Exam 2 Flashcards
Fees
income for the company
Billing Rate
a dollar amount charged for each design professional usually expressed as an hourly rate
= salary rate of employee + overhead expenses + profit
(usually 3x salary)
Overhead Expenses
expenses necessary to keep the doors open (rent, phone, copies, advert)
Fringe Benefit
an extra benefit supplementing an employees salary (subsidized meals, health insurance, company car)
Direct Personnel Expense (DPE)
a number that includes salary + benefits, taxes & paid holidays
Direct & overhead expenses
profit
Billing Rates accuracy
by salary is simpler
by DPE is more accurate
Indirect Job Costs
Overhead Overtime Indecisive Client Scope Creep Unforeseen Consultants Unforeseen job site delivery costs
Hourly Fee Method
Not to Exceed limit
based on professional level of employee
average of various levels
by kind of service rather than personnel
Fixed Fee Method (lump sum)
Calculate all expenses up front, include 10-20% contingency
Not good for inexperienced designers
Typically used for large firms with a bottom line
Contract
promise made between two or more parties to perform or not perform some act
Offer
one party purposes to do something for another party
Acceptance
The party to whom the proposal has been made agrees to accept the offer and is bound
Contractual Capacity
each party to the contract must have the legal ability to enter into the contract
Consideration
something of value that is exchanged as it relates to the contract
Mutual Assent
the giving of the offer and acceptance of the offer must be done willingly
Legality
the contract must exist only to support the performance of some legal act
Performance
the completion of the acts called for in a contract
Breach of Contract
occurs when one of the parties of the contract does not perform his/her duties
Letter of Agreement
a contract that is generally less formal in content and terminology and looks more like a letter
same legal considerations as a contract
Net Pricing
50% reduction from the suggested retail price
Wholesale Pricing
Net and Wholesale- a special price given to a designer by a supplier, which is lower than what it would cost the consumer
Cost Price
The price the designer must pay for the goods
Selling Price
The actual price at which designers sell the goods to the client
Retail Price
The price at which goods and services are sold to the consumer
MSRP
Manufacturer Suggested Retail Price (List Price)
Discount
a reduction, usually a percentage, from the suggested retail price
Full Discount Price
50% of the suggested retail (net price)
Markup
a percentage amount that is added to the cost of goods to get the selling price
Standard market is 100% from net price
Deposit
prepaid by the buyer for security
Down Payment
a portion of the total selling price paid at the time something is ordered
Retainer
is a payment to a professional to cover future services or advice by that professional
The UCC
Uniform Commercial Code is a uniform set of laws concerning the sale of goods
Buyers Rights
Buyer has the right to inspect the goods before paying for them
