So, as some of you know, I'm in my first year of starting my firm. It's just me. I'm getting a ton of phone calls, and am getting a steady stream of work. Most of it is residential, and most if it is really budget work.

My goal for the next year is to move onto larger projects, or at least better billings. Right now I feel lucky if I can bill 3% of construction. Had 2 potential clients inform me today that I was too expensive, the prices they suggested were laughably small.

How did you make this move, or how do you explain value?
Apr 24, 14 6:13 pm

That is tough.

Right off the bat, you just have to tell them what design is worth and the time involved.

Laymen see a sketch-up model in schematics and assume that you are finished with design.  

You should break out a huge set of residential CD's and show the clients; this is what it takes to build a house.  Then inform them, they can hire a draftsman from craigslist to do a design, but the personal headache to the owners and the amount of change orders involved in in the project would far outweigh any fee that you throw at the project to do it the right way.  

In the end, they end up paying for it, either in professional fees or in the stress and money involved in a total cluster fuck.  

Apr 24, 14 8:06 pm  · 
Token AE

Don't forget the value of having someone that knows what they are doing in the CA phase.

Apr 24, 14 8:22 pm  · 

my suggestion: bill hourly (but it will be your responsibility to set expectations of general professional fee totals). don't tie yourself to percentage of construction


maybe propose hourly thru SD and then do a not-to-exceed for the remainder with a caveat about changes in scope?


write up a critical path of tasks involved and apply hours:

client meeting & phone calls

zoning research - mtg w/ planners, specific overlay issues, design review

code research - energy? life safety?

design time

coord w/ structural, survey, landscape



its ok if you are too expensive for some -- sometimes those jobs are just not worth your time

Apr 24, 14 8:45 pm  · 
won and done williams
Find better clients. Period.
Apr 24, 14 10:06 pm  · 

3%???  Ok, I can almost guarantee the contractor is taking his sizable share of the cost.  Why stoop so low?

Apr 25, 14 11:32 am  · 

Didn't arch fees used to be like a 15% standard?

Apr 25, 14 11:33 am  · 

Why Architects Don't Charge Enough:

The above is a history of architectural fees schedules and the extraordinary actions by the Department of Justice to make them go away.

grneggandsam - while it's entirely possible some firms in the past were able to charge 15% fees, that percentage was never the norm. I've never seen a standard fee schedule include any fees much above 6% for projects of any size or complexity.

A major problem with trying to use historical fee schedules as a basis for establishing fees is the simple fact that today we are required to provide immensely more analysis and documentation than was the case when standard fee schedules were the norm.

Apr 25, 14 12:48 pm  · 

How is it even possible to go as low as 3% on a budget residential project? Yikes.

Apr 25, 14 1:29 pm  · 

ok, everyone just raise your fees in tandem to 10%... now!  Comcast gets as much as they can, why don't we?

Apr 25, 14 4:00 pm  · 

Every time the economy crashes there are more architects competing  for less work.

1988, 2001, 2008 ... notice a pattern?

Apr 25, 14 5:35 pm  · 

This link is an informative supplement to the point made above by Miles Jaffe -- it shows the contribution to GDP of investment in both non-residential structures and residential structures as business cycles ebb and flow:

Apr 25, 14 6:32 pm  · 

Don't go for percentage ever and don't present it that way it appears like a lazy method for making money. Clearly define the scope and break it down in parts accordingly. You want to be in the position to lower fees by reducing scope. I used to take anything but in better position to take the right thing now, not sure where you are at....but removing yourself from CA can have its major problems and is best to give a few visits with hourlies as additional. The reason I say this, mainly from experience, you at least need to be in a position where you are paid for the headache of informing the client that the knuckle head GC they hired is botching the job completely. Otherwise when the GC deviates and runs into trouble they will blame you and you wont be there to defend yourself leaving your reputation unjustifably tarnished. You want your time to be justified hourly. Sometimes if I get a client who feels like they can design, i give them plans with a grid and bill them drafting rates for inputting their stuff and hourly for professional advice. The client becomes less cocky and quickly defers the big decisions back to me to save money, worth at least 100 hr in any part of this country as an unlicensed designer and 150-200 with license. Make sure you get that this includes your time for anything project related. Often giving your client a not to exceed budget helps calm down the micro managers.

