How much should you charge per hour?

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Author Message Anonymous   Posted on Monday, February 25, 2008 - 08:01 pm:    I’ve looked over past discussions on this topic and only found a few comments on it. One person mentioned they asked for 3% of the design fee and another talked about hours paid being tied to the number of spec sections and their complexity. What I would like to know is: If you were simply to charge an hourly fee for compiling a project manual, how much would you charge per hour? I don’t mind if people answer this one anonymously (since i asked it that way). Robin E. Snyder Senior Member Username: robin Post Number: 167 Registered: 08-2004 Posted on Monday, February 25, 2008 - 08:42 pm:    Well, first off, discussing specifc fee amounts is illegal - collusion. Second, I wouldn't charge hourly, it was a rare circumstance for a regular client. One of the first rules of consulting is never to charge for your time. You are charging for the value of your service, your knowledge, your experience, education etc. Third, your fee will vary depending on your location and the economic conditions and what your market will bear. Fourth, charging as a percent of design fee is tough. Is the architect going to tell you their fee? I have had small projects take me longer than projects 10 x the size and construction budget. Finally, I realize this probably doesn't help you a bit. If you can do some research and find out what Principals at local firms charge for their hourly rate, that should give you a reference point. You are providing a highly specialized service - don't be afraid to charge adequately. Also, be very careful about starting a precedent of lowering your fee if they request it. This is dangerous cycle. Nathan Woods, CCCA, LEED AP Senior Member Username: nwoods Post Number: 231 Registered: 08-2005 Posted on Monday, February 25, 2008 - 09:06 pm:    "Well, first off, discussing specifc fee amounts is illegal - collusion. " No it isn't. Agreeing to all charge the same fee is illegal, discussing how your fees are set is not. Robin E. Snyder Senior Member Username: robin Post Number: 168 Registered: 08-2004 Posted on Tuesday, February 26, 2008 - 10:50 am:    Discussing how fees are set is not illegal. But I would be very careful about discussing how much we all charge per hour. Especially on a public forum. Do what you want though. Ron Beard CCS Senior Member Username: rm_beard_ccs Post Number: 263 Registered: 10-2002 Posted on Tuesday, February 26, 2008 - 11:21 am:    I rarely use/quote hourly rates. OTOH, when I do, the rates vary depending on circumstances. Is the rate a part of existing project already under contract (ie, extra work for changes in design or scope), scope of the project (a large open-ended project or a small specific task), type of client/work (public agency or private sector), relationship with client (long time relationship or first time (called from telephone book)), and complexity of the project (investigative/forensic, complex issues (water/moisture) or simple construction) are the first issues that come to mind. Each case should be evaluated as to its specific issues. Generally, simple projects can be converted into a fixed fee. For depositions and expert testimony work, I usually double the fee I a would quote to a good client. John Bunzick, CCS, CCCA, LEED AP Senior Member Username: bunzick Post Number: 852 Registered: 03-2002 Posted on Tuesday, February 26, 2008 - 11:53 am:    You can set an hourly rate to your cost, or to your value. Cost is easy (if time consuming) to figure out--add up your annual expenses to run your business, figure in time for marketing and non-billable tasks, determine how much your salary is or should be, and divide by billable hours. Setting an hourly rate to value is trickier to determine. Here you're charging for your knowledge and experience, what clients are willing to pay, and what your competition is. But certainly your rate should around that of what principals in architectural firms would bill at, but it could easily be more. Charging by the hour will never give you the upside potential of fixed-fee work. If you can deliver the product at an overall cost the client is happy with, and do it very efficiently, you have the potential of making much more money. Anonymous   Posted on Tuesday, February 26, 2008 - 07:52 pm:    I've heard 1/2 of 1% of design fee mentioned, along with $100 per section. You can also figure your actual time/hours (guesstimate # of sections, etc.) and multiply by what you want to make, and then by factor to cover your overhead (old rule of thumb used to be 2-1/2 times, but nowadays....). Then you need to "value" your knowledge, experience into the equation...although, most clients won't even care about that part. Can't use any of these methods alone. As Robin says, what will market bear, who's your competition, large or small project. Surely you've worked for someone and, even if salaried, the salary was most likely based on some hourly rate...over the course of a year. What did that company use for hourly rate (your salary plus O/H expenses) in charging project owners? In the end, you'll have