You’ve landed an opportunity to work on a multifamily development—exciting, right? But if you’ve primarily worked on single-family homes or smaller commercial spaces, the idea of pricing a large-scale project like this can feel overwhelming. Multifamily developments involve more units, more coordination, and potentially more revenue, but figuring out the right pricing structure can be tricky.
The good news? Pricing multifamily developments isn’t as complex as it might seem. Once you break it down, there are tried-and-true strategies that you can tailor to your business model. Let’s dig into the different ways you can price these projects while ensuring that you’re fairly compensated for your time, effort, and expertise.
Understanding the Scope: Breaking Down the Phases
Before we get into pricing models, it’s important to understand how multifamily projects are typically structured. Unlike smaller residential projects, multifamily developments have distinct phases, and each phase comes with its own set of tasks and challenges. By breaking the project down into these phases, you can more accurately estimate the time and resources needed, which in turn helps you determine your pricing.
Phase 1: Schematic Design
This is the conceptual phase, where the design vision is born. You’ll be working with the developer to establish the general look and feel of the project. In multifamily developments, this often includes creating design schemes for the individual units, as well as for the common areas like lobbies, hallways, and amenities. Depending on the size of the project, you may be creating repeatable designs for dozens—or even hundreds—of units.
While it might seem like you can simply copy and paste designs for the individual units, don’t underestimate the time needed to get the details just right. You’ll need to consider functionality, finishes, and customization for different types of units (e.g., studios versus two-bedroom apartments). Plus, the common areas will require more attention, as these spaces often need to be unique and visually impactful.
Phase 2: Design Development
Once the overall design direction is set, it’s time to refine the details. In this phase, you’ll be finalizing materials, finishes, and technical specifications. You’ll be working with architects and contractors to ensure that your vision aligns with the building’s structural and functional requirements. This is where you’ll also create more detailed drawings, including floor plans, elevations, and possibly renderings.
Expect to spend more time here than in single-family projects, especially when it comes to common areas and amenities. Each space may require multiple revisions to ensure everything works cohesively. This is also the time to get clear on furniture and fixture selections, which brings us to the next phase.
Phase 3: Construction Documents
This is the heavy-lifting phase, where you produce the detailed drawings and specifications that contractors will use to build the project. You’ll be coordinating with multiple teams, from electricians and plumbers to builders and inspectors. The sheer volume of documentation for multifamily projects can be staggering, so you’ll need to account for the time it takes to generate and revise these documents.
It’s critical that you build in time for revisions. With multifamily developments, revisions can come in waves, especially as the project progresses and different teams need to tweak the plans to fit real-world constraints.
Phase 4: Procurement
If you’re handling procurement, this phase can be both lucrative and time-consuming. Procurement involves sourcing and purchasing furniture, fixtures, and other finishes for the project. In large-scale developments, you’ll likely be dealing with bulk orders for the individual units and more specialized pieces for common areas.
Procurement is also where you can increase your profit margins, as many designers mark up the cost of furniture and fixtures. But remember, procurement management comes with its own set of responsibilities—such as managing deliveries, handling delays, and troubleshooting any issues with the products—so make sure you’re charging accordingly for this additional service.
Pricing Models for Multifamily Developments
Now that we’ve broken down the project phases, let’s talk pricing. There are three primary ways to structure your fees for a multifamily development: hourly billing, per square foot, or as a percentage of the construction cost. Each method has its pros and cons, and what works best will depend on your preferences, the project size, and the client’s expectations.
Hourly Billing for Large-Scale Interior Design Projects
Hourly billing is a flexible option, particularly when you expect the project scope to evolve over time. If you’re working on a project where revisions and changes are frequent, this method ensures that you’re compensated for every meeting, drawing update, and consultation.
The downside is that clients can sometimes get nervous when they see the hours (and costs) piling up. It’s important to be clear with clients about how quickly those hours can add up and to provide regular updates so they know where their money is going.
Per-Square-Foot Pricing for Multifamily Developments
Per-square-foot pricing is a simple, transparent way to charge for large-scale projects. This method is particularly popular with developers because it provides a straightforward way to estimate costs. You can adjust your rate based on the complexity of the space—charging more for custom-designed common areas and less for repeatable unit designs.
For multifamily developments, you might consider offering different rates for residential units and public spaces, since the level of detail and customization in common areas is usually higher.
Percentage of Construction Cost as a Pricing Strategy
Charging a percentage of the total construction cost is another common method, particularly for larger commercial or multifamily projects. This method ensures that your fee is proportional to the size of the project. The typical range is between 8-12% of the total construction cost.
The percentage model works well when you’re involved throughout the entire project lifecycle, including the design, documentation, and procurement phases. It’s a good option for multifamily developments because it scales with the project size, and if the construction budget increases, so does your fee.
Estimating Hours and Managing Scope in Multifamily Projects
One critical step in pricing multifamily developments is estimating how much of your design work will be repeatable versus custom. For projects with multiple units, you’ll likely have core designs that repeat across many spaces, but areas like lobbies, hallways, and amenities will require additional attention.
To price effectively, break down your estimated hours based on the different tasks and unit types. For example, calculate how many hours it will take to design a unit, then multiply that by the number of units. Make sure to account for how much customization each space will require—common areas and unique spaces will typically take more time than individual units. Once you’ve done that, you can apply a multi-unit discount to remain competitive, which developers will appreciate.
It’s also essential to define your scope clearly. This means outlining exactly what’s included in your fee—whether it’s initial design, revisions, or meetings. A clearly defined scope prevents scope creep and ensures that everyone is on the same page. When additional requests arise, you can offer upsells for out-of-scope work, such as custom furniture design or additional revisions.
If you’re working on a particularly large project, it’s a good idea to consult with legal professionals to ensure your contract is solid. This protects you and your business from potential disputes down the line, especially if the project involves a lot of customization or moving parts.
Insights from the Community
Now, let’s check in with some seasoned designers from the Interior Design Community to see how they handle pricing for multifamily developments:
- @idgreenlist: “For our full team, it was about 385 hours for 75 apartments and a four-story building. We invoiced by phase: schematic, design development, construction documents, and furniture design.”
Phasing the project and invoicing progressively helps keep cash flow steady and ensures you get paid as each phase is completed. - @studio_mills: “Top down is the construction cost, and aim for about 8-12%. Bottom up, I work out the number of drawings required. The time lies in revisions.”
Using a percentage-based fee, along with factoring in the number of revisions, ensures you’re charging appropriately for the scale and complexity of the project. - @raygeorgeinteriors: “I’m working on a five-story building and charging hourly.”
Hourly billing can work well for large-scale projects with variable scopes, but it’s essential to keep track of hours and communicate costs to the client regularly.
Moving Forward with Confidence
Pricing multifamily developments might seem daunting at first, but once you break it down into manageable pieces, it becomes much more straightforward. Whether you go with hourly billing, per-square-foot pricing, or a percentage of construction cost, the key is to stay organized, define your scope clearly, and manage expectations with your client.
The scale of these projects also offers fantastic opportunities for growth, so price smart, manage the project phases effectively, and you’ll be set up for success. Now, go out there and tackle those big projects with confidence!