Apr 25, 14 6:40 pm  · 

I am suggestibg those hourlies as minimum wage btw

Apr 25, 14 6:42 pm  · 

quizzical - interesting to note that 2001 shows an uptick for residential. Here in Hollywood East there was a boom and doubling of prices nearly overnight after 9/11 as the rich left the city in droves. Seems the behavior was more widespread ...

Apr 25, 14 8:16 pm  · 

6%?  What scope does that include?

May 27, 14 6:49 pm  · 

I completely agree that all fee proposals should be written as stipulated sum for defined scope and deliverables rather than T&M, Cost-Plus, or Percentage. Not only is that the best way for me to protect my profit, it also provides the best value and least risk to the client.

There are a few exceptions to that rule, though, which are entirely dependent on third-party risk and/or the difficulty of defining scope. In some cases, it makes sense to break out complex entitlement process and contract administration services as T&M, because third-party involvement and uncertainty risk can cause big problems for the bottom line (architects tend to charge in a way that sustains losses at both the beginning and end of the project). The major downside of going T&M for anything is that it increases your administrative overhead by orders of magnitude. You have to track the time and expenses in detail and issue regular bills based on that, which you will inevitably fight over when the client gets the bill. In general, it's much, much better to charge lump-sum for everything, and if scope changes or uncertainty risk approaches blowing the fee, renegotiate. It's far easier to be able to say, "We delivered 50% Schematic Design deliverables as stipulated in our agreement on such-and-such date, so you now owe us 0.5 x SD Fee." They may quibble over whether or not you delivered what you promised in the agreement, but as long as you can show you did, that argument tends to be short.

May 28, 14 12:57 pm  · 

No one wants to enter into an hourly rate.  It scares clients away.  In this consumer economy people want to know what something will cost them.  Even many lawyers are switching to lump sum systems.  

May 28, 14 1:27 pm  · 

Architects fees are going down significantly as everyone notices while the fees of just about every single other professional service is going up significantly (not to mention costs of living in general).  The AIA and all the architects out there are fully to blame for allowing this to happen.

Recently, I was even encountered with some side work - an entire office where the client wanted a renovation.  The only fee:  $1 a square foot.  I told him to take his business elsewhere.

Soon enough our "profession" will be extinct.  Structural engineers,  electrical and even fire protection engineers,  and computer programmers will be designing all the shitty buildings they want to.  Hope we are happy with that.

May 29, 14 11:12 am  · 

med - i'd wholly disagree that every other professional services group's fees are going up. just ask the lawyers, who are under fee pressures they couldn't have imagined years ago. so are building related engineers. 

there's more truth in this: the way people determine the value of a professional services (and their firms) is and has been under radical change for a while now. where the value is: in a proven, evidence based design approach that quantifiably shows higher resale value, higher rents, higher occupancy rates, etc. in short: prove your design is bringing genuine, quantifiably better returns to an owner, you'll be in demand and you'll get paid. 

where the value isn't (and really never has been): clients looking to do the bare minimum to meet code and/or looking for a commodity driven end result. always been with us and always will be. you have to choose whether you'll work for them. if so, then you'll have to figure out how to structure your services accordingly (and your margins will be entirely on volume of work performed, minimizing what you offer, and your ability to keep labor costs low).

finally, ask yourself this: why aren't the architects capturing these other 'significantly' higher fees as part of their overall office structure? why aren't we (generally) doing that work as part of our overall set of service offerings? that's not the aia. that's us. 

May 30, 14 3:41 pm  · 

To somewhat back up gregory's position, the problem and beauty of being an architect is what we do is not so clear cut as the other trades. Sometimes I do marketing rendering, sometimes I do MEP, sometime I do expediting (nyc dob stuff), sometimes technical detailing for other architects, sometimes project consultant on costs or construction management, sometimes clients rep, 3rd party foresics, BIM consulting, surveying, fabrication,...oh yeah and sometimes design. Now you see the dilemna here on how to structure fees. Almost every job the fee is created to match the scope and personality of the client. A sqft number is common in commercial interiors and helps the owner understand costs better. A lump sum is often prefered but with unconventional work maybe an hourly with a not to exceed cap. In short you can't expect an organization to ensure there are standards for work that can be quite non standard. Its your obligation to determine your value.

May 30, 14 7:12 pm  · 

We charge almost exclusively on either a percentage of the cost of the work, or on a dollars-per-square-foot basis.  We avoid fixed price contracts because it is very easy to get burned if the scope of the work increases - and it often does.  If you are going to enter into fixed price agreement, then you need to be VERY detained in describing the scope of services in your agreement - what is included, and what isn't.  With something as complicated as a custom residence, this can be very difficult to do.

