The Congress of Residential Architecture

Greg L. wrote:



As design professionals, can we keep our current business lifestyle on $ 5,000 per job?

Well, I depends on what you are providing. You certainly cannot provide traditional architectural services including a custum design, workings drawings, and contruction observations for anything close to that type of a fee. If you think so, you are kidding yourself, or you dont understand the role of the architect in the construction process. Urrr, or you work for slave labor.

Now, if you are talking about providing mass produced design of some kind like we have talked about on the board from the beginning, possibly.

Walter - the intention is that for 5k you are providing a modification to a predesigned solution. The mods can extend to site adaptation, climate or orientation adaptation, and without a doubt adjustments to suit an individual client. If this is not MORE profitable than conventional services then you are doing something wrong.

And also I just have to point out one thing, because the naivety of your question just sheds light on how out of touch we are as a profession. I for one have run my practice on $5,000 jobs. Not all of them of course, but the vast majority of projects in my project number list were small projects that were between 3-7k fees. Its not made me prosperous, and I'm certainly struggling now in the absence of even those modest projects. So yes - you sure as hell can survive on $5k design services, and the fact that you even need to ask the question just reinforces my belief that most of us here don't really know what its like in "the trenches", what its like to provide services to people who don't value it, to people who are forced to purchase it, and what it really takes to demonstrate value under those circumstances. The 5k job is the housing industry in a nutshell. We all need to get good at that if you think we'll ever have any influence over the wider market, and change the shape or residential architecture. This comment is meant for the group fashioning that letter too BTW.

It's called the price- pace phenomenon. You do 1- $100,000. job or 20- $5000. jobs. Same money and time. Actually less time on the 20 jobs because you can re-use stuff, and you get more proficient at what you do with the additional experience.

Its also a lot easier to find the 20 people that agree $5000. is a value for design services than the 1 person who agrees that $100,000. is a value.

I do small projects all the time...

This discussion has to be relative to project size, percentage of construction cost...

BUT... a real constructive discussion on fees is illegal!

Yes Thomas, for the 20 jobs there is some repeat, but I find the repeat is more in process than in content - its not drawings or details. Your administration can be 20x as well and there is no grabbing from past jobs for that. Billing, filing, printing etc. are all many multiples. Its not as simple as 1x100k = 20x5k. That is rubbish in fact. There are efficiencies and methods you have to create to serve the way you work if you hope to be able to do the 20x5k.

And I don't agree that the discussion of 5k services has to stray into price fixing for it to be useful to us. There is a lot to talk about here without crossing that line.

And David - I also don't agree with your assertion that it depends on scope, and budget, and construction cost. We are not talking about designing a mail box for 5k. We are talking about something more commonplace, something that wider market of homeowners might request. A 12 x 18 ft addition for a home office or small family room? For 5k. Can you do it? Can you make a profit? Can you survive on 20 of these? Can you even meet your payroll?

The first step to learning is admitting what you don't know. Frankly I know little about designing a custom house in all its glory down to every last hardware decision, documented on 50-75 sheets, and commanding a 50-100k fee. I've never had a 50-100k fee to design a house. But that is less than 3percent of the housing market. I believe we came here to influence the other 97percent of the housing market. Can we at least admit that we've not really done that kind of work before? When you say you've done small projects, are they in the 97percent or the 3percent? Don't kid yourself. No use in it.

I just provided a proposal for a screened porch addition for about $1500 for partial existing condition and 10K for complete services.

I don't care if I have 20 of those or one house.

What I am not willing to do is work at significantly reduced rates... I would be happier building real things out of wood in a cabinet shop at a lesser wage scale if that were the case.

Dave

I don't want to stray away from the topic but this issue has come up a few times.

I am not a lawyer but don't think that you understand the law correctly David.

It is not illegal to discuss fees. It is illegal to fix prices. This is anti-trust law.

From Architectural ethics guidelines:



You may have read this and misunderstood it's meaning.



This is a guideline to to help people avoid anti-trust problems. What it means is that it is better to not discuss prices because that takes away any possibility of breaking the law. It does not mean that it is illegal to discuss prices. Under anti-trust law it is illegal to collude. In other words if we all agreed to charge the same fee that would be illegal.

