Design/Build Pricing

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Fortunately, in most markets, more homeowners need design/build services than there are professionals available to provide them. Any of your standard marketing practices can be effective in bringing you a new type of business. Public relations, marketing back to your old clients, advertising, direct mail, do whatever has worked for you in the past. The key is to get the word out. At the same time, work to sell these new services to any new clients who contact you for work. If your work typically does not involve any designs (or you provide the design work for free), use your sales call to your client as an opportunity to sell the value of professional design services to them.

Selling your design services. Don't give it away. Remodelers in your area (yourself included) may provide "free" design work for their clients. In most cases, people get what they pay for.

In a strong market, there is rarely a need to give away your valuable work. Initially, you may need to do some work at a reduced rate or on spec to develop your reputation, but don't get caught up doing this indefinitely. You must convince your client of the value in having a project professionally designed, and that they need to pay for that value.

Determine what extra value you can bring to your clients through design/build and use that as a sales tool. When you are determining those added values, understand how they compare to your competition. If you are competing against another firm that does not have professional design capabilities, stress the value you bring to the project that your competition doesn't. When your client is considering design/build against the traditional design/bid/build scenario with an outside design firm, talk up your strengths. Can you provide the services quicker? Can you give them more for their money? Can you give them a better design? Research your competition and know how you compare.

Charging for your work. You can bill your design work by the hour, with or without a maximum cost. Design work can be performed on a fixed-cost basis. Some firms calculate the design costs as a percentage of the total contract value. Only you can determine which structure is right for you and your clients. At the upper end of the spectrum, the hourly rate or a percentage may work well. At the middle and lower range you may need to do your work at a fixed cost, or include it as a part of the construction contract. You can take a nonrefundable deposit for a project that will cover the cost of your design work and give you a commitment from the client. This type of arrangement protects you: If you do not enter into contract for the construction, you are still compensated for your design time.

Preparing the design contract. You need to have a contract for any work you provide your clients, and design work is no exception. The type of contract should reflect the way you intend to do business with your clients. If you are billing on an hourly basis, make sure to include your billing rates, what services you are providing, the payment schedule, and any limits on the scope of your work. If you are billing at a fixed rate, it is critical to clearly define what you are providing, what you are not providing, and the payment schedule.

One important issue to address is your liability for the design. If you are designing and building the project, any problems in the design become your problems, and you, as the contractor, are responsible for correcting them. If you prepare a design and the owner hires someone else to construct it, you may find yourself liable for design problems that arise during construction. By including a clause in your design contract stating that you will not accept any liability for work constructed by someone else, you can protect yourself against this type of liability. When developing your contract, be certain to consult an attorney to make sure your "assets" are covered. You can purchase standard contracts for you to use or use in helping develop your own contracts from various organizations, including the American Institute of Architects (AIA) and the Design Build Institute of America (DBIA). Several recently published books on Design/Build are additional valuable sources of information on this rapidly expanding sector of the remodeling industry.