to learn from experience. Put some numbers out there and see if you get the work. If not, then you're probably overpriced...again, remember there is no value in your experience or knowledge, only in how much you propose for fee. Mark Gilligan SE, CSI Senior Member Username: mark_gilligan Post Number: 38 Registered: 10-2007 Posted on Tuesday, February 26, 2008 - 11:58 pm:    A big mistake people make is not charging enough. There is a lot of truth to the saying that the more you charge the happier your clients will be. Equally important is not accepting the 20% of the projects that will cause you 80% of the grief. Interestingly these projects often seem to be the ones where the fees are lowest and the client less sophisticated. David J. Wyatt, CSI, CCS, CCCA (Unregistered Guest) Unregistered guest Posted on Thursday, February 28, 2008 - 12:40 pm:    One grand misperception people have, even those who should know better, is that specification writing is practically a clerical task. Too many architects and clients think that spec writing is easy, especially when you have a master guide specification system. I think that's why clients often want to know what your hourly rate is. They tend to think of it as labor rather than risk management and consulting. Anonymous   Posted on Thursday, February 28, 2008 - 12:55 pm:    This is precisely why my starting hourly rate is one million dollars per hour. It raises a few eyebrows, but I always get what I'm worth! Ronald L. Geren, AIA, CSI, CCS, CCCA, SCIP Senior Member Username: specman Post Number: 623 Registered: 03-2003 Posted on Thursday, February 28, 2008 - 01:10 pm:    This reminds me of a story about consultants: There was an engineer who had an exceptional gift for fixing all things mechanical. After serving his company loyally for over 30 years, he happily retired and became a consultant. Several years later the company contacted him regarding a seemingly impossible problem they were having with one of their multi-million dollar machines. They had tried everything and everyone else to get the machine fixed, but to no avail. In desperation, they called on the consultant who had solved so many of their problems in the past. The consultant reluctantly took the challenge. He spent a day studying the huge machine. At the end of the day, he marked a small "x" in chalk on a particular component of the machine and proudly stated, "This is where your problem is." The part was replaced and the machine worked perfectly again. The company received a bill for $50,000 from the consultant for his service. They demanded an itemized accounting of his charges. The consultant responded briefly: One chalk mark: $1 Knowing where to put it: $49,999 It was paid in full. George A. Everding, AIA, CSI, CCS, CCCA Senior Member Username: geverding Post Number: 405 Registered: 11-2004 Posted on Thursday, February 28, 2008 - 02:29 pm:    But Dave, it's even less than a clerical task, all you do is push a button on your computer, and out comes the specification, right? That's unfortunately what too many people think, about specs, about design, about CD's. And with BIM, it will be even easier, which I guess means the button will be bigger, and the fee should be less. (Unregistered Guest) Unregistered guest Posted on Thursday, February 28, 2008 - 04:22 pm:    George, sad but true. The bigger button is an astute observation. We just have to work hard and work together (in a non-collusive way) to raise the value perception of specifying. One of the good things about LEED projects is that the specifications are where the LEED requirements are expressed - from a practical standpoint you can't really do it with drawings alone. Our public officials in Ohio are also helping us by implementing MasterFormat 04 (we should drop the 04 as soon as possible)for its projects. The attention drawn to the new formatting helps raise the value perception of spec writers. Russ Hinkle, AIA, CCS Senior Member Username: rhinkle Post Number: 42 Registered: 02-2006 Posted on Friday, February 29, 2008 - 09:51 am:    Doesn't everyone have a Staples "Easy" button on their desk? David Axt, AIA, CCS, CSI Senior Member Username: david_axt Post Number: 989 Registered: 03-2002 Posted on Friday, February 29, 2008 - 02:47 pm:    Robin, Discussing fees is not collusion because whatever you say you charge I will approach your client and them I will do it for less. ;-) Anonymous   Posted on Friday, February 29, 2008 - 05:49 pm:    well, to answer your question anonymously ... it sort of depends on who your client is. I think you want to be charging just a little bit more than what your clients typically charge. if your potential clientele is billing at $150 per hour, you can't ask for $300 per hour and expect to get it. they will be figuring out how many hours they have to bill for to pay your bill, and they may have a hard time justifying it to their clients. in my current office, the only people who have a higher billing rate than me are the 7 partners. I'm billed out higher than any project manager/project architect on the staff -- by about 20%. in previous offices, the specifier was typically billed out at 5% more than someone with comparable experience.