So i have noticed that since the beginning of the year, more and more folks are coming to me for residential work. While my fees are considerably lower in the residential sector, I have been lucky to get as much as 3-5% and on some, and on larger homes 8-10% lately, this is with CA included as that is not an option. There was a downturn in residential last year, and not much was coming my way due to folks low balling my fees and the typical draftsmen and design-build folks taking potential clients. I feel now that in the residential space i am gaining traction, advertising profusely and it has been working tremendously.
I love residential design, I enjoy it and continue to do so. Commercial work, not so much, as the folks requesting bids or seeking me to do services try and low ball me to insulting 1-2% fees.
How is everyone here in the archinect space holding up in the residential sector? What are your fees roughly for services?
senjohnblutarsky
Jul 13, 16 4:52 pm
I try to run off most of the residential requests. Few are ever promising.
proto
Jul 13, 16 10:01 pm
we tend to be in the 8-13% range for residential but do not bill on a percentage of construction
i know we're not the cheapest, but we're nowhere near the most expensive either
greatescape
Jul 13, 16 10:38 pm
proto, thats a good rate, what is the size of firm? What state would this be in if you don't mind me asking?
proto
Jul 13, 16 10:49 pm
2, sometimes 3 when we can get some intern type help from a recent grad (we've been sharing with another small office)
well wow, I had no idea such a site existed. I shall investigate.
Thanks proto.
proto
Jul 13, 16 11:32 pm
be aware that billlings and deciding on your fee are not based on averages in the profession. you need to figure out what YOUR business plan is; what YOUR level of service is; what expertise & experience YOU bring to the table; what YOUR local market will bear; etc
no hard & fast rules
Jamb'd
Jul 14, 16 2:29 pm
I've always done residential side work. Now, that I'm licensed I've increased fees, which I've had mixed results with. I price everything based on an hourly rate and I estimate the number of hours that it will take.
However, I very rarely give anyone a fixed fee. I explain that it's an estimate that I feel confident about, but their ability of inability to make decisions could impact the final cost.
I feel that if I priced my work on a percentage of construction cost, that I wouldn't get many jobs that I bid. Also, the pricing concept seems a little arbitrary. If you use that pricing structure, how do you sell that to your clients?
The last job I bid, I spent a little free time for the client (an acquaintance) doing some preliminary zoning review. Once he found the lot to be buildable, he interviewed builders. One builder suggested an architect that quoted him $1.50/s.f. This worked out to be a little more than $5,000! The client then asked me to match the other guy's fee. I basically warned him about choosing the low bidder (both builder and architect) and told him good luck.
greatescape
Jul 14, 16 2:47 pm
Yikes Jamb'd, those are the kind of folks that have been coming my way lately.
They have always come by low bidding, but never to this extent where it is every other day.
x-jla
Jul 14, 16 2:53 pm
I do all residential and always on a 10-15% of projected cost...I've worked long enough with contractors to be able to estimate the cost usually pretty closely. Typically, residential clients are not comfortable with hourly fees, and I would rather be up front with them and avoid the inevitable questioning of my time spent and final cost...This is for landscape and up to construction observation/consulting...for that I charge an hourly rate as time involvement can vary greatly from project to project...
Jamb'd
Jul 14, 16 2:54 pm
greatescape, do you try to educate them at all? Or do you just say send them on their way?
To some extent, I tried educate this last client. But as I was writing the email, I couldn't help but feel that it was a waste of time. A) where do you begin... design, details, constructability, liability, accurate bidding, etc. And B) do I just sound like a salesperson trying to instill fear...
proto
Jul 14, 16 4:08 pm
all you can do is explain the situation
if they choose to ignore your advice, there's not much you can do
we've had clients come back after a period because they went and tested the market and discovered that we weren't trying to fleece them
it's not cheap to hire an architect, and it's not cheap to build. But, once the client has educated himself enough to take on the prospect of building, the architectural fees are rarely going to drive the bus
Leandro Llorente
Jul 17, 16 10:37 pm
3-5% sounds realistic esp if you dont have an established name yet.
If somebody asks you for a 1% fee, charge only until construction drawing release then put construction management as an Optional fee.
x-jla
Jul 17, 16 11:43 pm
"If some one asks you for a 1% fee..." laugh and run away. That's a joke.
Jul 18, 16 1:03 am
Well if the construction cost was something like $1500 / sq.ft. and the labor work was fairly normal or even marginally above normal.... sure.... I can accept 1% of construction cost.
