a rented loft — this is the "office overhead" you've always heard about.
Add the overhead time costs of yourself, staff, & contractors to the office overhead, plus the direct personnel expense of your own compensation (i.e., salary, benefits, cost of vacation, holidays, personal time, etc.); next divide this by the actual number of hours you can bill to clients; the product is your hourly rate. Scary, huh?
We usually round this up to some nearby figure so clients don't think we're strange loners for trying to charge 'em $147.19 an hour, but that's the math of how our rate is reached. Crazy how I hear of those so often who charge rates around what they made (5 years ago) plus say 15% for self-employment tax, plus a tiny bit more "just in case", say maybe up to a total of around $70-75 an hour, then cap their hours, quaking at the bluster of some GC who wants to ensure as few details as possible to tie him down. Sound familiar?
hmmm... now when you put it like that...
dba, we're soooo going to lunch and talking about this more. and I'm bringing my calculator. :-)
When you are marking up your consultant fees, is this something that you list on your invoice with the original fee and markup or is it just baked into the fee? I'm curious what the thoughts were on disclosing markups to the clients.
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