Design Retainer Fee?

Discussion in 'Landscape Architecture and Design' started by mcw615, Mar 4, 2010.

  1. castle555

    castle555 LawnSite Member
    Messages: 127

    I talked with a person the other day who's a horticultural designer and does seminars -she charges 120.00 for the first visit based on getting burned too many times. Otherwise no design.
    I've been doing design as part of my business for over 18 years.
    I have a pricing link on my website if you are interested to see; Located first page, lower left area "Design Pricing" click on link. I also remain flexible about this -I don't think you need a contract for a design process to work.
    Just let them know what it costs -People who respect this are invariably going to be your best customers.
    I sometimes work with a California Licensed Landscape Architect, and he charges about minimum 3500.00 to 5000.00 for a residential plan. His fees include rough cost estimates, site inspections, irrigation plans plant selection and placement, and full blueprints. Also, his commercial plans are way more $$ than that.
    When I go out and consult a plan, I spend about 1-1/2 to 2 hours with a client and take photos and measurements. While there are relatively small jobs that are not complex where you could charge about 275.00 to 300.00,
    I figure out what to charge based on the size of the property, and the complexity of the design -i.e. how much creativity is required, specifications, drawings, blueprints, swimming pool, irrigation plan, and computer 3-d views. I ask a min. 10% of that number -it's usually 85.00 to 100.00 if I have to start from scratch. Some people present an unfinished plan and I don't have to spend as much time making it workable.
    Most importantly, all of my design time is figured on the basis of $25.00 per hour right from the start anyway, and I can charge $25.00 per hour for any design revisions past the presentation, or second meeting where revisions can be made, as this reduces the possible abuse of my time by the customer continually making changes (refer to pricing link on website). A good designer will eliminate this from happening by "nailing" the design concepts the first time out.
    Then if they waver, I know I have a "tire kicker" who's 'just looking'. If they choose somebody else in the meantime, I'm not out for my time. If we continue the process they will get more than their money's worth for a working plan.
    I do not charge for time when I make a mistake, or when I do not clarify something that they wanted that I should have -design is about 80% listening and probing the customer for needs. I do place some disclaimer notes regarding easements, field measurements, errors and omissions -etc. especially for hardscapes and slopes.
    I have discounted the cost of plans if they sign a contract for my landscape company to also build it. Get the job!
    Essentially -they are hiring a professional and have to pay for the service.
     
    hort101 likes this.
  2. mcw615

    mcw615 LawnSite Senior Member
    Messages: 473

    $25.00/hour??? That is my costs for labor+labor burden. I need to charge $50.00/hour for design to recover overhead, profit, direct design costs software etc.

    Design is still a very small part of my business, so if I do get something, I charge accordingly, but I am lenient as to I am going to be spending more time then usual until I get better.

    I got a call last friday for a homeowner that 'wants to do something with their back yard and would like some landscaping, but they are pretty busy with work and ball practice and would like to know how much we would charge.' That's like looking for a needle in a hay stack. I knew I was going to be in the area last saturday morning and figured I would atleast present my face and give my company some good PR. I am learning their is a class/category for each type of prospect customer and you need to place then in one on their seriousness. They just wanted to hear we will charge $X,XXX.XX plus a $XXX.XX budget for plant material.

    I think I am going to give a prospect 30-45 minutes of free time to show up give an introduction, ask about their requests, and explain how as a landscape professional where we go from here and sell a design then the job. If they are not interested in spending the couple hundred in a design, then they can't be serious enough to be willing to spend at minimum a couple thousand dollars. Then you get the well we just want to know roughly how much it is going to cost, we don't really need a design because if its too much we will wait or do it ourselves. I then if I feel giving a comfortable ball park range will give what I feel our costs are, say $5,000 then give the rough price range of 20%-25% both ways, $3,750.00 as the minimum with $6,250.00 about the maximum greatly varying.

    I have learned most price shoppers have in their mind the costs and it is usually about half to the actual. I do explain the benefits of having a licensed and insured landscape contractor, a design etc. That way they are not just shocked about the rough price and they are chasing you off their property with a baseball bat. They think it is something you just show up with a shovel and wheelbarrow and a 1-2-3 step process to get the job done. I brief the 1-2-3-4......120-121-122 steps, considerations etc. That way they just don't think we are making huge profits or ripping people off, I can walk away and they know I am serious, and landscaping is not as easy as they thought.

