If you feel in-the-dark as to how architects charge for their work, you’re in good company—it’s a system that mystifies architects, too. In 1990, the government enacted the Sherman Act, a law that made it illegal for the American Institute of Architects to offer fee recommendations to architecture firms. It means that architects must act on their own while deciding fees, and they’re allowed to set prices any way they see fit.
The result, however, is that "nobody talks about it," says Peggy Deamer of the Architecture Lobby, an organization that advocates for the value of architect’s work. "It’s all word of mouth [regarding what other firms charge]. There are no set prices."
What it often boils down to, Deamer says, is "what to charge so that I can get a client." The fluctuation regarding prices affects clients, too. Deamer feels that there’s often less-than-ideal communication between firms and clients about the amount of work that goes into architecture projects, what architects’ deserve for their time, and how that plays out in the fee structures.
However, there are basic structures that clients should familiarize themselves with, and discuss with their architect, before moving ahead on any design project. Here’s a breakdown of what you can expect.
This is pretty straightforward: Architects will bill you for the hours worked on the project. Prices will differ depending on the project and the location you’re in, but can come in around $150 per hour or higher to work with a firm’s principal.
The hourly fee can be problematic, says Deamer, because "While we’re excited to be paid for the work we’ve done, we always have to back down on what we charge, because the client wouldn’t believe how many hours we spent on a project."
A client can control the number of hours worked on a project by adding a "not-to-exceed this amount" in their contract with the firm. "Almost nobody gets away with charging hourly without a cap," Deamer says.
Architecture firms may charge hourly for some parts of the design process, but not all. "Often we’ll start charging hourly, because people don’t always know what they want to do when they start the project," says Dylan Chappell, founder of his firm Dylan Chappell Architects.
A firm may charge hourly to come up with a concept design that will show the client the scope of work ahead. "Once we know what the project is, we can move to a more permanent fee structure," he says.
Smaller and moderate sized architecture firms tend to be flexible in working with different fee structures with clients, according to Chappell. "Some larger firms may have a ‘this is how we do it’ attitude," he notes.
A fixed-fee contract with your architect will state the set amount that they will charge. "Clients like that," says Deamer, "And the [architect’s] angst about what you can charge hourly goes away with a flat fee."
But usually, architects will not settle on a fixed-price contract until they known exactly what the project entails—thus, the need to charge hourly for work in the beginning stages.
The fixed fee is typically used for smaller-scale projects, according to Chappell. Think removing a wall or adding a bathroom. "It’s cut and dry. We already know the scope of the project," he says.
Percentage of construction costs
For larger projects, there’s a good chance your architect fee will be calculated as a percentage of the construction costs. This fee structure doesn’t come without its challenges: "Figuring out what the construction pricing will be is extremely difficult, because it varies a lot," explains Sebastian Donovan, partner at Architect Construction Services (ACS), a construction firm based in New York.
But here’s how it works: The client hires an architecture firm, who comes up with a design. When the firm is ready to send a project out to bid, they’ll invite contractors to bid on the project. ("Up until that moment, [your firm] is assuming the construction costs," says Deamer.)
Those contractors will provide their bid, and the client will select one. The client sets up a separate contract with their contractor, and that price will be calculated as a certain percentage to determine the architect’s separate fee.
As for the percentage charged by the architect? "It’s a sliding scale affected by how big the firm is and the size of the project," says Donovan. It could range anywhere from 8 to 20 percent, so be sure to ask your architect what percentage they typically charge for various projects before you start any work.
If a firm charges less, they may only offer basic services or drawings to obtain a building permit. If they charge on the upper end, expect the full package deal, with full services and drawings to take you through the construction process.
To help eliminate early questions about the budget, Deamer recommends that the client asks the architect to take on a contractor that they trust and have worked with before. By eliminating the bidding process, you don’t have the guesswork that goes into pricing.
"Along the way, as they develop the design, the architect can check in with the contractor and bring in the budget," Deamer says. "When jobs come in closer to the budget, everybody wins."
Above all, be realistic
No matter what fee structure you work with, you must be realistic about your budget. "Clients will want a half-a-million-dollar project, but only want to spend $250K," says Chappell. He notes that there’s often a discrepancy between clients who envision their dream project and what architects can actually do with the budget at hand.
He says that a helpful method for clients working with architects in the early stage is to move backwards from their set budget. From there, they can take into account not only the estimated construction costs, but soft costs not associated with construction—the architect’s fee, permitting fees, unexpected costs like a soil report or new water meter.
"You think you have $100,000 to spend? You really only have $80,000 for construction," Chappell says. But "Good contractors and good architects will try to inform you about the budget upfront. And any firm with repeat business will have a fee structure that they default to, and they will lay it right out for you."