Very high-end residential - structural design fees are challenging/confusing me 8

[DETstru]

For the last 3-4 years I've been taking on very high-end residential structural design and I like the projects for the most part. Decent sized jobs so there's less admin work to do, relatively low-stress structures, and the fees can be good. It probably makes up 15% of my revenue (I'm a 1-person shop and do my own drafting).

But I feel like it's a crapshoot when it comes to fees. Especially recently. Some clients expect you to charge the same per SF as a relatively simple home, and others understand that high complexity increases the cost per SF.

I'm defining very high-end residential as having roughly these qualities:
[ul]
[li]Construction cost >$1M[/li]
[li]Market value when complete >$3M[/li]
[li]Size >5,000 SF[/li]
[li]High-end features like tall ceilings (12 ft+), canopies, roof steps, mix of flat/pitched roofs, large architectural feature walls, high-end finishes, etc.[/li]
[/ul]

I found this thread from last year and most of the comments are in line with what I like to charge. Something like $1.4-$1.5/SF for a moderate level of complexity.

https://www.eng-tips.com/viewthread.cfm?qid=495787

I've gone down to close to $1/SF if the complexity is relatively low, and a few times I've been closer to $2/SF for 2-story or a basement or lots of canopies and/or odd features.

Most recently I did a design for a single-story 7000 SF home with a lot of complex architectural features (mix of clay tile and low-slope membrane roofs, 8 different roof heights, ceiling height up to 16 feet, parapet height up to 23 feet, 6 different attached canopies, 3 sliding panel exterior doors that were up to 45 feet long each, 2 exterior semi-freestanding "feature walls", and some site retaining walls). My fee of $13k was accepted and honestly I think it was low after the effort I spent on those canopies. I had 2 full 30x42 sheets dedicated to the plans and details just for the canopies. There was so much steel to design for them and in the feature walls. Not to mention all the hoops I went through to justify the diaphragm steps to the AHJ.

I'm bidding on another job that is of similar design features but 9000 SF and has a walk-out basement due to it being on a very steep hillside. The client wants to work with me but they have a proposal for just under $1/SF! I can't imagine it's profitable at that fee. Maybe someone is trying to buy the job, who knows. I went in at about $1.5/SF and that was only because I learned of the low bid.

Anyway my real question in all this is: what do you currently charge for this kind of work? I'd like a reality check on what I'm charging with the goal of expanding my business in this market.
I've only gotten maybe a quarter of these that I've bid on. Maybe my fees are too high, maybe I work too slow. I don't know.

 

[DETstru]

Well this thread definitely helps me. I felt like I was going crazy when I'd clients told me they got bids half of mine. I don't need to drop my prices, I just need better clients

8thStreet, 3.5% would be fantastic. Great that you're getting those rates. Very informative.

SE2607, I agree with you 100%. It's the detailing that really gets you on these things. The more you look, the more you realize how many oddball conditions there are.

 

[IceNine]

I'm in the same boat as 8thStreet, $3.50 to $4.00 a square foot for houses costing $500 to $1000/sf.
These fees are no issue for our local regular clients. Though we rarely get projects from the out of town architects searching for the lowest fee....fine by me.

 

[bones206]

The largest structural firm in my area does a lot of the high profile stuff- institutions, education, high rise hotels, etc. According to the head engineer there, their most profitable sector is actually high end coastal homes. It’s pretty much a side-offering that they don’t advertise, yet it makes them the most money somehow. The key for them is definitely their long-standing relationships with architects, which allows them to get higher rates.

 

[Eng16080]

Wow, this thread is getting optimistic. I'm glad some of us are getting decent fees for residential work. And I was thinking I was a hot shot occasionally getting $2/SF!

The worst is when you get undercut by some other firm, wondering how they can possibly do the project for so little, and then on those rare occasions when you actually get to see their plans, it's obvious that they put in a fraction of the effort you would have.

 

[Brad805]

The problem with this market in our area is few value quality drawings. The common phrase I would hear when we tried working in this field was, "the contractor will figure that out in the field." Maybe at one time, but nowadays far too many parts are ordered to fit. I have made up to $5/sqft, but in that case we detailed the steel. Even at that we did not do great given the number of unique parts. We tried working in this market again not that many years ago. The arch dwgs were horrible, and we bowed out again. We find a lot of the so called "archs," in this market know a bit how to draw or make pretty pictures, but know very little about how things go together. Many are technologists that have found architects willing to stamp their drawings.

 

[a2mfk]

What a great post! The range in fees is crazy, but so is the range in types of construction.

I have a colleague who does mostly residential, just him and a CAD tech, and they did around 400 projects last year including some smaller stuff probably, some light commercial. He does not charge nearly enough, I think only like $0.60/sf and that INCLUDES ALL ARCHITECTURAL. Yep, entire house plans for that price. But how it works is people bring him "house plans from a designer", so he does not figure out the floor plans and all that nonsense, and experienced house designers get it pretty close architecturlly to code.

