Realistic expectations. Get some.

The service triangle is just one grouping of three clients need to be realistic about. The other one is how their budget breaks down.  That falls into three parts also:

Fees(design/architectural/permits)

Materials

Construction/labor.

With a limited amount of money (as opposed to unlimited- not necessarily low-budget), you have to understand the relationship between these things and know where you’re going to have to make adjustments.  People have asked me how to get the most for their money on their residential (though the principles are sound no matter what kind it is) project.  Here’s my advice on that, taken backwards:

Construction/Labor

You can competitively bid for contractors and of course that’s what commercial projects do.  You can do it on residential projects also, but I find that people are much more interested in finding someone they can trust with their house than they are about getting the lowest possible bid.

How to minimize that cost:

Aside from going with the lowest bidder(which is not necessarily the best value), the biggest advice I have is to make sure that all your ducks are lined up on your project before the contractors ever get near your site.  Finalize everything you possibly can.  Have all your model numbers, construction documents, and materials either already there or on a timeline that will not waste any time for your contractors.

For a contracting crew time is literally money.  Don’t waste their time(or their gasoline), and they won’t waste your money. Corrections, changes and afterthoughts will cost you.  The smoother you can make things go for your contractors, the happier they are.  If you are the kind of person who tends to wibble, make sure all your wibbling is done before they come near your project.  You only have so much money. You don’t have room to dick around.

Materials:

Not only do some materials cost less than others(obvious) but be aware that some materials come with hidden costs that others don’t.  For example- Some refrigerators cost more than others. But once it arrives, a refrigerator is a refrigerator.   The worst thing that happens is you have to hook up an ice maker.  However,  getting a lot of elaborate ceiling lights means someone has to install them all. There’s *nothing* wrong with wanting a dynamic lighting plan.  But understand that overall, that’s going to cost you more than a pricy fridge.  Understand that a curved surface on a countertop is going to cost more than a plain rectangle.   You have to balance dramatic design with realistic expectations. Also, not *every* element has to be the most dramatic thing ever. If you try to do that, the space becomes too busy, as elements compete with one another for visual room.  Understand what is most important to you, and be willing to let the other stuff go.

Design/Architectural fees/permits.

Permits are permits. They cost what they cost.

Fees are something else.  This can be really confusing to people because every design professional has their own way of figuring this out.  There is no One True Way to figure this one out and you have to find a design professional who uses a system that works well for you.  Some residential projects are priced by the job. Some are priced as a percentage of total budget. Some people charge an hourly rate.  Still others use a system like 30% over net.  And to make it more confusing, some do a combination of all of these things.  I used to do residential stuff with a combination of a flat rate + hourly.  I don’t do that anymore, and instead do a percentage of total budget.  30% over net is *VERY*  common, but I don’t use it because I think it sets up an adversarial relationship with the client.

How to minimize the cost:

Ask how the design pro figures out the cost. A flat fee or a straight percentage is going to be more predictable on the front end than an hourly or a 30% over net arrangement.  It’s a gamble. You have to know how to play your odds.  The former two may sound like the cost more initially, but if the project is complex and subject to a lot of changes, it might be cheaper in the long run.  If what you really need is just a couple hours of consultation, an hourly rate might be your best bet.   Honestly, I’d give an example where I thought 30% over net was better but I just don’t have any. I know it’s a standard residential practice. I just think it’s dumb.

Unlike the service triangle, this is not a simple “pick two” situation.  This is a little more complex.  But if you play your cards right and balance the three elements, it will cost you less in the long run.

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4 Comments

  1. Very good post. All clients should read this. I think it’s difficult for some clients to feel comfortable hiring a designer. Many women in the area I live in feel they should be able to do it themselves, so therefore, I should work for next to nothing. I know that makes no sense at all, but I used to run into that a lot – especially when I first started out.

    What do you do when your client has no budget?

  2. Tell them that when you have no budget, you get no design. I realize that what they show you on TV is meant to stretch a dollar but there’s a limit. Not everything is a handicraft project that can be done in a weekend. Design does actually cost money.

    I don’t have the patience *at all* for people who think that because they saw it on TV somewhere it means I have to work for free.

    I paid those dues a LONG time ago.

  3. I think I confused you. Yeah, I get those calls (which I run from) where I’m expected to work for “free.” But others are very willing to pay, but they have no idea how much to budget. On commercial projects, it’s easier to come up with a square foot cost. But residential is different. They really need more hand-holding. I’m thinking of moving from an hourly rate to a cost plus. But I’m thinking that will make clients (who have no idea how much to spend) that I’ll boost the cost to make more money. Am I being paranoid?

  4. You’re right. You confused me. 🙂

    See, I’ll consult for an hourly. But for an actual project? I pull a straight percentage of projected budget off the top. Done.

    Your fear is *exactly* why I don’t use a cost plus system. I think it sets up an adversarial relationship with the client. The client then gets to worry over every nickel and dime, convinced somehow that you’re pushing for a more expensive option to boost your own cut. And for some reason, “this is standard industry practice” doesn’t really sound like viable reasoning. The truth is, if I were the client, I’d think the same thing. If the designer makes more money themselves by pushing option a over option b, what incentive do they have to look out for the client’s best interest?

    With a straight percentage of projected budget, I don’t *care* which option they pick. It changes nothing about my bottom line either way. I am under no incentive to try to upsell. (which is good, because I am so not a salesperson.)

    The reasoning for cost plus as far as I’ve ever been able to tell, is it gets the designer better relationships with high end vendors. I haven’t figured out the benefit to the client yet, but there is a benefit to the designer on the back en for high end stuff. Vendors (and we all know how insane some of the prices for furniture, etc. can be) fall all over themselves trying to get a designer to use their stuff, because it keeps the prices as high as they are.

    I prefer to create and maintain good relationships with my vendors by just being a reasonable human being, but not every vendor appreciates this approach.

    As to how do I get clients to come up with a budget? First I tell them they have to. You’d be amazed at how many people don’t know you have to do this *before* you start.

    Second I ask them to come up with two numbers- how much they’d LIKE to spend, and what the maximum amount they *CAN* spend on their project. I also have them create a wish list of things they want to have, and to make a note of the things they feel they MUST have. I compare the numbers to the list, and tell them what’s realistic and what isn’t.

    My current clients in Florida had no idea what their money would get them. I used exactly this approach and we came up with a budget without any problems at all. My fee was a straight percentage off the top, which removed any worry about upselling. My job is to keep them on budget- not to upsell them to increase my own percentage. (besides this means I get to spend less time listening to sales pitches from vendors. Hallelujah.)


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