    Guess that's the name of the game.
     
  3. castle555

    castle555 LawnSite Member
    Messages: 127

    While I wrote a lot in that earlier post, there is a variable as to pricing. And, I didn't convey that there is a minimum charge first, based upon the property size -as adjusted accordingly, where some designs start at $1000.00, with 10% of that down, and then it goes to $25.00 an hour, especially for revisions or further work, details, specifications, etc. Irrigation plans are about $35.00 per hour for an irrigation system designer (commercial) in CA. Here, if you are a licensed Landscape Architect, who's avocation is landscape design, then the fees are going to be about 5000.00+ per plan, or a percentage of the build cost per square foot on most commercial projects. Are you charging what a licensed professional charges?
    You should at least be (IMHO) a combination of some sort of Horticulral college degree, Certified Nursery, a Master Gardener, and a draftsman with an irrigation system background to do that, or what separates you from the amateur? And what about swimming pools? There's a whole other specialty area of knowledge and expertise (which I do as well in design and execution, with a working knowledge of hydraulics).
    If you can get that kind of response to a design fee in your area, and paid for it, more power to you. I fully understand the amount of knowledge and expertise it takes to create a comprehensive 'working' landscape plan that if a homeowner had to do themselves -they would charge you $100.00 per hour!
    I know you take it seriously, and it is right to charge no less than it is worth.
     
  4. AGLA

    AGLA LawnSite Bronze Member
    Messages: 1,774

    Reality is that there is no standard pricing for design. I don't know where you come up with all of these numbers.

    It is very complicated, but it is based on what a particular designer is worth to a particular client on one side of the coin. The other side of the coin is a lot more complicated because there are a number of ways a designer can get paid and there are lots of opportunities that are worth investing time and effort if you are in the right position to gain from it.

    Some design work simply is routine landscape practice that no customer is going to pay for simply because other landscapers will write up a proposal to do the work without putting them through the extra expense. Then they walk away wth the job and the profit from it while others totally miss the opportunity because they are trying to charge a fee for what is essentially a basic planting that the other guy just explained and described in his proposal.

    As soon as you you start putting a price on design (as a design/build), you have to realize that you are cutting off your ability to service a big portion of potential customers, so you absolutely have to have access to that demographic that will pay and the skills to compete with other professional designers because they are only hiring one designer.

    A design/build company makes far more on the "build" than the "design". Design is the bait, not the fish. There are three reasons for a design/build to charge well for design. The first is because you are wasting TOO MUCH time designing for people who are not serious enough to follow through with hiring you to do the build. The second is to cut off the lower end of YOUR market because you are at max. production and you can stick with only the most profitable jobs without supplementing. The third is because design work is taking up too much of your time that you need to spend somewhere else.

    When, as a design/build, you get a paid design job by someone who is going to hire somebody to build it, it is your build job to lose. You have had the opportunity to build trust and familiarity with the client while no one else has. It is pretty unlikely that they'll go with astranger after that. This is why landing the design job is much more important than getting the most possible $$ for making the plan.

    Now if you are design only, you either have to get paid well just for the plans, or you have to act like a general contractor and take full responsibility for hiring subs, quality control, and manage the whle job for a percentage (no one gets 10-20% for drawing plans, it is to manage the project). That is difficult work with high liability and you earn every penny.

    If you only get paid for plans, which is currently what I do, you have to be selling something that the customer feels they can't get from a design/build because the design/build will almost always be a heck of a lot cheaper. We like to think it is because we are better designers, but if we are honest with ourselves we know that it is more often because they get comfort from the fact that we are independent and don't have much to gain by steering them in any particular direction - simply there is less reason to distrust us and then they can shop our plans to competitive bidding. It also seems like a lesser commitment (they feel like they almost have to commit to you for the build, at the time they hire you for the design when you are design/build).

