How Do Architectural Fees Work?

Architectural fees are a big concern (and rightly so!) for many homeowners planning to build a custom home or remodel their existing home. Fees vary per project and are influenced by a number of factors including: size, scope, site, specifications, etc. Generally speaking, there are 4 common methods architects can use to calculate their fees:

  • Time spent (hourly)
  • Stipulated sum
  • Percentage of the cost of the work
  • Based on the project’s square footage

Today we’re going to take a brief look at each method, and examine the potential pros and cons.

Time

For some projects, especially those that do not have a clear definition of scope, the architect will bill an hourly rate for services rendered. The hourly rate charged will depend on the type of work performed and by which members of the design team.  Rates vary between architect, project manager, draftsman, etc.

While hourly billing is fairly straightforward, charging an entire project based solely on time makes many people nervous – it feels undefined and open-ended.  For some aspects of the design, billing at an hourly rate is preferable. At KGA, we typically only bill on an hourly basis for tasks such as:

  • As-built drawings (As built drawings document existing conditions and are needed for remodels when the original plans are not available).
  • Homeowner request for changes that are beyond the original scope of the project, or occur after certain approvals have already been made.
  • During schematic design for remodels (When the scope is still being defined).

Stipulated Sum

When an architect quotes a stipulated sum for a project, he or she is essentially basing the number off of gut instinct. If their educated guess is correct, then great! As a homeowner, you can know exactly what your project will cost. Unfortunately, this doesn’t always work out. We’ve seen many professionals – not just architects – low ball their quote in order to win the job, and then later realize that they aren’t charging enough to complete the project. At this point, they generally return to the homeowner and ask for more money. Not a conversation you want to be having.

Percentage of the Cost of Work

This is not a method that KGA uses, but since you may run into a firm that does charge architectural fees as a percentage of the total cost of work, we are including it. Imagine that the total cost of your home is going to be 2 million dollars – this includes everything: construction, finishes, details, maybe even interior design. If your architectural fees are 8% of the total cost, they would come out to $160,000.

Charging as a percentage of the total cost of work doesn’t make sense to us for one main reason: the quality of finishes, construction, appliances, etc. can vary widely, and why should you be charged more in architectural fees based on the quality of construction or of your appliances?

NOTE: This method does make sense in cases where the architect is providing interior design or construction administration in addition to typical architectural design services.

Based on the Project’s Square Footage

This is our preferred method at KGA. We believe it makes the most sense for everyone involved. At the most basic level, this means you’ll pay more for a larger home and less for a smaller home. Initially, it can be more difficult to pin down an exact cost, but once the scope of the project is in place and the square footage has been decided upon, the cost will only vary if there are any significant changes in scope or design after approvals have been given at certain stages.

Take our above example of the 2 million dollar home. If we put some nice round numbers to it and said the home was 5,000 SF and the architectural fees were $10 per square foot, then the architectural fee would be $50,000.

Conclusion

Hopefully this information has given you a better understanding of how architects charge. Architectural fees can be confusing, but they don’t have to be! If you are working with an architect, take the time to read your contract carefully and ask questions if there is anything you don’t understand. This is one of the simplest ways to avoid unpleasant surprises down the road.

Next up, we’ll take a detailed look at how pricing per square foot works, what factors can affect your costs, and tips for avoiding additional service charges. In the meantime, if you have questions, we’d love to hear from you! Leave us a comment below or email us at: info@kgarch.com.