Hourly, fixed fee or percentage

One current survey answers most of the question

The AIA asks its Architecture Billings Index panel a set of special questions each January, and the January 2026 round covered fee methods (AIA, released 18 February 2026). Stipulated sum, or fixed fee, was used regularly by 73% of firms. Professional fee plus reimbursable expenses was used regularly by 61%, fee per square foot by 31%, percentage of construction cost with a cap by 27%, and percentage of construction cost without a cap by 24% regularly and 32% occasionally.

Asked which method had been most profitable over the past two years, 30% said fixed fee, 25% said professional fee plus reimbursables and 24% said hourly. Among small firms the order changed: 33% named hourly, as did 39% of firms whose work is mainly multifamily residential. The AIA’s consumer guidance describes hourly as “perhaps most widely used” by small firms (AIA, How to work with an architect).

Methods used and methods that pay

Two older AIA readings fill the hourly gap, and both reach us as secondary summaries. In a March 2024 special question, 93% of firms used hourly at least sometimes and 92% a stipulated sum, while 70% used fixed fee regularly against 42% for hourly (AIA ABI, March 2024). In the AIA Firm Survey Report 2024, covering 2023, stipulated sum and professional fee methods each took 32% of billings and hourly 20%, with hourly most likely at small firms (as summarised by Archinect; the full report is paywalled).

What each method actually prices

A fee structure is a decision about who carries the risk that the scope changes.

• Hourly prices time. The client carries the scope risk, and the firm carries the risk that the client questions every hour. It punishes an unclear brief less than any other method.
• A fixed fee prices an outcome. The firm carries the scope risk. It is the most profitable method for firms that write a scope tightly and charge for every change, and the least profitable for firms that cannot.
• A percentage of construction cost ties the fee to the budget. It rises when the client adds scope, which is fair, and when materials inflate, which has nothing to do with your work. It also gives the client a reason to suspect every specification. The capped version used by 27% of firms limits that exposure.
• Fee per square foot, used regularly by 31% of firms, suits repeatable building types and is a poor fit for a renovation whose area is fixed and whose difficulty is not.

One point on the US market needs stating plainly. The AIA publishes no fee schedule. Its consumer guidance describes typical ranges, and those are descriptions of what it observes rather than recommendations. We do not attribute any fee percentage to the AIA, and neither should your proposal.

Why hourly suits small residential scopes

A residential scope is rarely fixed at the first meeting. The client is a private individual deciding how to spend their own money, the existing building hides conditions until it is opened up, and the brief changes as the drawings make it real. A fixed fee agreed before any of that is discovered is a bet against the client’s future wishes, and the firm loses it often enough that hourly comes out ahead. The same survey supports the client side of this: developers and private individuals were rated “not very profitable” by 29% of firm leaders, second only to non-profits at 42% (AIA, 18 February 2026).

Larger firms on commercial work face the opposite conditions: an organisation as client, a documented scope before the fee is agreed, and a change-order process that protects the fixed fee. That is why 30% of all leaders name fixed fee most profitable while 33% of small-firm leaders name hourly. Both groups are right about their own work.

The hybrid: hourly until the scope is fixed, then a fixed fee

The structure that matches both findings is a hybrid, and it is what we recommend for small residential and interiors practices.

1. Stage 1, hourly or a fixed feasibility fee. Site visit, measured survey, planning check and a concept with two or three options, billed hourly against an estimate or as a capped feasibility fee. The client has spent a known amount and owns the result.
2. Stage 2, the fee proposal. Once the concept is chosen, the scope is written as a list of deliverables and exclusions, and the fixed fee or percentage is quoted against that list. The fee proposal builder produces the fee, the stage payments and a client-ready summary.
3. Stage 3, fixed fee or percentage with a change clause. Anything outside the written scope is priced before it is done, at the hourly rate from stage 1 or as a fixed addition. The fee proposal playbook sets out the wording stage by stage.

The clients that do not pay well

The AIA’s January 2026 round also asked which client types were not very profitable: non-profits led at 42%, followed by developers and private individuals at 29% (AIA, 18 February 2026). A residential practice works almost entirely for private individuals, one more reason to hold the fixed fee back until the scope is written and to charge for the feasibility stage rather than giving it away.

Negotiation is harder, which is an argument for structure

In the same survey, 56% of firm leaders said negotiating design fees is more challenging than two years ago, and 15% said much more challenging; among firms billing $1 million or more the share was 62% (AIA, 18 February 2026). A client who pushes on the total is easier to answer when the fee is in stages with a written scope behind each, because the conversation moves from “can you do it for less” to “which of these do you want to leave out”. Our article on what architects should charge covers the rate itself, and what scope creep costs covers what happens when the written scope is missing.