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Calculating Hourly Rate and Fee Proposal (Overheads (Institute…
Calculating Hourly Rate and Fee Proposal
Hourly rate
30% of overheads get built into hourly rate
Let client know what your hourly rate is even if you are charging a fixed fee
Make sure you use time sheets
Fee structure
% fees based on construction budget
Risky because budgets are unknown
If construction costs increase, designer fees increase (bad for client)
Lots of unknowns
Cost per square meter
Based on hourly rate per square m
Only really good for commercial franchises
Hourly rate
Never take on a project that is just an hourly rate
Has potential to blow out
Only really works if you give an estimate up front
On you if you go over the minutes/budget
Fixed Fee
Normally how you would operate (Jacqui's preference)
Estimate cost of each stage x hourly rate = fixed fee for each stage of project
i.e. concept development takes 12 hours x $80 per hour = $960
% over costs
Designer is charging a percentage over the cost of the product
Risky because some clients will stop after design phase
Used when doing solely procurement for example
Combination rates
Where you use a combination of the other methods
Need to be clear with client that this is the method you're using
10 - 20% of income needs to go back into business
GST
Only need to claim GST if earning over $75,000 a year
GST in Australia is 10%
Can claim GST back on products
Need to complete Business Activities Statement
Don't do this unless you have to
Calculating hourly rate
52 weeks in year
-4 weeks holidays
minus public holidays and sick days = 46 weeks
46 x 5 days = 230 days to earn target income
Overhead of 10 days to get jobs, do taxes, training etc. = 220 days (rule of thumb)
Daily rate = $227.27 for $50,000
Overheads
Institute Registration
Insurance
Office rent
Training
Service bills - phone, electricity
Internet connection
Vehicle costs
Depreciation on assets
Stationary
Building Codes subscriptions
Magazine subscriptions
Promotion and Marketing
Need to keep copies of everything/logbook of driving etc.
$50,000 + 30% (overheads)
Daily rate = $65,000 divided by 220
Daily rate = $295.45
Hourly rate = $295.45 divided by 7.5 hours = $39 hour
INcluding overheads and profit
$50,000 + 30% (overheads) = 20% (profit) becomes $78,000
Roughly equals $50 per hour
Fee proposal
Don't do any work at time of fee proposal
You are only stating your fees
Do not do any work until fee proposal is signed
Never take a verbal agreement of anything
Take payment before commencing work