Math. Complicated calculations – the creativity killer that sends any confused designer straight off in a bad mood.
There is no more frustrating feeling than to have brilliant ideas buzzing in your head but be utterly lost at how to start calculating design fees. Not to worry – we present 6 easy ways of calculating design fees to get you your perfect design fee masterpiece. Even better – after understanding the concepts, we provide a formula for you to get your numbers with several clicks!
Basics: Industry unspoken norms
Approach 1. Percentage of overall project budget
This is one of the most straight-forward methods where you charge a certain percentage of the overall project budget. Depending on the nature of the work to be done, the percentage charge can vary from say 5% to 20%. Usually, the bigger the project cost the smaller the percentage charge.
Approach 2. Hourly worth + Cost: Bottom up approach
You can easily work out the hourly pay of your standard charge from your last salary/ideal salary. The next step will be to predict the number of hours you need to complete the task/project. Then, multiply the two to find out your quotation. Of course, never forget to add a buffer to account for extra security! Always keep a record of how many hours you spent on each task in reality to improve your future quotation accuracy.
Don’t forget other costs to make a project works – marketing, rent, traveling and what about that special software you bought for this project? Try to be as comprehensive as possible and never underestimate the daunting amount these apparently miscellaneous elements add up to.
Approach 3. Standard of fee per area
If hourly worth calculations are giving you a headache, you can consider using the method of charging a set amount per square foot of interior/exterior space. For instance, by including all concept design and schematic design together in mind, each square foot design fee is X HKD. Regardless of the scale of the project, simply multiply the cost depending on the amount of space required.
You’ve learned all the concepts now – give yourself a big clap! If you’re not sure how to turn thoughts into action, check out our Top Tips to get started! With our step-by-step guidance and a fun exercise to practice, you’ll be able to tailor the most suitable pricing! Of course, let us know if you have any questions – we’re more than happy to talk to talented professionals like you!
Advanced: Pricing concepts & Top tips from experience
Maybe you have always been underpaid in the past, or maybe you had been overcharging too much in the past – and that definitely had affected your hit rate for turning inquiries into customers. Time to sit down and learn the basic pricing concepts to make your own life as an independent designer easier.
Tips 1. Identify the true competitors
The real competitor of a green sustainable design is not other office designers, but air-conditioning companies and their energy saving system. Or say the real price comparison in a project owners’ heart to budget a design of google style cool office will be the design fee to provide an energetic, happy and productive work environment, versus increasing overall staff salary by 10% to achieve the same effect long run. While calculating your costs, chew on manifesting your design merits to convince your clients. Most of the time you are selling more than a creative design, but intangible yet important elements and values. Remember to set foot in the right market and present your well-deserved price.
Tips 2. Be flexible
Keep in mind the difference between price and value – price is defined by the market while the value is more or less approach 2 in the first section. When doing a design for a project client not in your city, you need to understand the “price” the project owner can afford and is willing to pay. Sometimes you can play with the ideas in tip 1 to charge more, sometimes you need to be flexible and provide a leeway for adjustment based on how much you want that project put down on your portfolio and affordability of the project owners. Before you send out the quotation, do research first!
Tips 3. Set up a calculation system
Instead of either giving a random number or spending hours on calculation each time, set up a readymade system for calculations to save you a humongous amount of time!4. Set up a minimum charge for each project. Know what your bottom line is in charging for each project. Wavering with no firm minimum charge might lead you to feel ripped off and lead to unnecessary money confusion with your clients.
Tips 4. Play with the extra pay items
Do you fancy skipping a few site meetings due to your busy full-time work schedule? If it’s a yes, then list a high price! There’s no need to be sheepish as it is an independent designer’s privilege to decide your own rules for negotiation. If you would like to go to the site a lot for supervising the process, then tactfully propose the attractive bundle of, say three free site meetings to make project owners extra happy.
Tips 5. Credible systems
The key to success is planning and defining a clear scope of deliverable, number of revisions, the number of meetings, schedule, punishment system and reward system which aligns with the mutually agreed expectations of you and your client.
Tips 6. Buffer matter
Life drops, however, delightful or terrible surprises on the way whether you welcome it or not. TOUCHWOOD but in case something goes wrong that puts you in the likely situation of an ugly argument with the project owner for a small bill for bits and bobs, a buffer comes to a rescue by already reserving a portion of the money for dispute at the beginning. When everything works out according to plan, the project owner results in getting a ‘free’ service upgrade while you sitting back and smile at the outcome.
Tips 7. Time is dollar
Takes into consideration how much time archiparti could save for you. On average 70% of project time is spent on project management and archiparti does exactly the digitalise project management which independent designers need. Always give a discount to your quotation based on how much time you have saved by using archiparti.
Afterward, however, you can always do a compared study using the knowledge of industry norms and concepts of pricing mentioned above to get a sense of the real compound charges you should be asking for. The ideal charge may be the average of all the above or the medium from the highest to the lowest or even the maximum amount in all calculations. After all, you should feel comfortable with the amount you charge depending on your original purpose of becoming an independent designer. Whether to improve income or to have more lifestyle and build only a meaningful very selective portfolio.
archiparti understands your frustration (perhaps also irritation?) with numbers. Therefore, we’re bringing you the most user-friendly design fee calculator! Stay tuned and this will be launched by next week!
Stephanie, archiparti blog contributor