Jamb'd
Jul 18, 16 10:32 am
jla-x is right. 1% is a complete joke.
Like someone said on another thread on here, "real estate agents get 6% just for selling a house." Their services and liability are minimal compared to an architects.
Wood Guy
Jul 18, 16 12:21 pm
If the construction cost was $1500/ft² then there are either a lot of details to worry about or a lot of very expensive materials that require coordination. Either way, 1% is not realistic.
I don't usually do super high end work (but I have done the occasional $80K bathroom). I charge hourly, and it depends on the scope but I'm usually 5% to 8% of construction costs. My highest percentages were around 14-15%, for very complicated renovations for very detail-oriented clients. I've done nice garages for 2.5%. The two things that skew the percentage the most are the extent of interior design and how decisive or indecisive the clients are.
I've worked for the 1% and don't enjoy it; I now aim to serve the upper 10% and try to provide a good value.
Non Sequitur
Jul 18, 16 12:31 pm
Ha, Blakinario thinks he can offer quality design for %1 on $million+ houses.
That's why we know you're full of shit Balkins.
mightyaa
Jul 18, 16 1:58 pm
You should understand your numbers. So, if you are doing 3-5%, you are a profession liability and part of the ‘why architect can’t make a good living’ issue. Those are working in the basement sort of fee’s and ‘because I read on the internet that’s what I should charge’ is not a business model.
A: What is your overhead factor? B: What is your profit margin needed to meet your business goals? C: How much time do you think it will realistically take?
Basically the formula is ((C x Your Direct Salary Expenses) x OF)) x (1+B) = Your minimum fee.
So fill in the blanks; If you think it will take 100 manhours, you want to bring home $45/hr (about $90k salary), you want 20% profit, and your expenses figure out to 2.5 OF…. You’ll need to charge $13,500. If that is 5% of the fee, that project better be $270k assuming you don’t have anyone else besides yourself coming out of it like structural. The one I’d immediately question is the 100 man hours for that size of a project (2.5 wks or 5 wks half time). You’ll need to work the numbers; budget, time, scope, etc. until it works for everyone. Not just blindly choose 3-5% because that is what the internet told you to do.... that’s setting you (and our profession) up for failure.
mightyaa
Jul 18, 16 2:01 pm
btw; that is also basically how you figure your billable rate: $45 * 2.5 * 1.2 = $135/hr to support a $90k salary assuming you've accounted for max 80% billable (and less if you do marketing, etc.) into your OF.
Jamb'd
Jul 18, 16 3:07 pm
^ Great Post mightyaa
MyDream
Mar 13, 17 4:35 pm
Nice post very interesting to see how people handle their fee's and dealing with clients. I didn't hear about any fake clients yet.
So i have noticed that since the beginning of the year, more and more folks are coming to me for residential work. While my fees are considerably lower in the residential sector, I have been lucky to get as much as 3-5% and on some, and on larger homes 8-10% lately, this is with CA included as that is not an option. There was a downturn in residential last year, and not much was coming my way due to folks low balling my fees and the typical draftsmen and design-build folks taking potential clients. I feel now that in the residential space i am gaining traction, advertising profusely and it has been working tremendously.
I love residential design, I enjoy it and continue to do so. Commercial work, not so much, as the folks requesting bids or seeking me to do services try and low ball me to insulting 1-2% fees.
How is everyone here in the archinect space holding up in the residential sector? What are your fees roughly for services?
I try to run off most of the residential requests. Few are ever promising.
we tend to be in the 8-13% range for residential but do not bill on a percentage of construction
i know we're not the cheapest, but we're nowhere near the most expensive either
proto, thats a good rate, what is the size of firm? What state would this be in if you don't mind me asking?
2, sometimes 3 when we can get some intern type help from a recent grad (we've been sharing with another small office)
in OR
someone here posted this link in another thread:
http://architecturalfees.com/
might be worth a read through
well wow, I had no idea such a site existed. I shall investigate.
Thanks proto.
be aware that billlings and deciding on your fee are not based on averages in the profession. you need to figure out what YOUR business plan is; what YOUR level of service is; what expertise & experience YOU bring to the table; what YOUR local market will bear; etc
no hard & fast rules
I've always done residential side work. Now, that I'm licensed I've increased fees, which I've had mixed results with. I price everything based on an hourly rate and I estimate the number of hours that it will take.
However, I very rarely give anyone a fixed fee. I explain that it's an estimate that I feel confident about, but their ability of inability to make decisions could impact the final cost.
