Helping You Make A Profit
The first section of this two part article dealt with techniques for establishing a budget; this section will deal more technically with design cost and hours, and how to work out what you should be charging for your design services - taking into account the time spent conceptualising and detailing the design and the expenses involved.
How do you decide how much to charge?
If you have achieved 'star designer' status and are an ethical design professional, your hourly fee might be higher, and your fee could ideally be based on the supply of your intellectual design service only, and not supply or material. You should be charging enough money to cover your time comfortably and to deliver a quality service to your client. The tables below assume that your initial consultation is free. In fact, the initial consultation never is free - it is absorbed as part of your later fee billing.
Design time is not only the time you spend at your drawing tool. It is the time when your mind is working - while driving or walking or even trying to sleep. For this reason, see the efficiency hours in the table below.
Detail and administrative design is more efficient as you are not trying to conceptualise - hence the increased productivity time.
On any project there will be a split between conceptual time, detailing time and supervision time. We are not considering supervision as part of this model.
Notes on the following table:
This table shows your hourly minimum cost at a salary shown.
With or without an assistant - as a business grows you will want a larger basic salary and more facilities and employees.
You should regard the salary figure as a basic wage, where additional profit is added on to supplement your income.
Productive Hours
Relating to the standard number of construction industry working hours per year, this would equate to £33.96 per hour if a designer were to work productively for six hours per day, with holidays and leave allocations. There is always non-productive time.
You should vary this to suit, or you can request a working copy of the Excel sheet from the author. The table further assumes that your salary increases with the number of staff you employ - it would be bad business sense if it didn’t!
It also assumes that you have an increase in simultaneous projects, for which fees are being charged. The example with five staff assumes that there are three projects being run concurrently.
Productivity
The table below shows how the standard percentage might relate to the job values.
This table shows the reality of the percentages against the hours and designer wage rates for conceptual work (five hours a day) and for detailing, which is arguably more productive - though not as interesting. The following table demonstrates the hourly allocations of the rates against a normal 15% and 20% of project value, using the Salary and Admin tables.
Now divide the bottom line above by how many jobs you run concurrently to give the rate per hour per job.
This alternative view shows a sample of how many hours you could expect to profitably spend on a project at the rates shown above.
On the basis that an assistant makes you more efficient, you could spend lower cost hours on a project if an assistant were helping you with some aspects of the process.
Conclusion
A good design practice will transparently communicate the fee and time to its client, allowing the client to see where their money is going. It should additionally allow you to design with profit in mind, ultimately delivering the perfect project for your practice’s portfolio and your client.