13 May Rookies pay a percentage, don’t be a rookie..
Here’s a tip for you:
As developers, it is our duty to monitor costs and not pay one cent more than we need to. If not, it can easily chew chunks out of your profit.
Other than paying sales commissions as a %, do not pay any other costs as a %.
Well, except stamp duty and maybe occasionally land tax, but that is the government (public enemy No 1) and I still haven’t worked a way around that.
Architects particularly love to try and charge a % – but a % of what? Often it is construction costs. The higher your construction cost, the more they get paid. It is an upward spiral of costs. No, insist on a flat rate per unit/townhouse.
That rate per unit/townhouse should reduce with size. There is not double the work on 8 townhouses as there is on 4.
The same goes for project managers. Do not ever pay a % for the same reasons. Set out the brief and decide on a set fee.
While I don’t recommend percentages on costs I am in favor of percentages on income where the incentive is to improve income – like sales commissions, profit share etc.