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Reselling a Floor Plan


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#1 Warren Ducote

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Posted 06 September 2019 - 04:28 PM

I have been drawing house plans for the better part of 40 years and I have a first I would like comments on. I just recently finished a home for a customer. Very nice home. I charge by the square foot under roof for my plans. The customer paid me $4600 for the plans. They brought it to their builder and the builder has another customer that saw the plans and fell in love with it. That customer called today wanting to set up a meeting for next week to discuss a “few changes” they will want to make on the plans. How would you guys and gals handle what to charge for a plan that has already been drawn and may require just a few hours to make a few changes. Anything less that the $4600 that the first customer paid would be a disservice to my first customer that worked with me for a couple of months to develop this floor plan. I have never resold plans so not sure how that should work.

 



#2 Mark Petri

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Posted 06 September 2019 - 04:37 PM

That is a great problem to have. Most would probably say to charge the same and consider it a sales commission. I try to be fair in those situations, but every job around here has so many changes due to snow and wind loads, and the engineering that goes along with it, plus the fact that none of the land is flat so no two sites are alike.

 

It probably makes sense to meet with the new client first. Tell them your fees for the first time around. Then, tell them you'll need to review the changes desired and any particular needs for their version. Take a little time to consider the changes, which may have a ripple affect. Are there variations due to the site- are there issues that will cause some variations with how it sits on the property or is a site plan needed as well? Often when someone tells me they have it all sorted out, or only want a few small changes that does not end up to be true. Then consider what your insurance, overhead, and design knowledge is worth as well. Also, it may really make your first customer's day if you give them a gift, discount, or other thank you that shows your appreciation.


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#3 Gary McKeon

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Posted 06 September 2019 - 05:26 PM

I would add to what Mark said in saying that what the first client paid has no bearing on what the second one is charged. Find out exactly what they want to change and go from there. As designers we have a tendency to under-value what we do and look to give 'other' people a break. Even if they didn't ask for or expect it. But, a break from what? Us- making a living? I'll give that 'break' to my wife instead for all she has to put up with. 

Charge what you charge and stop cutting deals. You don't have to.


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#4 Dennis Hilborn

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Posted 06 September 2019 - 07:54 PM

I occasionally make a resale.  Sometimes to the original customer.

I look at it as almost pure profit.  My only cost is a meeting, draw site, run prints.  I have what I consider a fair fee for that.  Then is there are any changes I keep track of my time and charge what I want to make per hour. 

Occasionally I have someone want to retain the copyright.  That just about doubles my fee.  Half the time that stops that.


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#5 Kevin Rabenaldt

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Posted 07 September 2019 - 02:34 PM

Remember this.  If or when the new customer sells their home, whatever profit they make on their home, they have no obligation to share with anyone, even those who gave them a break.  Charge at least the same.  Remember to tell them and the builder that the plans are copyrighted automatically by law, so they can not use any part of the them, even if they have an designer draw from a sketch on how they remember the design.


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#6 Don Gibbons

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Posted 07 September 2019 - 04:50 PM

A different customer buying a plan that I have already done pays the current rate(I will occaisionally sell older plans). If the client who originally had the plan done wants to build it again then they only pay for the changes.


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#7 Rick Kingsbury

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Posted 09 September 2019 - 08:53 AM

I would charge them the same rate as the first customer plus the revisions at your normal rate. 

Why should they expect to pay less?

Your time is valuable too.


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#8 Brian Berzinskis

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Posted 10 September 2019 - 04:12 PM

I actually do a lot of work with builders that tend to re-do their plans and make changes for different clients. So it is basically like re-selling the same plan. I like you would price the original out to the builder at a certain price per square foot for the first design.

 

Then from there I would charge them a repeat fee plus revisions not to exceed the per square foot price for a new project. Revisions are typically billed hourly based on the time that SoftPlan records in their drawings. I don't log my hours for meetings, telephone calls, emails and everything else. So I just take the hours recorded in SoftPlan and multiply times 2. Plus I try and make sure that I am always closing my SoftPlan files when I am not working on them to keep these numbers fairly accurate. 

 

The other thing to consider if you are licensed and carry insurances is that it is a liability and there is a cost associated with that. So that is why there is a repeat fee and it is not just free.


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#9 Dennis Hilborn

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Posted 10 September 2019 - 04:30 PM

I would charge them the same rate as the first customer plus the revisions at your normal rate. 

Why should they expect to pay less?

Your time is valuable too.

It's already drawn.  If they take no changes you are basically only out the time it takes to change the names and dates, then print costs.

I can't in good conscience charge them the $1 per sq. ft. that the original customer paid for all my time it took to work up the plan and draw const. drawings.  I can't see any of my customers paying that much either.



#10 Rick Kingsbury

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Posted 11 September 2019 - 08:19 AM

If I was the first customer I would be pretty upset that the second guy got the same plan for less.

It just seems unethical to offer the plan at a discounted rate to other clients.

I could see discounting the price if the original client was using it for multiple projects.


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#11 Kevin Rabenaldt

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Posted 11 September 2019 - 09:56 AM

The good and bad of the copyright law and ethics.  If you have created a house design from scratch, then you have created a copyright to that design and any derivatives of that design.  The fair thing to me is to charge the same for each client.  If you design for a builder and unless you give a written ownership of the design to the builder, then the designer still owns the design.  This is how it was explained to me many years ago at a National Builders Conference from a legal perspective.  If you have to go to court over any of this, good luck.  Courts don't always get it right and it takes money and good legal help to ensure you are protected legally.  Many builders think since they paid for the design it is theirs.  However, that is not how it was explained to me. Since I am not an attorney what I have just expressed means nothing.  I do explain this to all my clients.

 

I will charge my clients a design fee for a new design.  If the same builder uses that same design, I charge a lesser fee because I want their repeat business.  At the same time, I will not sell this design to anyone else just out of good will with my clients.  I may take elements and use in another design however.  Everyone's situation is different, so use what seems ethical to you.  Just remember, everyone is looking for a good deal.


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#12 Tom Rogers

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Posted 01 October 2019 - 11:02 AM

Late to the party on this but I have in my contract that I will not use any custom plan for a client within a certain radius of the site (usually 30 miles) .  Then I have the right to charge what I want, and is known that their plan maybe become a portfolio plan down the road and not worry that the original client is going to drive by their home in the same town. 


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#13 Warren Ducote

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Posted 01 October 2019 - 02:41 PM

When I shared this question, I was led to believe by the builder that he had a customer that just loved the plan and wanted to build it as is. I had issues with this because I did not want to have my original customer becoming upset with me for selling their dream home to another customer which I never have done. Long story short, when I met with the new customer, they wanted to make substantial changes and flip the house. What a pain.  We even added bedrooms in the attic space along with dormers. My concerns were unfounded. Totally different house.  All’s well that ends well.



#14 Mark Petri

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Posted 01 October 2019 - 04:04 PM

Warren,

 

I find that is usually what happens. "I love it and only want to make a few little changes" often means, "I like what you've done, I want to change everything"!


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#15 Kevin Rabenaldt

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Posted 02 October 2019 - 11:49 AM

Most people do not understand the whole process of building a house.  They take a complicated process and grossly simplify it.  Seemingly minor changes create a wave of revision. 


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