FEATURED ON THE SHOW: 

INTERIOR DESIGNER’S GUIDE TO CONSTRUCTION MANAGEMENT

WHAT YOU’LL LEARN IN THE EPISODE:

HOW THE SIZE OF YOUR TEAM PLAYS A ROLE IN YOUR PRICING YOUR PROJECTS

HOW THE COMPLEXITY PLAYS A ROLE IN PRICING YOUR PROJECTS

HOW THE CLIENT’S BUDGET PLAYS A ROLE IN PRICING YOUR PROJECTS

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Today’s subject is the number one question I consistently get asked: How do I price my construction projects and what is the best way to go about it?

I’m excited to share the parameters, scope and steps you need to go through to price your construction projects correctly in today’s episode.

I understand why this is a scary step. You are projecting costs that may run weeks, months, or years, and you want to make sure your bottom line is covered. 

I feel that this is a different process than your decorating projects. One, because there are just more moving parts, and the way things are set up as far as teams and your position in those teams. 

I would love to tell you that I have a calculator that could price every project down to the nickel, and you will be making the profit you have earned through your experience. However, that will not serve you well because I have never had two projects price out the same way. I know that is frustrating. When I went to flat fees this year, I went over all of my data, and while some projects were close, there were none that were the same. That almost caused me to steer away from going to flat fees. 

The reality is you have to be very thoughtful when pricing out your construction projects. And the reason is that construction projects have so many different variables from job to job. 

Let’s start with the team. 

There will probably be three different ways you will work on a construction project.

The first is that you are running a team. When you are the one running the show, that requires a lot more time, and they are typically smaller projects.

Then there are larger projects where it’s a larger construction team. Say the homeowner brought in the contractor, and this contractor has 2 or 3 teams that he assigns to different projects. So that’s a different set of scenarios. Typically they are the ones running the jobs. So my role is different on those projects, meaning I don’t have to be the point person for everything on that job. It’s a different amount of time than if I were to run it on my own. 

The third type of project you may find yourself in is a new build. That is with a very large construction company. And there will be an assigned supervisor for that project. And your role, again, will be defined differently. Therefore, your fee structure will be different for each type of these projects. 

The second variable to look at is the complexity of the project. 

Let’s take bathrooms, for example. No two bathrooms are alike. You need to be super careful in assuming one bathroom project will be like the next. Even if they are the same square footage – that doesn’t matter. What matters is the complexity of the project. 

Another component – let’s say you’ve done lots of kitchens and bathrooms, and someone asks for a family addition put on the back of the house. You cannot compare that project to the square footage of a kitchen you’ve done. The complexity is totally different. You aren’t adding plumbing and putting cabinetry on all three walls.

Another variable to consider when pricing your project is the budget created by the client. 

Using a bathroom as an example, I’ve done bathrooms for 50k, I’ve done bathrooms for 150k, and I’ve done bathrooms for 200k. They’re all bathrooms. But the budget was different. Some of it was in the complexity – moving walls, moving plumbing. Some of it was in the fixtures they selected. A bathtub can range from a couple of hundred dollars to tens of thousands. So I want you to be very careful when you’re estimating your design fee AND when you are estimating the profit on this project because I want you to get involved in purchasing. 

I want you to focus on the profit you will get from these projects. Remember, profit comes from purchases as well as the times. These two components must be considered when estimating jobs and deciding whether to take them. 

Then there is experience. 

If you are new in this business, then you are likely going to spend more time accomplishing the same tasks as I am. I’d love to tell you it’d be different, but the fact of the matter is experience saves time.

This is one of the reasons I went to a flat fee. I realized I was being negatively impacted by the fact that I could do something that used to take me several hours, that I would have billed, and now do it in nanoseconds, that I didn’t even bill for.

Here’s the thing about projects. Every project has predictable steps, such as design, demo, drywall, paint, etc. What isn’t predictable is the length of each of those steps, so when someone calls you up and asks for an estimate, you need to dive into all of the project’s specifics. 

I hope this episode helps you enough so that you can sit down and start noodling numbers based on your experience, your past projects, where you live in the country, the type of team you’re going to be working with, the complexity of the project, the budget the client has set, and break it into the stages to come up with a number you’re comfortable with knowing you have to add some in the end to cover the surprises that absolutely will show up at some point during the project!

If you feel like this is making your head spin, check out my course, Interior Designer’s Guide to Construction Management!