    Bottom line - there are more landscape jobs out there to build that won't require a plan than do. A design/build design usually costs less than a design only design. The more designs you land as a design/build, the more build you'll be doing. There is more money in build than design. Everything is competitive and variable in price based on what else you bring to the table to compete with.
     
    hort101 likes this.
  5. castle555

    castle555 LawnSite Member
    Messages: 127

    AGLA. Excellent and articulate response, and you are right on target. I have to agree with all that you have said -it is how things 'work' out there. And as for the cost of design -it is for precisely whatever the designer wants to charge. As part of my business I fully recognize that to get that design/ build the cost of the design may be included in the contract even as 'free design' , if we get the build ...so as you well stated it is better business to size-up the potential client for their response to what you have to offer and then deliver accordingly. In my own business I set some numbers as general guidelines for those individuals who just have to know what it costs, and while I know my time is worth $75.00 per hour, my experience in California as a licensed contractor, landscape and swimming pool designer, the market (the consumer)is not really going to pay that. Only on very high end clients does the pricing I mentioned start to work. Thanks for bringing those points up.
     
  6. AGLA

    AGLA LawnSite Bronze Member
    Messages: 1,774

    There is always an arguement between getting paid for your time and investing your time to get work.

    Another arguement is that your time is always worth $x no matter what you are doing. Well it might be worth that to you, but it only matters if it is worth that much to whom you expect to collect it from.

    Most contractors would serve themselves best by not having an initial "consultation fee" unless they are getting too many calls to chase. Many projects can be efficiently negotiated without a drawn plan (eliminating a fee for a plan). When a plan is to be drawn, it is important to have some kind of fee in order to avoid providing the free plan for others to follow and to isolate yourself as the only contractor they are currently dealing with (chances are that they are not paying six different people for plans).

    Most design/build contractors are going to have a very high closing rate on the build part of design/build if they do the design. It is more important to get that design than to make money on the design part of the job because of that.

    It might sound great to say that you charge $75 per hour for design, but if it is followed by designs totalling $200-$300, you have to ask if something that you can measure up, draft, & design in two or three hours really worth $300 to a potential customer. The follow up to that is who will pay for it? An experienced contractor should be able to tell the prospect roughly what he is going to do and write up a proposal that lists the materials he is going to use and get the contract signed for any job that can be "designed" (measured, drafted, and planned) in three hours.

    Selling design is a tough business because there is a point where design goes from unnecessary expense to something of value to the person who has to pay for it. The more the cost goes up, the more the prospect gravitates to reputation, portfolio of built work, and credentials and the less creedence they give to potential.
     
    hort101 likes this.
  7. mcw615

    mcw615 LawnSite Senior Member
    Messages: 473

    You made some very good points. I don't feel charging for a 'initial' consultation is the best business practice unless you are flooded with work and people demand your services that much. I feel if you are going to bid on a job or anything you are going to spend an hour meeting with the prospect then probably another rough hour at the office preparing the materials. So showing up for 30 minutes to introduce yourself is good for business as the prospect can put a business with a human face.

    I don't feel you should try and sell them a full design IF IT'S NOT NECESSARY. Design should be done on every job with a list of plant materials and location to be done. Put everything on paper or it's your word versus theirs!

    NOW.... it's what and how much design is NEEDED. If it is a simple install, then do a simple design. The design is structure to the contract and can save your butt, and take pictures before, during, and after - ALWAYS.

    A small bed where you are only using maybe 2-3 different types of shrubs, and maybe a crape myrtle or something you can draw out in 30 minutes not even and just print it on 8.5x11 black and white and insert it on the bid/estimate.

    To sum, don't try and sell more design then needed because that's how you will loose out on jobs. And if you ever feel you are the landscape professional and they may be working with Jim's Lawn Care and Landscaping, explain how your expertise will be more beneficial to them, your horticulture background etc. Jim cuts grass and can dig a whole and put a plant in but knows nothing about it and the list can go on.
     
  8. andyslawncare

    andyslawncare LawnSite Senior Member
    Messages: 812

    I have hired a freelance landscape designer to take care of my design work. I pay her a flat rate of $200-$300 for a scale design. When I pay her, I have a base drawing, and a few sketches; all drawn to scale. If my customer changes their mind, I can change an area in a few minutes with no problem. I don't make money on the designs we offer, but I am charging a retainer fee to cover my designer. I visit the property two times. One time with the customer to gather information, and another time with my designer. I then leave her to do her work. Its too much for me to handle to go back several times, but I do go 3 times. The third time is to submit the finished drawing, and if they want changes, there can be a charge, depending on what is not right for them.
     
    h&m GARDENS and hort101 like this.
  9. GJB Construction

    GJB Construction LawnSite Member
    Messages: 1

    Very good insight.
     

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