By HESTIA Design Collective
Choosing to invest in a new building or interior design project is a huge decision. Often, the budget process can be daunting, especially if you don’t have a working understanding of what your design costs will be. One of our missions at HESTIA is to help demystify what it’s like working with designers, including how fees are determined and structured. We want everyone who wishes to improve their space to have the knowledge they need for a successful design project.
There is no single or universal rule regarding how a designer’s fee is calculated. Each project is unique so the fee structure will be, too. Fees are impacted by factors such as project size, type, complexity, and schedule, as well as the experience level and renown of the designer.
Whether your project is your home or a place of business, and whether you’re looking at new construction or doing a renovation, we’ve broken down the different ways fees are typically calculated. Learning these general rules of thumb, along with some insights into how HESTIA calculates our fees, will set you on a smart path forward.
Building Your New Home: Fees for Single Family Residential Architecture
For new construction single family homes, most basic architectural fees will typically fall between 8% to 12% of construction costs. As the level of service provided by the architect increases, the design fees will, too. It’s not uncommon for projects on the “high-end” side of the design spectrum to yield fees closer to 20%.
Here in Loudoun County and the Washington, D.C. area, construction costs often start around $350 per square foot. That means that a 2,600 square foot house (the average size of a U.S. home in 2019, per the National Association of Home Builders) would cost approximately $910,000 to build and its design fees would likely range between $72,800 to $109,200 for custom residential.
Renovations almost always cost more per square foot than new construction, so they will come in at the higher end of the 8% to 12% range for a couple of reasons. First, before an architect can even begin designing the new work, they must document the existing conditions. This typically requires the architect to complete a detailed field survey of the building and translate the information into a usable computer model that serves as the basis of the new design.
The second reason renovation fees tend to run higher is because working with an existing house is unpredictable. Tying new work into an existing house is far more complex than building from scratch, and often, there are unforeseen complications. A great example of a renovation complexity would be updates made to the outside of the home or transition points between the existing home’s exterior and the new work. Enhanced detailing for exteriors requires specific expertise to execute well and ensure the structure is weathertight, which can be time and cost intensive.
Refreshing Your Oasis: Fees for Single Family Residential Interior Design
Sometimes people who build a new home may choose to hire an interior designer to finish the inside, rather than have an architect do it. If a project is only an interior renovation, either an architect or interior designer can do the work. In truth, there is some overlap between the work architects and interior designers can do inside a home, which means there can be flexibility to share or split the design scope to suit the homeowner’s preferences. While hiring a separate interior designer may reduce the architect’s fee, that reduction would probably not be enough to cover the entire interior design fee because the two professionals will need working time to coordinate with each other. At HESTIA, we are both architects and interior designers, so our architectural fee covers the full building design including interior finishes.
When HESTIA’s scope of work encompasses interiors only, we may choose to calculate fees either as a percentage of construction or on a square foot basis. The way we decide generally depends on whether the design includes furnishings or not, but other factors may also impact the fee strategy. When we calculate fees on a square footage basis, they typically fall between $12 and $18 per square foot. As an example, consider that we may be asked to provide interior design services including furniture for a 20’ x 25’ living room. Using our standard square foot rates, this 500 square foot space would cost somewhere between $6,000 to $9,000 to fully design and document, depending on the complexity of the space.
Furniture and accessories procurement is a separate piece of the puzzle and fee scope from interior design services and is always optional. In our practice at HESTIA, we charge a 10% administrative fee on the purchase price of furniture to compensate for our time, but because we receive a trade discount at most retailers and pass those savings on, it is still typically less expensive when we manage procurement on behalf of our clients.
Designing Your Dream Business: Fees for Commercial Architecture
Commercial projects like retail establishments, restaurants and workplaces often come with many more design requirements than single family homes or renovation projects. Complete design fees for even small commercial architecture projects will include the architect as well as a core team of other design consultants, which at the very least would include a civil engineer, structural engineer, and MEPFP (mechanical, electrical, plumbing, and fire protection) engineer. Depending on the type and size of the project, the core team may also be augmented by additional specialty designers such as a geotechnical engineer, landscape architect, sustainability consultant, lighting designer, foodservice designer, code consultant, or any number of others.
Because of the various designers and consultants needed for commercial projects, fees are almost always calculated as a percentage of the overall construction budget. Design fees for commercial projects will typically account for an increasingly smaller percentage as costs go up, so for a $1 million project, the architect’s fees may run about 6% or 7%, while for a $100 million project, the architect’s fees will run closer to 3% or 4%. These rates may be adjusted based on a project’s complexity and the level of coordination and service provided by an architect.
Upgrading Your Workplace: Fees for Commercial Interior Design
For most commercial projects, an interior designer is a specialty consultant brought on to do work in coordination with the architect. It may be helpful to understand that interior design as a standalone profession is constantly evolving. The training and knowledge of people who market themselves as interior designers varies widely and because of this, commercial applications in many jurisdictions do not recognize interior designers as licensed professionals, even those holding an NCIDQ certification. Most jurisdictions grant design authority to architects, whose licenses and qualifications cover life safety. Interior designers do add critical value to a commercial interior project. They craft the look and feel of a place, creating aesthetic qualities that reflect a company’s brand and ethos. Strong, thoughtful interior design can single-handedly shape a place’s character and identity, which in turn directly impact whether a design supports the business’ success or not.
For estimation purposes, calculating interior design fees on a square foot basis is the most straightforward and most commonly used method. It’s accurate to assume most commercial interior designer fees will fall anywhere between $5 and $15 per square foot before additional costs for furnishings and fixtures.
About Hourly Rates and HESTIA’s Balanced Approach
Sometimes, hourly rates are the most effective and best approach professionals use when charging for design time. A designer may choose this type of structure if the project scope is unknown when you start working together or if it’s simply their preference. Hourly rates are determined based on factors like the designer’s experience level, reputation, location, and overhead costs. Typically, they fall anywhere between $80 per hour and $300 per hour and perhaps more. Putting that wide range into context: an intern’s hourly rate would be closer to $80 while the rate for a senior principal at an established design firm would come in on the higher end.
In our practice at HESTIA, we prefer to charge hourly for early concept design work and then again for the construction administration phase of a project. Based on the needs of our clients and the project, we always specify our approach in the design proposal. Currently, our hourly rates at HESTIA are $120 per hour. We set this rate to reflect the fact we are a small, boutique firm with limited overhead expenses and with the acknowledgement that while we are licensed design professionals with many years of experience, HESTIA design collective is still an emerging business.
While estimating fees based on construction percentages and square footage assumptions are quick and easy strategies for getting in the right budgetary ballpark, at HESTIA we also always consider the actual number of hours we anticipate spending on a project when calculating fees. Our intent is to provide fair and accurate pricing that is specific to our clients and their projects. With fee transparency and strong communication, we can provide our clients with the best value and focus on the most important thing, which is delivering quality design.
Interested in exploring more? We recommend checking out this online primer on architectural fees.
Ready to get started with a project of your own? Read our blog post “Five Steps for Planning a Home Improvement Project”