Charging for design
As those of you who have attended one of my CEDIA Design & Documentation courses will know, this topic is the bonus section I give at the end of that course. It always piques people’s interest and gets debate going at the end of a long period of concentration studying design methodology and drawing techniques.
Currently we use and recommend a percentage model, based on charging a five per cent fee on the total value of the project. The interesting thing here is our take on this has changed over time. As our business moves forward into the world of writing tenders and working on commercial projects we have had to rethink this percentage based model.
In essence there is little wrong with the percentage model, it still has the same drawbacks that it only really works for projects with values of between about £50,000 and £250,000. Above and below this is where it begins to breakdown, with smaller projects not generating enough revenue to cover the cost of design and larger projects generating a figure too large to justify as a spend on design alone.
We wanted a fairer way of charging for design which actually reflected the amount of work involved, rather than a percentage of the total project and we spent months agonising over the mechanics of how a new system would work.
“After much deliberation and testing the new model on past and current projects, we finally settled on charging a rate per drawing type.”
It quickly became clear that the fairest way to charge for design is to charge a small fee for the design of each piece of equipment in the project. For a floor plan this could be a price per device, for a rack elevation this could be a price per U and so on and so forth.
However, we wanted a simple way an integrator could easily calculate how much our design fee would be for any given project, without us having to provide a formal quotation for each and every job. This would then mean that any integrator could build a realistic cost for design into their projects.
This is where the price per device falls down, as there are simply too many variables to be able to provide an easy calculation method.
This got us thinking back to a project we did for a commercial integrator at the end of 2017. That integrator already outsourced design and told us point blank that if we wanted to win their business we would need a better way of charging for design than the percentage model explained above and used by us up until now. This particular integrator was accustomed to paying a fee per page and said ‘if we could give a competitive price per page they would give us a test project’.
We knew from this project that using a price per page model worked pretty well for room by room schematics, which is what we provided for the test project we completed for that integrator. What we didn’t know was how well this model would work for floor plans, equipment elevations and rack layouts.
“It quickly became clear that the fairest way to charge for design is to charge a small fee for the design of each piece of equipment in the project.”
After much deliberation and testing the new model on past and current projects, we finally settled on charging a rate per drawing type. This basically means we now have one rate for floor plans, another rate for equipment elevations (actually two depending on whether they are typical elevations or wall specific), another rate for rack layouts, etc., etc.
This new fee structure makes it easy for integrators to calculate their own design fees. For example, by simply counting up how many floors they have in a project, they can work out how much we will charge for designing and creating General Arrangement drawings and Pre-wire information. The same goes for calculating how much we will charge for designing and drawing up equipment elevations; they just need to count up how many wall mounted devices and any wall specific elevations required and voila, there is our fee. The model carries through in a similar way for rack drawing and schematics and is now also used for all the cinema design and documentation we provide.
We have also come up with a simple excel sheet which integrators can use as a tool to generate a design fee to include within their proposals and quotations. We have even built catalogue labour items which integrators can use directly in their favourite AV quoting software. So now there is an easy way to get the fees for design right every time!
Keith Jones studied Product Design at Central St. Martins where he graduated in 1996. He has had a successful career working in numerous high end audio outlets, culminating in owning his own successful AV installation company from 2001-2008. After a career break he started Jones designs in August 2009 which morphed into limited company designflow, in 2015. Designflow aims to increase awareness of design in AV and help integrators win more jobs and create proper documentation for them.