Fees are fees- what does it cost to provide the service, and what profit and overhead do you need to account for?

It's a fee for service game- if you are intending to provide a "drafting" service- what are your competitors chargeing and for waht quality of service?  

If it's "engineering" which can be made up of both design/calculations and drafting, then what you charge your clients has to account for either the blended rates, or you charge differential hourly rates for the different levels of service.

Different rates, because that is what the market will require.  You may consider my case history when I started freelancing:
(a) started with one single rate as calculated from "rate to meet your needs" in all the "How to be a Consultant" books.  I got very little business because I was overpriced.
(b) Developed a graduated fee scale based on the type of work.  Low dollar drafting fees were in line with local market prices, and accounted for 60%+ of total work.  It paid the bills.  The sales gimmick was that the customer was getting an engineer to do this work, not a mere drafter.  "Engineering" work that required calculations and higher-education knowledge accounted for about 10%-15% of total work.  I charged a higher fee for that.  That segment was my "profit".  Seemed to work well enough.

The theory of the business is that I could build enough business that I would need to hire real drafters and pay them accordingly, then I could do more engineering work.  

TygerDawg

GMcD is right, and TygerDawg just proved.

Similar to Tyger, I have put together a 4-tiered pricing structure based on the complexity of service and amount of liability.  For example, you want a PE stamp, that is an egregiously high rate and once you require that, all my services are provided at the pay level, even basic drafting services.

Otherwise, I track my time based on the tasks I perform and bill my client those hours at that rate, line itemed on the invoice.  I also throw in a few "preapproved" surcharge fees based on their requests.  The rates pay the bills, the surcharge fees act as my profit.

--Scott

http://wertel.eng.pro

It should be.  You should use a drafter to draft, and use and engineer to design.  They shouldnt be making the same amount of money.

I'll often do CAD stuff hourly (works out to a lower rate) and do design/engineering for a quoted cost (works out to a higher rate unless I've overlooked something in the quote or if things in the project get ugly [it happens]).  I'm never the lowest bidder (anymore), but often get the bid.

Jeff Mowry
www.industrialdesignhaus.com
Reason trumps all.  And awe transcends reason.

In the civil/structural world, we like to breakdown to various levels of engineers and drafters.  Senior drafter's rate is somewhere between project engineer and engineer's rates.

Principal engineer, Senior engineer, Project engineer, Engineer
Senior designer, Senior drafter, Drafter

Most, if not all, work requires a professional engineer's stamp in this industry.

Where PE stamp is an option, discount is fair for projects where stamps are not required.

I just knocked off a little report for litigation and I typically charge $120/hr but for the CAD work, I charged for 1/2 time at full rate and 1/2 time as non-chargeable...

If your billing time by the hour, then the billing rates should definitely be different. Engineering billing rates should be higher than drafting.

I charge my (very high) hourly rate for the work I'm asked to do.  If someone wants me to do drafting then I tell them that they can get drafting for 1/5 of my hourly rate, but if they want me to do it I'm not very fast, very thorough, or or very experienced, but I'm also not giving out coupons.  Some people still want me to do it, most appreciate the silliness of having me do drafting and go elsewhere.

David

David Simpson, PE
MuleShoe Engineering
www.muleshoe-eng.com
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The harder I work, the luckier I seem

Thank you everybody,

That's kind of what I had in mind.  Engineering/Consulting fees at one rate and drafting at a lower rate. I think is fair enough.

Regards

For myself I charge the same rate for everything and anything. They want my experience, education and judgment that is what they pay for.

I cannot divide engineering from drafting. When I am making a drawing I am also analyzing the final work and calculating the dimensions, details etc.

If the project has a lot of drafting work involved I’ll hire a drafting firm and their costs are disbursements. However driving back and forth to their offices checking their work and other issues relating to getting the drawings done are at the standard rate.

The decision to hire a drafting firm or do the work myself is based on the least cost for the client.

Rick Kitson MBA P.Eng

Construction Project Management
From conception to completion
www.kitsonengineering.com

RDK, I agree with you if it is a one-man office.  The fee should be based on your own rate times a fair markup while maintaining the total design fee competitive.

Distinguishing engineer and drafter rates apply to companies with both engineers and drafters.  In this situation, it doesn't make sense to bill the client at drafters rates when engineers' drafting work.  Usually when a company hires an employee, he/she is designated either engineer or drafter.  Each employee usually designated with a single rate based on their classification.  At least it is true in the structural side of this business.

That is my practice expanded to the multi person office.

It is also my experience that people have charge out rates based on either their classification and or individual pay structure. Some offices have a senior engineer rate for everyone in that classification other have individual rates depending on the individual’s salary within the classification. (The deciding factors are usually ease of accounting practices or keeping individual salaries confidential.)

This is Ok as long as the firm is assigning people to the job based on the needs of the client and not on keeping revenue as high as pssable.

Rick Kitson MBA P.Eng

Construction Project Management
From conception to completion
www.kitsonengineering.com

It is very common to have multiple fees, based on function/skill. For example:
- engineer (senior, intermediate, junior)
- drafter
- document control
- procurement
- secretarial/business administration
- project manager

For each project, we assign the function/people as required. Not all projects use all of the different people/functions.

"Do not worry about your problems with mathematics, I assure you mine are far greater."   
Albert Einstein
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I agree with RDK.  

Originally I differentiated between drafting time and engineering time but quickly switched to an average of the two.  It was impossible to separate, since I do both simultaneously, as well as overly complicated to estimate and bill.

However, when I hire a drafter or subcontract the drafting, I do charge a lesser rate.

I like to have both fees, as well as administrative.  It allows me flexibility when preparing proposals and tweaking invoices to meet client expectations.

Don Phillips
http://worthingtonengineering.com

One benefit of having multiple rates is the ethics and legal issues of giving discounts.

If you have a written pricing policy showing multiple rates, it is much easier in a court of law to demonstrate that you did NOT give excessive discounts to a particular client because he's a friend or any other ethically-questionable reason.

Going rate with a 60% discount is a much more difficult sell than showing the hours at your different published rates even if the final dollar value is the same.

And although this may sound like a way to cross the line on ethical situations such as discounting or even kick-backs, it is not intended to be so.  This example is how you can win that bid without having to compromise your ethics by giving a 60% discount and when you get audited, it won't appear that way either because you are working to your published rates.

--Scott

http://wertel.eng.pro

Gentlemen, please excuse my probably silly for you question, but I live and work in another country and our system of calculating fees is different:
How do you define the amount of hours necessary for a particular project when you make the offer? And how the customer will be sure that you really had used this amount of time after completion of the project?

It is just curious for me, as I said we have different system.

I figure fees various ways and then look at the various results and see what the realistic fee is.  Fees are calculated based on area of a project, or percentage of estimated building cost, or estimating the amount of design and CAD time needed based on previous projects. I keep a chart of previous fees and how the projects fared and what the fee should have been.  A lump sum fee lets the owner know what the fee will be and assure he can afford it, but puts the designer at risk to loose.  At the beginning of the design just about every project looks simple as there is very little information on it. So a lump sum fee has to be on the high end to account for that risk to the designer.  I still like to describe the building in my fee proposal so it is clear when there is scope creep. With lump sum fees there are projects I win and others I loose.  A fair way of compensating is naturally on an hourly basis.  It is good to give the owner a range of the anticipated fee.  That may back-fire though, if the design time spent is clearly above the range.

Eric McDonald, PE
McDonald Structural Engineering, PLLC