Pricing Architectural Services
Every firm/studio prices their projects differently, but most generally fall under one or a combination of the following categories:
Hourly Billing
For hourly pricing the designer will bill the amount of time spent on the project by each team member, with junior hours carrying a lower per hour fee than those of the more experienced project managers etc.
This structure is great in that the client only pays for the time spent on their project, but the final total can be difficult to estimate and if the project runs into complex issues the design fees might rise considerably. This option may incur extra expenses for things like design changes that may be included in other types of pricing (make sure it’s clear between you and your designer if these are included in a flat fee).
We thought that this was the pricing structure that we’d operate under at Atelier Lupo when we started the studio, but over time we ran into issues with this structure and started looking for something that would allow our clients to understand the total cost up front and found that when we charged hourly clients would sometimes hesitate to reach out to us to help with something that we really should have been involved in - and we didn’t want our clients hesitating to use us on the project!
Fixed Fee
Fixed fee projects require the designer to have a lot of experience in the area so that they can review past projects to determine a reasonably accurate estimate of what they’d need to charge to make money on the project. For inefficient firms fixed fees aren’t great, but for studios that prioritize workflow and efficiency there can be benefits to this type of pricing structure as it rewards hard work for the designer.
One benefit to this pricing structure to homeowners/clients is that you get the price of the design and permitting services up front - you know exactly what you’ll need to pay (and roughly when) so you can better plan for the project and work out financing if needed.
One drawback is that since the designer must estimate the total amount of time/effort their firm will spend on the project they must have a very clearly defined scope of work to operate within. This makes it more difficult to just start the work and see how the project progresses, and adds the requirement to clearly define what is (and perhaps more importantly what is not) included in the price.
Percentage of Construction Cost
For this one the designer will determine a reasonable construction budget based upon preliminary discussion and cost per square foot construction prices then determine their fee as a percentage of this total - this type of fee is probably the least used as it mostly applies when the client wants the designer to take over all management aspects of the project on their behalf, which is becoming more rare these days.
The Royal Architectural Institute of Canada (RAIC) publishes a document titled “A Guide to Determining Appropriate Fees for the Services of an Architect”, which is made available for free to designers and members of the public. For custom residential projects, the fee guide recommends percentage based fees of around 11.5 to 15% (if the designer is not providing basic engineering drawings as well), and fees of 15 to 18.5% if the designer is providing basic engineering in addition to their services. We think these numbers are too high - for example if you were building a 1.8 million dollar home (which is not so much these days), then the guide recommends our fee to be about $250,000 - while we would love to be making this much on a project like this it does not really reflect the amount of effort we’d need to spend on the project, for this reason we prefer other pricing schemes.
Clients sometimes are wary of this pricing structure as they may worry that the designer will run up the construction costs to inflate their fee - while this certainly can happen there are recommendations in the pricing guide to ideally prevent this from happening.
Price per Square Foot or Unit Pricing
These pricing structures are mostly used for niche projects where they work best - for example a price per unit for interior design of a large multi-unit building or a square foot price for simple commercial projects like warehouses.
We find that most of our clients do not mesh well with this type of pricing, because every home and homeowner are different and require different amounts of assistance throughout the project or want different things from us.
The above being said we do compare our price to a cost per square foot fee to ensure that we don’t go over certain amounts - although for smaller or very complex projects the price per square foot can be higher than normal.
Atelier Lupo’s Pricing
Here at Atelier Lupo we like to practice what we call “pricing the project”, which basically means a fixed fee based upon our experiences and the specifics of each client/property. We take time to meet and listen to our clients in an effort to determine exactly what they need and how much we’ll be required to take on for the specific, individual project. We take our notes and look at past projects to determine a flat fee for our services, with clearly defined deliverables and responsibilities.
We tend to not include engineering fees in our proposals but do provide estimates for the cost of these services if required - this is because it can be difficult to determine if these services are necessary at the start of a project (ex: we can complete the structural design of almost any home, but if you want to use special engineered joists to create large open spans or underpin the basement we legally need to hire an engineer - much of this can only be determined as the project progresses but we keep clients informed of how decisions will affect price and legal requirements throughout the project).
Pricing in this way allows us to come up with a custom proposal for each project and ensures that we are aligned with our clients right from the start in terms of expectations and responsibilities. We provide estimates for engineering fees and services that could be added on later, such as help with purchasing furniture or more assistance with managing the construction. We sometimes will offer a potential client a choice between service levels if we cannot determine what exactly they need from our early discussions, this allows the homeowner to review the different types of services we provide in an easy to review format.
Atelier Lupo
Tanya & Justin
