Are designer's rates and contract reasonable?

4 years ago

Hello,

We are hiring a designer to come up with drawings, purchase materials, and project manage the renovation of a Manhattan studio apartment including gut renovation of bathroom and transforming kitchen into a laundry room. (Yep our coop approved!)

We received a contract from one we like. What do you think of the hourly, commission, and termination clauses below? I have nothing to compare to so please educate me. The hourly for Manhattan seems incredbly reasonable, but I don't know about the commission fee. The termination seems stringent.

Thanks!

Billing

All services will be billed at a rate of $175.00 per hour.

All purchases of materials, products and services made by designer for client will be purchased leveraging any Trade discounts available and will have a 25% commission.

During the development of the Project, Method and Moxie shall make a reasonable amount of revisions requested by Client without additional charge, but if the revisions are requested after approvals by Client, standard hourly rates will apply.

Termination

In addition, this agreement may be terminated at any time for cause by either party notifying the other party in writing of that party’s breach of the Agreement and giving ten (10) business days for a cure, after which the notifying party may terminate if there has been no cure of the breach. Causes for termination shall include, but not be limited to, failure to perform any duty pursuant to this agreement in a timely manner and postponements of the Project for more than 60 business days in total. While reserving all other rights under this Agreement, in the event that the Project is terminated, you agree to pay Method and Moxie for all services rendered through the date of termination, for any purchases by Method and Moxie of merchandise and construction pursuant to purchase orders approved by Client, and for our expenses.

Just a pick of a small bathroom to throw in to this post!

Master Bath · More Info

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Comments (7)

PRO
Kristin Petro Interiors, Inc.
4 years ago
This seems standard. Their hourly rate is the same as mine. Their markup is average. Their termination clause is similar to mine.

I charge for all time spent, so the fact that they are willing to not charge for some revisions is a benefit to you.
Kendrah
Original Author
4 years ago
Thanks for your insights Kristin. I appreciate it.
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PRO
Joseph Corlett, LLC
4 years ago
Does "project manage" mean hiring the subs? You'd have to have a contractor's license to do that in Florida.
Kendrah
Original Author
4 years ago
"The 25% commissions on product procurement are going to end up putting her in the hole, with all of the problems that has today."

@Charlie, can you say more about why that would put her in the hole? I think I am missing something. For example, if she purchases a $1000 sink, let's say it takes her 4 hours researching, ordering, chasing down the order, multiple calls because it is delayed, arranging delivery, etc, plus she gets $250 commission. She would make $700 on the hourly fee for the procurement plus the 25%, totaling $950. The sink ends up costing me almost double, and she makes half. And that is on a rather inexpensive object.

@Joseph - This is in New York City. Project management means creating and adjusting an overall budget, helping to hire a GC for the project, meeting with them and subs weekly or as needed to discuss progress, changes, issues that arise, communicating with the coop building management, NYC DOB, filing for permits, being present for some inspection meetings, placing and tracking all procurment orders.

Some designers I have spoken with do not do this. They just come up with ideas and drawings and then they are done. They can circle back around if the design needs to be changed. One woman I spoke with who works this way did connect me with a freeland project manager she works with regularly. The project manager does all the work above for $165/hour, including procurement but without a commission.
PRO
Kristin Petro Interiors, Inc.
4 years ago
My markup is 20% and I have had a profitable business for 17 years. Let's assume the designer knows how to run hers. However, when I sold furniture (I only offer new construction/remodel design now), my markup was 38%. I do not charge my hourly fee to manage purchases (checking on status, confirming deliveries, etc). My markup covers the cost of my time to do that. You may want to confirm with your designer about what she does and does not charge her hourly fee for.

In general, her project management is similar to mine. I do not hire contractors nor do I schedule them, but I meet with them as needed.
Kendrah
Original Author
4 years ago
Kristin, Thanks for clarifying your billing structure - that you did not bill hourly to manage purchases. I assumed that this designer charges hourly for the purchase plus 25%. If it is only the commission, that is quite a deal! I will need to clarify if I proceed with her. Luckliy I have found three more architects / designers since posting this and hopefully will have different contracts to compair.
Helen
4 years ago
last modified: 4 years ago
I did a gut remodel with a designer and I was charged between 15% and 20% for purchases - new furniture was 20% above her trade price and 15% for stuff like tiles.

She also charged me a flat rate to do what is called a PlanCheck in Los Angeles which is submitted to the permit office. It is a very detailed "blueprint" which was also used to get bids from the GC. I am not sure how you get a true bid from a GC without providing them with that kind of specific plan

She also charged me $2000 to provide me with the "design" - i.e. the design board which suggested specific colors, fabrics, styles etc. although obviously this was modified as we proceeded. If I went forward with her services this amount was recouped against her fees.

My contract also contained hourly rates but hers were a bit higher for herself but lower for her junior designer. However I was never actually charged any kind of hourly rate for her services even though she did help me with "space planning" and determining what I should keep and how I should arrange stuff.

She also acted as the "project manager" in terms of inspecting stuff and dealing with the GC. This was helpful since I really didn't have much knowledge so I wouldn't be able to now if my expectations were reasonable or whether something was wrong and needed to be corrected.

I didn't try to weasel her out of money - even when I located stuff I wanted to buy through my research I ordered through her so that she could earn her percentage. It almost always turned out to be less than I would have paid anyway because of her trade discount but I wasn't going to nickle and dime someone to save $100 or so.

The only thing I did exempt out from her commission arrangement were appliances because I was using my own expertise on those. But even though she wasn't being paid she did help me achieve a lower price because she knew the salesperson and so was able to get some concessions on that end in terms of delivery - even though she wasn't making money on those elements.

I am 100% certain that she made money from her business model as she has a successful business of many years and I don't feel cheated in the least. Her services were well worth it both in terms of providing me with a well constructed end product as well as an aesthetic one - neither of which I could have achieved without her professional services.