ID 34013 Lecture Notes - Lecture 7: Scope Creep, Stuart Pugh, Length Overall
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Published on 13 Mar 2018
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Chapter 6: Project Compensation and Design Fees
Design Service Fees
• fees=income for the company
• Charging a professional fee instead of selling merchandise
• Variety of fee methods, different methods are better at different times and under different
circumstances
Billing Rate
• A dollar amount charged for each design professional; usually expressed as an hourly
rate
• Billing rate=salary rate of employee+overhead expenses+profit
• Most commonly, your billing rate should be a multiplier of 3x’s your salary
• Based on salar is far more simple to calculate
• Based on DPE is more accurate
Overhead expenses
• Also called selling and administrative expenses, as those expenses incurred whether the
firm produces any revenues or not
• Expenses necessary to “keep the doors open”
• Non-billable time
• rent , phone, copies, advertising, etc.
Fringe Benefit
• An extra benefit supplementing an employee’s salary, for example, a company car,
subsidized meals, health insurance, etc.
Direct Personal Expenses (DPE)
• A number that includes salary+benefits, taxes and paid holidays
• Direct and overhead expenses
• Profit
• Most accurate way to determine multiplier
Billable rate based on DPE
• Direct Personal Expense and Fee Multiple
o Total annual salaries $100,000
o Total fringe benefits $
Estimating Design Fees
• Understand the scope of services
• Calculate costs carefully (including expenses and profit)
Considerations when developing a fee
• Know what the market charges
• Maintain your reputation
• Your value is in what your client values
• Relationships
• Offer services others don’t
• Residential projects vs. commercial projects
• Designer’s experience
• Client’s experience with an ID
• Size and complexity of project
Indirect Job Costs
• Overhead
• Overtime
• Indecisive client
• Scope creep
• Unforseen consultants
• Unforeseen job site delivery costs
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