Architectural fees can very greatly from one firm to the next. Some architects rely on generic cost per square foot pricing, others on a percentage of construction cost, and still others just charge an hourly rate for their services. We have always relied on a fixed fee pricing model for our services, because we believe it to be the most fair for all parties involved. Here is a brief comparison to show you what we mean.
Cost per square foot – in this case, an architect’s fees are based solely on the size and type of the building. For instance, an architect may say that he charges $2.50 per square foot for a new home design. Therefore, the design of a 2,800 SF home will cost $7,000. However, what happens if during the course of the design phase, the home grows from 2,800 SF to 3,000 SF (an occurrence referred to as Scope Creep – very common in architecture) The architect will demand an extra $500 for the design because the home is larger. The problem is that it is very difficult to know if the increase in the size of the home actually requires more effort from the architect. Now imagine the opposite. Let’s say that the architect comes up with a great, unique and efficient design that is only 2,600 square feet. Does the homeowner ask for $500 back because the architect did a good job?
Percentage of Construction Cost – this is by far our least favorite. In this case, the architect estimates their fee based on a percentage of the construction cost of the project. For instance, an architect may base their fee at 2% of construction cost. In their initial meeting with the client, they determine that their moderately finished 2,800 SF home will cost about $150 per SF. The total construction cost is $420,000, and their 2% fee is $8,400. The same problems occur as above with the cost per SF model. As the home size and budget fluctuates, so does the architect’s fees. In effect, the architect will have an incentive to grow their client’s construction costs so that their own fees also go up. They also would have an incentive to underestimate the original construction cost so that their fee appears more attractive.
Hourly Rate – this is just as it sounds. The architect provides an hourly rate schedule and simply charges based on the amount of hour worked. There are obvious problems with this system. There may be no control on the maximum amount. In the time between two design meetings an architect can easily charge several thousand dollars. Even if the architect provides an estimate on the amount of time for a project, it may not prevent any overages. For example, an architect may have spent up 80% of the time he has estimated for a project, but the design may only be 50% complete. Does the architect ask for more money, or do they decide to skimp on the rest of the design. Just as in the other cases, this fee structure provides incentives that are contrary to their client’s goals. The architect is rewarded because it takes him longer to provide the same level of service.
Fixed Fee – our preferred method. The primary advantage we have seen with our clients is this – predictability. Our fee is our fee. If the client chooses to change the project during the course of the design, we will adjust our fee accordingly. We generally do not charge for minor revisions, even after the design is set in stone. We also make it clear to our clients what constitutes a major revision. For example, if we are half way complete with a design of the new home, we would not charge extra if the client decides they want separate his and her walk-in closets. We would charge extra if the client decides that their second floor master suite should really be moved to the ground floor. The other main advantage is that it allows us to be an impartial advocate for our client’s needs. We have no incentive to grow your home, expand your budget or waste your time.
Crowdsourcing – or as we like to refer to it – design piracy. See our post on ‘Why I Hate Arcbazar” to find out more.