Charging hourly is ok, and you are protected from losing money.  But there is no big upside either.  Efficiency doesn't gain you anything in an hourly scenario.

Jun 1, 14 10:05 am  · 

By the way, our business manager calls hourly, not to exceed "Hourly not to succeed".

Jun 1, 14 12:46 pm  · 

I agree - Hourly NTE leaves architects with all of the economic risk, and none of the economic benefits, of our own expertise and efficiency.

Jun 1, 14 1:27 pm  · 
Unless your hourly NTE is actually you being efficient and billing full freight anyway. Just sayin.

Antually, my original question was slightly different:

1) I want to land better projects

2) with higher fees as a percentage of construction c
Jun 1, 14 7:40 pm  · 
Cost (regardless of how I decide to bill)
Jun 1, 14 7:41 pm  · 

everyone wants to land better projects -- that comes with time, experience and some networking/meeting people and sometimes luck. all you can do meanwhile is deliver high quality work at whatever rate you negotiate.


i'm not sure what the benefit of tying yourself to construction cost is -- can you explain?

imho, get paid for what you do -- itemize the tasks and apply your rate to them. it's fair to you and to your clients

raise your rate over time as you get more experience and more clients are demanding your time. your opportunity cost to do the work will become self-evident as you field more inquiries for work and can be more selective.

Jun 2, 14 7:48 pm  · 

I don't mean specifically tying my rate to cost. What I mean is that my current rate, regardless of how I bill, ends up being a small percentage of where I feel it should be. 

Another related question, that you touch on, is "how to win larger projects" especially when I'm a one-man shop. I see a lot of good RFPs that I could easily do, but cannot qualify since I don't have the depth. 

But thank you for your advice - essentially it's been my business plan thus far and seems to be working. I'd just like to take a jump soon to larger projects. 

Jun 3, 14 2:43 pm  · 

The way we work as architects may just have to adapt to what clients are willing to pay for the services. 

Jun 5, 14 5:27 pm  · 

In our office, for all jobs that are vague in scope we do an Hourly Not To Exceed (HNTE), however we specify that under no circumstance we will work for less than $165 AHBR (Average Hourly Billing Rate), that means if Principal is charged at $225/hr and Secreterial is charged at $95, Client must expect that the Not to exceed price divided into $165 is the number of hours he can expect to get out of the office, not any more!  Even in this type of contract, we define a relatively tight scope of work.  The scope is what determines what the Not to Exceed Price is!

However, once jobs are into working drawings, or if a job has a very clear scope to begin with, then we do a Lump Sum Contract based on the highest competitive number that we can get out of the client based on our own experience.  These days, on major jobs, lets say $10.0 M construction cost or more, the fees we have quoted (for Arch, only) and been successful at getting have been in the neighborhood of 2.5-3.5% of construction cost, not more.  This is in line with an overall fee of 6% of Construction cost including Structural and MEP.  This must be said in the context that we are a small boutique firm and we find that the only way for us to get bigger jobs is to be very competitive on fees!  Anytime, we quote higher fees , invariable we lose the job as there is always some architect who is willing to do it for less.  We try to mention that we are a high idea design firm and our work is better, but more times than none it falls on deaf ears, the bottom line to most clients is $$$$'s.


One of the biggest problems we find is that every time we go against a different caliber of architects, its never the same or at what we consider our level! so, you never know what competition you get and what they will quote the client!


Overall, I must say that its gotten a lot harder to get jobs, and the pressure on fees has been relentless.  The quality of clients has also gone down.  I think this is true after any recession like we had! Bottom feeder types are the new clients! always bargaining to get a better price!.


I also think it helps if we configure our proposals more like soils engineers where they have specifc deliverables and assign hours and cost to it. Also, they get paid half upfront and half at the end before they deliver a soils report to their client!


Our problem is, once we negotiate a fee, its hard to get paid on time or at all!  We need to be more like Soils Engineers!  NO drawings unless we get paid!!  Problem is , there are too many artsy young  types out there who think they are designing the East wing of National Gallery every time and want to get published at all cost that ruin the profession for all the Architects out there!!  Only a few years later they realize, they now need to make some money or else!!!

Jun 9, 14 5:03 pm  · 

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