Determining Fee for Services

[J. O. R.]

I?m in the process of writing a business plan to open my own Electrical Engineering Firm in the Northwest Region of the US. The most challenging aspect of this is to determine the value of my services. I?m interested to know is there a typical method of billing for engineering design services by a licensed engineer: Time & Materials, Fixed Fee, or a percentage rate based on the project cost? How do you determine what this fee is once the method for charging is determined?

Also, since I would be the only employee of the company, I would be performing both the drafting and the engineering services for clientele. For billing purposes, do clients expect a reduced hourly cost for time spent drafting vs. time spent performing the engineering services?

Any insight is greatly appreciated, thank you.

James

 

[jim dungar]

Also, since I would be the only employee of the company, I would be performing both the drafting and the engineering services for clientele. For billing purposes, do clients expect a reduced hourly cost for time spent drafting vs. time spent performing the engineering services?

IMHO
One employee = One hourly rate.

But, why would you want to quote projects on a T&M basis? I can understand doing it sometimes but in general why not quote a lot price with a T&M adder if needed.

 

[charlie b]

The best chance for profit, and the highest risk for loss, is the fixed price. Just make sure that you pin down the scope of work that you propose to deliver for that fixed price. Also, include in your proposal a rate for T&M work that exceeds your original scope.

One more thing: I believe that employment law requires a company to use its resources to pay employees first, as the highest priority. You say you are the only employee. OK, but don?t forget that you still have to pay yourself. You won?t succeed if you disregard that fact, if you say to yourself that you?ll just work extra time on weekends for no extra pay, just to get the project delivered.

 

[petersonra]

Your rates will have to be competitive with firms in the area offering similar services. Find out what/how they are charging and act accordingly.

My guess is you will end up with several different plans, depending on the customer. For instance, some customers hate T&M, others realize it is often the most cost effective way to go.

I?m in the process of writing a business plan to open my own Electrical Engineering Firm in the Northwest Region of the US. The most challenging aspect of this is to determine the value of my services. I?m interested to know is there a typical method of billing for engineering design services by a licensed engineer: Time & Materials, Fixed Fee, or a percentage rate based on the project cost? How do you determine what this fee is once the method for charging is determined?

Also, since I would be the only employee of the company, I would be performing both the drafting and the engineering services for clientele. For billing purposes, do clients expect a reduced hourly cost for time spent drafting vs. time spent performing the engineering services?

Any insight is greatly appreciated, thank you.

James

 

[Denis]

company B offers bids, estimates, and T&M

company D offers bids

company M uses a "menu"

company P negotiates before & after

 

[831]

I?m interested to know is there a typical method of billing for engineering design services by a licensed engineer: Time & Materials, Fixed Fee, or a percentage rate based on the project cost? How do you determine what this fee is once the method for charging is determined?

Good luck w/ trying to get some underling "lowest price" mentality architect to buy off on the percentage of construction bit in a fee proposal!

do clients expect a reduced hourly cost for time spent drafting vs. time spent performing the engineering services?

Not trying to bag on you, but what was your experience w/ this issue in the firm where you have done work before? If I'm an owner or architect, I'd expect to pay something less for drafting, sure. I'm (speaking as an architect) not used to composite rates; I want drafting and design separated.