I feel that if I priced my work on a percentage of construction cost, that I wouldn't get many jobs that I bid. Also, the pricing concept seems a little arbitrary. If you use that pricing structure, how do you sell that to your clients?
The last job I bid, I spent a little free time for the client (an acquaintance) doing some preliminary zoning review. Once he found the lot to be buildable, he interviewed builders. One builder suggested an architect that quoted him $1.50/s.f. This worked out to be a little more than $5,000! The client then asked me to match the other guy's fee. I basically warned him about choosing the low bidder (both builder and architect) and told him good luck.
Yikes Jamb'd, those are the kind of folks that have been coming my way lately.
They have always come by low bidding, but never to this extent where it is every other day.
I do all residential and always on a 10-15% of projected cost...I've worked long enough with contractors to be able to estimate the cost usually pretty closely. Typically, residential clients are not comfortable with hourly fees, and I would rather be up front with them and avoid the inevitable questioning of my time spent and final cost...This is for landscape and up to construction observation/consulting...for that I charge an hourly rate as time involvement can vary greatly from project to project...
greatescape, do you try to educate them at all? Or do you just say send them on their way?
To some extent, I tried educate this last client. But as I was writing the email, I couldn't help but feel that it was a waste of time. A) where do you begin... design, details, constructability, liability, accurate bidding, etc. And B) do I just sound like a salesperson trying to instill fear...
all you can do is explain the situation
if they choose to ignore your advice, there's not much you can do
we've had clients come back after a period because they went and tested the market and discovered that we weren't trying to fleece them
it's not cheap to hire an architect, and it's not cheap to build. But, once the client has educated himself enough to take on the prospect of building, the architectural fees are rarely going to drive the bus
3-5% sounds realistic esp if you dont have an established name yet.
If somebody asks you for a 1% fee, charge only until construction drawing release then put construction management as an Optional fee.
"If some one asks you for a 1% fee..." laugh and run away. That's a joke.
Well if the construction cost was something like $1500 / sq.ft. and the labor work was fairly normal or even marginally above normal.... sure.... I can accept 1% of construction cost.
jla-x is right. 1% is a complete joke.
Like someone said on another thread on here, "real estate agents get 6% just for selling a house." Their services and liability are minimal compared to an architects.
If the construction cost was $1500/ft² then there are either a lot of details to worry about or a lot of very expensive materials that require coordination. Either way, 1% is not realistic.
I don't usually do super high end work (but I have done the occasional $80K bathroom). I charge hourly, and it depends on the scope but I'm usually 5% to 8% of construction costs. My highest percentages were around 14-15%, for very complicated renovations for very detail-oriented clients. I've done nice garages for 2.5%. The two things that skew the percentage the most are the extent of interior design and how decisive or indecisive the clients are.
I've worked for the 1% and don't enjoy it; I now aim to serve the upper 10% and try to provide a good value.
Ha, Blakinario thinks he can offer quality design for %1 on $million+ houses.
That's why we know you're full of shit Balkins.
You should understand your numbers. So, if you are doing 3-5%, you are a profession liability and part of the ‘why architect can’t make a good living’ issue. Those are working in the basement sort of fee’s and ‘because I read on the internet that’s what I should charge’ is not a business model.
A: What is your overhead factor? B: What is your profit margin needed to meet your business goals? C: How much time do you think it will realistically take?
Basically the formula is ((C x Your Direct Salary Expenses) x OF)) x (1+B) = Your minimum fee.
So fill in the blanks; If you think it will take 100 manhours, you want to bring home $45/hr (about $90k salary), you want 20% profit, and your expenses figure out to 2.5 OF…. You’ll need to charge $13,500. If that is 5% of the fee, that project better be $270k assuming you don’t have anyone else besides yourself coming out of it like structural. The one I’d immediately question is the 100 man hours for that size of a project (2.5 wks or 5 wks half time). You’ll need to work the numbers; budget, time, scope, etc. until it works for everyone. Not just blindly choose 3-5% because that is what the internet told you to do.... that’s setting you (and our profession) up for failure.
btw; that is also basically how you figure your billable rate: $45 * 2.5 * 1.2 = $135/hr to support a $90k salary assuming you've accounted for max 80% billable (and less if you do marketing, etc.) into your OF.
^ Great Post mightyaa
Nice post very interesting to see how people handle their fee's and dealing with clients. I didn't hear about any fake clients yet.