Nobody likes getting ripped off, and as design/build architect Alan Freysinger waited his turn at a local design review board session, he realized in a flash that he had been. Among those seeking plan approval that day were a couple of Freysinger’s former clients—and they were presenting one of his designs.
“We had met with the owners and charged them a relatively small amount for the preliminary design,” says Freysinger, who assumed that this would lead to a design/build contract for his Milwaukee-based firm, Design Group Three. Instead, he says, “they took the drawings, finished them to a buildable level, and elected to act as their own general contractor. The board loved it, but we got paid $700, and the owners walked away with the design. So we didn’t make any money on it, really.”
The experience served as a wake-up call. In response, Freysinger and partner Robert Prindiville developed a new way of charging for design that not only protects their creative output but also boosts their closing ratio, helps manage their workflow, and allows the design side of the business to generate a profit.
Demonstrating the Value of Design
A perennial hurdle for any supplier of architectural services is that clients tend to think that ideas are free, so design should be cheap. “For the most part, I find that when people hear the dollar amount for stand-alone design services, they think, ‘Man that’s a lot of money. I could do something else with that,’” Freysinger says. As every producer of intellectual property knows, ideas are hard to protect, and architects and designers face their own version of that problem. “The minute you charge someone for a design, they have a right to the design,” Freysinger says. Because he had charged his clients a nominal fee, “they were entitled to a copy of the drawings.”
In walking off with Freysinger’s preliminary design, the clients were skimming the icing off the cake. “People come to us for our design expertise,” Freysinger says. “We’ve done this kind of work long enough that we can solve the puzzle creatively and relatively quickly. That’s what sets us apart from everyone else.” Architects may charge by the hour, but not every hour of an architect’s time is created equal: The initial design solution, which may take days of sketching and mulling but also may come in an instant, is where the greatest value lies.
To keep clients in the bakery long enough to sell them the whole cake—a full design/build package—Freysinger and Prindiville resolved never to release usable plans until after the owner has committed to have Design Group Three build their project. The key to the company’s process is delivering only enough design in the early stages, free of charge, to establish the scope and cost of the project and build enough trust for the client to sign a construction contract.
Making Architecture Inseparable
At his initial client meetings, Freysinger gathers the owners’ ideas and goals for their project and sets a date for a second meeting at Design Group Three’s office. “For the second meeting, we put together a quick concept sketch—drawn to scale, but freehand. Everything we do to that point is a free service. We consider it kind of a loss leader, but we figure that we haven’t invested more than two or three hours at most at that point,” he says. When the meeting ends, the drawings stay with the architect.
Along with the concept sketch, Freysinger says, “we put together a written cost proposal that includes an outlined scope of work and what the costs are, plus or minus between 5% and 10%.” At that point, he says, “if they want to work with us, they have to financially commit. I tell people it’s a starting point; it’s the beginning of design development. But our concept sketches get out on the table what the potentials are. And it gives them a sense of what the budget’s going to be, barring any changes they make to the scope of work.”
If clients like what they see, the next step is to sign a contract that includes all further design and construction. “We’ll do a much more thorough survey of the house and detail everything out from there: selections, a design developed in much greater detail, all the elevations,” Freysinger says. “At that point, it’s a package. They’ve committed to work with us all the way through the project.”
After some 20 years of working with this process, Freysinger is familiar with its advantages. “One is that we don’t give away any preliminary design,” he says. "We own the design." It also identifies serious prospects and gently encourages them to move ahead toward construction.
“I tell people, ‘You need to decide right up front whether you’re comfortable working with us—our process, how we do things—before you sign the cost proposal,’” Freysinger says. “But once you sign that proposal, you want to do the project. That’s a commitment. The process weeds out people who aren’t serious very quickly, and that saves a lot of time.”
It also gives the construction side of the business a view over the horizon. “Once people commit to our cost proposal and to starting on design development, now we have our work queue filling up with projects we know are going ahead,” he says. That’s a great help in planning the construction calendar. He acknowledges that a client could always back out of the construction contract, but the likelihood of that is minimal. “In 20 years, that’s happened maybe three or four times.”
Selling the Whole Package
Perhaps as important as protecting the company’s preliminary design from getting poached, the process also circumvents any haggling over architecture fees by folding design development, working drawings, and oversight into project overhead. Clients need never see a line item for design; it’s just part of the package.
That addresses the problem that got Freysinger’s attention in the first place: Clients recognize and appreciate architectural quality, but they have a hard time paying for it. “Most people don’t realize the value of good design,” he says. “Some do, but generally, if you were to tell clients what the line-item cost for design would be, most of them would choke on that number.”
When design is simply a part of the project’s overall cost, as it is with any other consumer product, that problem essentially disappears. “We’ve had people say, ‘We can’t afford it. We love your design, but we can’t afford you,’” Freysinger says. “Well, okay; I can accept that. But our close ratio is still one out of four to one out of five, so we must be doing something right.”