Hiring an Architect is one of the most important decisions in your project planning process and should be considered at a very early stage. Having a skilled and experienced Architect by your side will provide you with great value through thoughtful design and efficient project management.Eric Rodrigues
The most common question is: How much will it cost to hire an Architect? The answer to that question is not as straightforward as it might seem as there are a lot of variables to be considered. To provide some clarity on the matter, below are some insights on how Architects price their services.
How do Architects price their Services?
Traditionally, there are four popular ways to price architectural services. Fees can be calculated on an:
- Hourly Rate
- Fixed Fee
- Percentage of the Cost of Construction
- Price per Square Foot
The selected method will depend on the nature of the projects, the clarity of the scope, the complexity of the building, and the number of unknowns at the time of the proposal. Below a breakdown of each of these methods.
1. Fixed Fee
A proposal based on a fixed fee is the most common method of pricing architectural services.
A fixed fee is often proposed when there is a clear definition of the scope of work, the Architect fully understands the client’s program and there is an outline of services that are excluded from the proposal. Normally, these fees are proposed for projects that the Architect has completed in the past and has a certain level of comfort to be able to estimate the time it will take to complete the design.
The fixed fee amount is calculated using an hourly rate, times the estimated hours for the completion of the project, based on the experience from previous projects of similar nature and scale.
|Project Team||Hourly Rate||Weekly Allocation||Weekly Hours||Weekly Cost||Estimated Weeks||Total Cost|
|Junior Designer 1||$120||100%||37.5||$4500||8||$36,000|
|Junior Designer 2||$120||50%||18||$2160||4||$8640|
In this hypothetical example of a Fixed Fee calculation (for educational purposes only), I have assumed 8 weeks to deliver the design services and a project team of 4, with a Junior Designer working full-time, another Junior Designer supporting the team 50% of their time, a Project Architect overseeing the project and dedicating 40% of their time and a Principal Architect, mostly interacting with the Client and attending project meetings. The total fee calculated would be distributed throughout the different stages of the project, as shown in the table below.
|Project Phase||Percentage of Fees||Amount Billed|
The method of billing would be established in the Architect/Client agreement, but typically is done through monthly invoices that correspond to the amount of work completed to date.
Clients tend to prefer this fee structure as it defines a fixed price from the very beginning and sets everyone’s expectations. For Architects, this fee structure works perfectly well if there are no changes to the project scope or too many design revisions that consume the projected design hours. Therefore, it is extremely important for both parties to clearly define what is included in the fee, and the services that are considered to be additional, and billed separately.
For example, if the client requests a change that will significantly alter the scope that was initially agreed upon, the Architect might request an additional fee to be able to complete the revisions.
Fixed Fee proposals might not include Site Plan Approvals, Re-Zoning, Committee of Adjustments (small variances) as there is always some level of uncertainty on the duration of those applications.
2. Time Basis (Hourly Rate)
An uncomplicated and straightforward method that Architects use to price their services is applying a standard hourly rate. It is simple, transparent, and is often appreciated by all parties involved. The Hourly Rate method is used alone and in conjunction with other methods, such as the Fixed Fee and the Percentage of Construction Cost.
Let’s say a Client approaches an Architect to design a mixed-use building in a plot of land he recently acquired. The Client does not have a program developed for the building and will need the architect to develop a Feasibility Study to better understand what can be achieved on that site according to the local zoning laws. The Architect might suggest an hourly rate billing for this initial phase, and once the parameters of the project have been determined, he will be able to provide the Client with a Fixed Fee proposal. The same applies to the Percentage of Construction Cost, when not initially provided, the Architect might suggest hourly rates until the construction budget is determined.
The hourly rate that is billed to the Client depends on the experience and role of the employee. A Senior Architect will have a higher hourly rate than an Intermediate or Junior Designer. Normally, the hourly rate is determined by adding the employee’s salary, the firm’s overhead (professional registration fees, software licenses, professional liability insurance, operational costs, etc), and profit.
3. Percentage of Construction Cost
Percentage-based fees have been around for a long time and are still one of the preferred methods of pricing architectural services for many professionals today. However, the percentage amount might vary depending on the building size, category, and construction value. For example, the fee for a building that will cost less than $500,000 will have a higher percentage than a building that is budgeted at $25M. Below are some typical ranges for architectural services for new construction. These are average ranges and might vary significantly, depending on the firm and its status.
|Category||Building Types||Base Percentage Fee Range|
|1||Warehouse, Self-Storage, Barns & Storage Buildings||4% – 7%|
|2||Multiple Unit Residential Buildings||5% – 8%|
|3||Motels, Apartment Hotels, Dance Halls, Commercial Office Buildings, Student Residences, Mercantile Buildings||6% – 9%|
|4||Schools, Police Stations, Retirement Facilities, Community Centres||6% – 10%|
|5||City Hall, Museums, Church, Restaurants||7% – 10%|
|6||Medical Research, Science Building, Laboratory, Hospitals||7% – 11%|
|7||Custom Residential||10% – 15%|
For this method to be properly used, at the project outset, the construction cost must be mutually understood between the Client and the Architect. As the project develops, the construction cost will become more refined at each design stage until the actual price is known. The Architect should adjust his fee and the billing will reflect the construction cost estimate at the time of the invoice.
Depending on the complexity of the project, it might be necessary to add some adjustments to the fee calculation. Complex projects, such as heritage buildings that require extensive conservation, or buildings that require advanced systems, and elaborate structural work, will require extra resources to be documented and designed.
4. Price per Square Foot
Possibly the least used method, and often associated with Residential Design. This method of fee calculation is used by residential designers and architects that focus their practice on single-family home renovations and new construction. Depending on the size of the home and the level of detail that is required, the designer might propose a price per square foot for the development of the project. I have seen prices that range from $5 per square foot for a basic set of permit drawings to $25 per square foot for a fully detailed design package.
Things to Consider
Construction projects normally involve considerable investments and are often combined with some significant degree of risk. When selecting the Architectural team, price should not be the only determining factor. The selection should be based on credentials, experience, and value. In the grand scheme of things, the design costs are residual compared to other hard costs associated with the project, but the benefits of making the right selection will pay back huge dividends, not only economical but also through great and thoughtful design.