How would you charge for a plan?


agr361
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Not sure if this is the right place for this, but Im meeting with a builder here that builds in several cities around Texas and is wanting me to give them a price to buy outright a plan(s) I would design from them. They would pay me once, and use that plan(s) over and over again; they would want CAD linework and have their in house draftsman update the plan to reflect legal description/site plan.

 

I've never done anything like this as far as someone buying a plan and using it over and over. Normally, smaller local builders would pay me a fee for design of one plan, and any duplicate would of said plan, I would charge half the fee if there were no changes...

 

 

Would you all even consider something like this?

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Imagine a customer walking into a car rental place and saying, "I'd like to rent a car for a week. But I'll pay you four, heck, FIVE times the usual rental fee. In exchange, I get to drive the car whenever I want -- forever." How would you suggest the car rental company respond?

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1 hour ago, agr361 said:

I've never done anything like this as far as someone buying a plan and using it over and over. 

 

Would you all even consider something like this?


Never. 

Tell them how you typically do business and that you charge full price for the first set, and 50% for every subsequent copy. 

Any changes to site conditions and legal info can and will be done by you. 

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1 hour ago, Richard_Morrison said:

Imagine a customer walking into a car rental place and saying, "I'd like to rent a car for a week. But I'll pay you four, heck, FIVE times the usual rental fee. In exchange, I get to drive the car whenever I want -- forever." How would you suggest the car rental company respond?

 

I disagree.  It's more like a customer walking into a car rental place and asking to buy the car...something that I believe any car rental place would happily do for the right price.

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37 minutes ago, Alaskan_Son said:

 

I disagree.  It's more like a customer walking into a car rental place and asking to buy the car...something that I believe any car rental place would happily do for the right price.

I can see that argument, but it's a different business model. Rental car companies first rent the car repeatedly, and then sell the car at somewhat less than market value, recouping some of their original investment. But if they weren't making money on the rentals first, well beyond the difference between the acquisition cost and the sales price, it would not be a sustainable practice. They could, of course, just sell the car for an inflated price, but it would have to include all the lost revenues from the potential future rentals, or it would be just a stupid business practice.

 

In this case, the builder would be hoping to save money beyond a repeated license fee, by paying an inflated initial cost, but undoubtedly much less than the repeated use would cost. I guess there is a price that it would make sense to sell the design outright, but I think the usual business practice would be to have the license and control of the design maintained by the designer. There might be a sliding scale for reuse, say: 50% for first, 40% for second use, etc., down to some percentage that everyone thinks is fair for larger quantities.

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Greedy bottom dollar builder looking to beat everyone else down so he can make more $$$$.  Life is too short to waste with people like that.

 

You need to figure out what you are worth and what you bring to the market.  Of course a builder will see your work as buy once, wash and repeat.  If he wants to draw up his own plans, then fine.  I don't see this as a good way to market yourself.  Allowing this guy to get you to operate this way can be perceived that you are:

 

1. desperate for work

2. easily pushed into doing work for cheap

3. not sure that your work is worth fighting for.

 

I went down that road before.  Was desperate.  Allowed a builder to sweet-talk me into the idea of $1000 per set of plans.  He said I could knock them out as fast as I wanted so I could make bank.  Yeah, right.  And he wanted me to act as the agent for the clients.....that's time spent in the planning department, health department......all away from my desk.

 

I nearly went under.

 

Now I charge 5 times that at a minimum and I am never the agent.  Things are working great.

 

I wish you every success in the decisions in front of you.

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If you refuse to sell it along with a re-use fee, he will simply have his guy re-create it and you will be left with $0.00 (save all the copyright B.S. he would NEVER win that and if he did, to what cost) I have sold the rights to my plans many times to builders for that very reason. If I say no, they will find someone to say yes, and I get nothing. 

 

I am very upfront and honest with them. If my normal fee to purchase the design/plan is $1200, and I would charge say...$450 for derivatives..then I will want the original $1200, plus an additional $4500 for the 10 plus derivatives he will build over the course of time. If he balks at the $5600, I kindly...sometimes not so kindly because I am blunt as a spoon...remind him of how much money he is going to be making off my design. 

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I do the initial plans at a set price.

After that, if there are only title block changes (Lot owner, SBL, Street Address) it's $1,200 plus printing charges.
If there is anything more involved but the basic house stays the same its an hourly fee of $125.00 plus printing charges.

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Not that this has much to do with this thread, but I have a story about using plans over and over.  I have no idea if the builder made a deal with the designer or not.  However.... 

 

There was a subdivision up near Gravenhurst Ontario where a builder paid for one house plane them built 20 or so houses with the one plan.  Each house identical to its neighbour, not even mirror builds.  He had one hell of a time selling them.  I bet the designer is laughing to this day.  It looked ridiculous.  I wish I had taken a picture of the street.  

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I would not give a discount of more than 5%-10%.  The contractor is not giving 50% off on the repeat houses he sells so why should you? If he decides not to use you and goes to some one else he/she will pay the full price for plans anyway and you didn't work for minimum wage.. The economy is booming so take advantage now keep your prices intact.

My 2 cents

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8 hours ago, Alaskan_Son said:

 

The contractor has to do dang near 100% of the work all over again, that's why. 

Another way to look at it is that he is selling the house, and making his profit based on the market value, not his actual labor & material costs. So why should your price be based on the actual labor, either?

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  • 1 month later...

I agree with most here.  I like the idea of 50% for reuse to include redoing the site plan and all the lot coverage calculations, That one sheet can get very involved.

I'm okay charging a flat square foot price fee for the first one, which in my area is between $2.00 and $3.00 per square foot depending upon the complexity of the home, and which jurisdiction it is going to be built in. Here in Western Washington, the local jurisdictions are getting Code drunk with power and making everyone's life miserable with complex requests for over reaching information. In some jurisdictions, it can take over 100 hours to create a permit set of plans!!  I talked with one local Architect using Autocad that say's he is billing for 300 hours!  Which is why Building Designers like myself are getting most of the work.   Start to finish, including lateral and gravity engineering, the cost is around $10k for new plans that are 2,800 s.f.

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If you are building a plan database and selling multiple copies of the plan, develop a system that values a plan based on whatever factors allow you a net profit after the time you put into it.

 

If you are offering your services as a draftsman, find a rate per sqft that covers your expenses, pays you a reasonable salary, and gives you a reasonable profit margin.

 

If you offer your services as a creative designer, there are several ways you could charge; percentage of building budget, hourly, fixed rate, or any combination.

 

But all of these things have in common a need to track time, expenses, overhead costs, and many other metrics that are specific to your business model.  This is something you need to develop over time, often through trial and error.  You may want to hire a business consultant if you need help getting started on this.

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Whatever your normal fee is multiply it by 1.618. That is the Golden Mean. They must have developed that for a reason. Wait, maybe I was thinking of the Golden Rule?

 

Either way, if you don't get your larger fee right away you will lose out. If he starts reusing your design and makes ever so minor adjustments you will have a tough road ahead to claim any copyright infringement. How unique is your design? Where did you borrow your ideas from. If you really want to make money by repeat use of your house design, develop them yourself.

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