My guess is that it is closer to illegal to suggest regulations which require an architect to supervise all home design (if the intent was to raise prices) than any specific discussion on fees which we have ever had here.

But if I am wrong I will be happy to stand corrected if anyone has better knowledge of this issue.

Back to the topic here is a recent job that came in.

What would be your reaction if someone came to you with this?

A: Ok I can draw that and if you want I have a few suggestions which you may like better

B: That sucks and we need to completely rethink this -start from scratch, analyze the site, define a program, etc..

No one around here is going to get 5k to do this job.

I hear you there, David. With builders as clients the mantra is "every one has to make do with less. At least it will keep you busy." I'm not buying in to it at all. If anything, my prices have to go up, as there is a lower dollar volume to absorb the fixed expenses. If people want to pay less, I have to put less in to the project, and that is the point of Greg's new business model. Better design in less time. And I add, by being clever, using leverage, and enhancing the experience. I just don't know how to do it yet.

A few things:

David and Greg:
Sometimes the simplest question can product a few interesting answers...

My point is that I agree with you both. David you have to remember that in our profession, we have a broad range of talent, education, age, certifications, experiences, etc... In custom design that price can be cheap depends on what services you provided. I know that a 60 sheet CD are not worth $ 5,000 but I also know to a builder whom wants a simple set of CD, it will not be worth the dollars we would like to quote them. One of your main reasons on having only registered architects do residential design is it should bring pricing of the work in line of you credentials (if I wrong, please let me know).

Greg, my point is that in our profession today, due to economy, outsourcing (yea even the garage draftsperson), shrinkage of our numbers, we should re-evaluate our business model just to stay in business tomorrow. Yes I agree with you because when this recession is over, only the best and the brightest design professionals will be left to do what they do like they did in the good ole days. Everybody else would have to complete for the leftovers which will be lower fees do to the industry (builders, do it yourselves, will be looking for price breaks, etc...).

Chris, you can get any price you want, if you position your business model according. Why don't we ask David, Greg, John Henry, etc... on how do they get what they get (I know it was discuss on this forum somewhere at sometime). Sharing information is part of CORA mantra. Is it?

Lastly, most of us know that even if we get what we charge our clients for, we will still feel that we will be underpaid for our services.

It isn't a question of how they do it. I can't get any price I want, I have to deal with the competition. Most architects can't get any price they want either. If we could all get any price we wanted than we would not be discussing this.

People on the high end get a completely different client with different needs and expectations. One advantage designers have in general is that providing this low end service gets our foot in the door. If this person ever wants a more custom house he would very likely come back to me or to another RD. (as long as he is happy with my service)

I compete against a small group of people in my region that provide similar services at a similar fees all the time. Very few of my clients come to me without interviewing my competition.

Obviously, if I say I am going to charge 100K for 60 pages and they choose to spend 15K on 15 drawings, the client was never going to pick me, no matter how much money they have. I compete against a large firm in my area that does B-work at 80 percent of my fees, and produces 40 percent of my drawings.

You need to provide added value, and then sell it's importance. Think about the profit margin the firm I just mentioned are making over me! So, I tell the new clients to ask the firms the interview these important questions as they go through the interviewing process.

"It's called the price- pace phenomenon. You do 1- $100,000. job or 20- $5000. jobs. Same money and time. Actually less time on the 20 jobs because you can re-use stuff, and you get more proficient at what you do with the additional experience."

Folks, I'd rather design five houses from scratch then deal with 50 remodels.
Each remodel means spending three times the amount of time per square foot you normally need to design from a blank sheet of paper.

Chris S. wrote:

Chris, let me be clear. what I'm talking about is what David said about his competition in his area. He wrote: I offer potential clients certain design solutions (i.e. green, aging in place, etc...) in addition to the basic service or they ask me about a trend or their suggested design idea. If you add it as a added value into your practice, they will pay for it, if you sell it to them. For example, if you doing production services, then your profit margin will be low due to the high competition among other architects, building designers, draftsmen, etc... If you find a added value to offer to your client and prove it to them, you may find that they will pay you more because of they know how you work.
I believe what Greg was suggested in the beginning about the "New Business Model" is that a lot of us will not survive this recession because we cannot change our way of thinking about our business practices.