This is almost all 1 and 2-story stuff, no basements, rarely steel, and he said his CAD guy does 90% of the drawings. He has it down to an assembly line I guess. Only making $3k-$5k a project, but has a small office and pays a CAD tech $50k/year. So yes, I have done that math, my buddy is doing well. Also he was working 60 hours a week and just had a kid, so maybe he was just saving up.... <SHRUG>

Guess I am doing it wrong.

 

[TLHS]

I don't do residential, but I definitely don't stress about losing work based on fees anymore for similar reasons to Eng16080. People have very different standards of care and knowledge levels on different things. Just because someone undercut me doesn't mean that I'm wrong. it may mean that they're going to work way less on it than I'd be comfortable doing. Or that they've done it 8000 times and have efficiencies I'm not going to have. I know there's work I'd be comfortable doing in a few hours that might take someone else a week, so presumably the reverse is also true.

There's lots of good work product out there, but also a fair amount of bad work product. You can't compete with bad work product on an hourly basis and you shouldn't stress out if you lose projects to that.

 

[jerseyshore]

Residential, whether it's low end or high end, is a competitive market all the way from the designers to the framer to the finish guy. That's just the nature of the business. There is always someone willing to do a whole house structure for $2k even though a "fair" price might be $6k+. But I think we all know what the $2k drawings are going to look like compared to ours. Very high end residential you have the same issues, just $9k fees vs $15k+. Residential is so tricky because they could build a house off a napkin and it'll still turn out somewhat decent. There are a lot of architects that when you send them a real fee think "why would I pay you that much when the IRC has 90% of the info?".

To really make money on a full house, especially with drafting and regardless of build cost, I think you have to have fees on the higher end consistently or be very efficient, but most likely a combination of both. Maybe a system like a2mfk mentions. It is so easy to sink time into single family residential.

 

[XR250]

One of the ways I make money on them is to only detail what is necessary - i.e. things not covered by the code. My drawings end up usually only being 3-4 simple sheets - which builders appreciate and are willing to pay a premium for. Some of my competition will send out 10+ page sets to make it look like you got what you paid for.

 

[milkshakelake]

@XR250 I put in tons of sheets and typical details to make it look like I do a lot of work, including fastening schedules that are in the code. Typical drawing set is 10-20 sheets.

 

[JMASE]

My $ 0.02: I've been in this business a long time, 40+ years. As a solo practice, I
1) am very picky about clients..its a risk management requirement.
2) never base a fee on $/SF. If you do, you're just chasing commodity work and it's a race to the bottom.
3) always put together a detailed scope of work with hours, sleep on it and usually bump it by 25% the next day.
4) use no less than $ 250/hour and apply to the hours estimate.
5) outsource all CAD which I can buy at $ 60/hour.
6) stay away from residential, and I specialize with mostly commercial/industrial retro-fit where the project schedules are short, the total CAD time is relatively low and the project budgets are based on the value of getting the retro-fits done quickly. Structural fees usually are not an issue.
7) be willing to walk away if the fees aren't there or the client seems sketchy.

 

[XR250]

@XR250 I put in tons of sheets and typical details to make it look like I do a lot of work, including fastening schedules that are in the code. Typical drawing set is 10-20 sheets.

Do better, milkshakelake

 

[DETstru]

2) never base a fee on $/SF. If you do, you're just chasing commodity work and it's a race to the bottom.
3) always put together a detailed scope of work with hours, sleep on it and usually bump it by 25% the next day.
4) use no less than $ 250/hour and apply to the hours estimate.

$/SF is not always the best way to set a fee for a single project, but it can be a good way to look at many projects in the same market sector as a whole and help you "gut check" if a fee seems right or not. Is this fee more or less than my average $/SF in this market sector? Is this project more or less complicated than my average project in this market sector? If both answers are the same, your fee might be right. If both answers are different, maybe it's worth a second look.

I figure out each fee based on an estimate of my time. Both for calculations and drafting. I also consider coordination, administrative, and plan check time. I currently base everything on $200/hour. I can then compare this to a % of construction cost (if I can reasonably guess that) and $/SF, adjusting as needed.

I may then add or subtract some amount based how much a really want to do this job.

Based on all those metrics (not just $/SF), I can "triangulate" to the final fee.

 

[DoubleStud]

I just want to make sure we are comparing apple to apple. When you say square footage, what is it? Is it sq. ft. of the livable space? How about crawlspace vs slab on grade? How about outdoor area under roof? Deck? Truss vs stick framed roof?

 

[DETstru]

I just want to make sure we are comparing apple to apple. When you say square footage, what is it? Is it sq. ft. of the livable space? How about crawlspace vs slab on grade? How about outdoor area under roof? Deck? Truss vs stick framed roof?

I typically count square feet of elevated structure. SOG doesn't count.

 

[Eng16080]

I start with a rough estimate based on square footage and adjust from there based on complexity and a few other variables.

I usually calculate my square footage for fee estimating purposes to be interior floor space plus area of exterior decks/porches/balconies. For crawl spaces, I'll often use a multiplier of 1/2.