DESIGN COMPENSATION AND FEES

In order to adequately determine a billing rate, the interior designer must consider all of these items except ________.

• The designer's salary rate

• A reasonable profit percentage

• Competitive markup rates

• Overhead expenses

The direct personnel expense is used by design firms to _________.

• Determine a proper salary multiplier to establish a fee basis

• Clarify direct labor on an income statement

• Estimate overhead expenses for the quarter

• Estimate salary increases for the next year

This staff member's time is rarely considered billable to a client.

• The owner

• The office administrator

• An entry level designer

• The project manager

The contract says, "The fee for this project will not exceed $ 7500. You will only be billed for actual time worked." This statement indicates which kind of fee basis?

• Hourly rate

• Lump sum rate

• Square footage factor

• Value added fee

Mr. Miller has never worked with an interior designer before. His interior designer—Jones—must consult with an architect, provide construction drawings for non-load bearing construction, and prepare specifications for the construction work and furniture items for Miller's summer house. As described, which fee method should best compensate Jones for her time?

• A fixed fee since the job is well defined

• A consultation fee since all Jones is doing is consulting

• An hourly rate with a flat fee for the preparation of the construction drawings

• A square foot fee that is based on similar projects

The project will require the designer to drive 76 miles round trip between the office and project site numerous times; consult with a contractor already chosen by the client in the client’s neighbourhood; consult at least three times with planning officials; and, of course, preparation of drawings and specifications to be used by the client and contractor for purchasing. The best fee method for this project is _________.

• fixed fee

• square footage fee

• cost-plus a 25% markup

• an hourly fee rate

The fixed fee method is a satisfactory method of charging fees when _________.

• A large amount of like items are to be purchased

• The amount of goods to be purchased are small in comparison to the time involved in the design project

• When it is easy to determine and control the time and requirements of the project

• All of the above

The value-added fee method __________.

• Bases the fee more on the designer’s experience than the amount of time to do a job

• Means the fee is determined by a value added to the project

• Can only be used in architecture since value is added to the building

• All of the above

Which of these is not considered an indirect job factor that can reduce the profitability of a design project?

• Overtime work by designers responsible for the job

• A special permit to unload furniture from delivery trucks

• Preparation of contract documents

• Client requests to include new areas in the project scope

The biggest disadvantage for a sole proprietor in using the cost-plus method is __________.

• The client may find merchandise at retail stores and not buy items from the designer

• The mark-up the designer is receives from some vendors is too small to make a profit

• The client may not like merchandise ordered and want to return it

• Sole-practitioner designers are limited as to from whom they may purchase goods