Love your work but hate the “job” portion of it? You know, quoting scope of work, dealing with fees, and getting paid? If so, check out Milton Gregory Grew’s great article about setting fees that can realistically account for your overhead and other indirect costs, “The Business of Architecture (Oxymoron?)”.
Of the tips Greg discusses, step #2, “Put it in writing” is key, as I’ve discussed earlier here.
Moreover, for fee issues, a written agreement is the gold standard. In a written agreement you can even account for collection costs, higher interest charges, and “reasonable” attorney fees if you later (heaven forbid) have to sue a (former) client for payment of services. Without a written agreement, you are stuck with statutory limits on what you can recover.
As they say, an ounce of prevention is worth a pound of cure.
Photo “Gold1oz” by Olegvolk via Creative Commons Attribution 2.5 license.
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Melissa: Thank you for referring to my blog post. Just a minor point that my first name is Milton. “Greg” is what folks call me which is the shortened form of my middle name.
Milton Gregory Grew, AIA, Architect
Grew Design Inc, Woodbury, CT
Sorry about that. Will edit the post now………….
Amen to that!
I am an A/E CFO, with a sister in real estate and a retired architect father. Here is his usual rhetorical question: “How come a real estate agent can get a 6% fee for selling a house, when the architect may only have gotten that to design it?”
Too often now, architects and engineers are looked at as commodities, much more so than their legal and medical “professional” peers. I have yet to see a fee proposal request given to a hospital or surgeon before heart surgery, or to a law firm for a major lawsuit.
I am not saying that one must be a ‘starchitect’ to get the big fees. Many, many A/E firms have 20% and 30% pre-bonus, pre-tax operating profit rates. And I have clients that have still experienced double-digit growth the last couple years. The point we are all making is that architecture and engineering also is a business, and needs to be managed as such. And it can be done without sacrificing the passion for the profession.
Mike– You make very valid points. (I especially think realtors have it good; low barrier to entry for good fees). Law firms, too are coming under pressure to be a commodity…. more and more clients require upfront billing budgets and don’t want you to deviate from them. I think its an experience many professionals are experiencing in this economy. Doctors, of course, get it on the back end with the “adjustments” of their fees to “reasonable and necessary.”
Yes, I agree that the designer needs to show his value to the project. Also, the construction supplies need to be right. I invite you to check out the McGraw Hill Sweets Directory.
Ouch, Tim! But you are right that the designer needs to show his value to the project.
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Architects have been very poor at demonstrating their added value to projects, beyond their insurance policy. They need to fix that or continue to face brutal fee pressure like the last 20 years.