Fee Options

[Luke Durack]

Hi Folks,
Restructuring the way I do my fees at present and was just interested to get an idea of how many people use percentage fees as opposed to lump sum fees. I have traditionally used percentage. Mainly because it feels less risky but I can see how it might be less appealing to clients. After all I generally advise on lump sum building contracts so why not my own fees. Productising lump sum fees seems like it would be more desirable for a client.
Interested in your thoughts out there.

[Sony Purba]

I generally use lump sum, and sometimes hourly (depend on the client and service). I only use percentage to gauge my fees in preparing my proposals for small budget projects. I use the numbers just for my own info, but still use lump sum in my proposal.

[Luke Durack]

Thanks SONY PURBA, AIA. Seems to be the way things are moving. Makes sense for the client at least.

[David Sisson]

I’m just like Sony, but CA is usually hourly-because quality of the contractor has such a big impact on CA time. Variances, etc also hourly. Some small work, open ended work or studies also hourly.

[Andrew Mikhael]

I use hourly for residential (too emotional and variable for fixed rates) and lump sum for commercial clients. Most of my clients, even the ones who prefer hourly, don’t like percentage as they feel its not indicative of the work you need to put in or the value of the work. I agree with that and do a high hourly or lump sum that reflects the value of the work (not necessarily the time it takes )

[DiegoArevalo]

Hi Luke

With redoing your fee structure the best way i did this was i purchased an awesome little app for the mac called Office Time. https://www.officetime.net i think its only for the mac though (sorry Windows)

So basically i used this program to record every single project i did for 1 year to help me gauge both residential and commercial project as to how much i should charge on average.

I had all sorts of project from residential project with all emotions tied into it to residential where there weren’t any.

The program allows you to set you hourly rate so that you can keep right on track to see in the project is going accordingly to time and money. Not to mention it will speed up your work processes as you don’t want to make a loss.

Hope this Helps.

 

 

[Roderick Anderson]

We are mandated to use percentage based fees for our services in my location. The percentage is fixed as a minimum depending on the services, but the variable is the projected cost the percentage is calculated upon. Many competitors will cheat by estimating their fees on unreal and impossible project costs or price/sq.meter.

What I’ve done is flip the formula around, and charge the firm’s fees in three packages, with different scope, so I place the power in the client’s hands to choose, but have taken away the fee haggling and negotiation.  In the three packages, I put a dollar amount per square meter for each package, and this way I have control of how much I want to charge for each service package.

The results have been staggering. Since I put this into effect there have been no price negotiation at all, and all but one of the clients went for the premium package with the highest fee price.

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