CCPIA’s article “How to Price a Commercial Building Inspection” discusses the four primary approaches to determine an inspection fee, including: a percentage of the sale price; your hourly rate; the cost per some ratio of square footage; and a flat fee based on the type of building. Let’s take a closer look at a combination of the cost-per-square-footage and hourly methods.
Standard Commercial Building Inspection Fee Calculation
The first step in calculating a fee is identifying your constants, including:
- Hourly cost of an inspection. This is the cost per hour for a single inspector.
Note: Under this constant, inspectors may choose to account for the time spent writing the inspection report, or set a different constant for an “hourly cost of report writing” if it differs. In short, your hourly inspection rate and hourly report writing rate may differ, resulting in two different constants.
- Inspection at a square footage per hour. This is the square footage of a building that an inspector can assess in an hour.
Note: Different types of spaces have different constants. For example, an office space has different factors than a warehouse. The warehouse may have a more complex HVAC system, and so on. The differences in complexity affect the constants and total fees.
The constants noted above will differ for individual inspectors versus a multi-inspector firm. Hence, the expectations for the billable dollars per hour will vary for constant #1. This could range from $100 to over $500 per hour, and will not only be self-driven, but also market-driven. There will also be a different level of experience and speed with which an inspector might work through a building for constant #2.
Another constant that may affect your inspection fee includes:
3. Additional fees for a second, third, or fourth inspector added to the project. A multi-inspector firm that sends a second or third inspector to the same inspection has to consider the compensation split. Some might automatically factor into the calculation a second or third inspector. Some might consider adding a second inspector if the inspection time exceeds four hours, while others might consider eight hours to be the cutoff point.
Example of Constants
Every individual inspector and inspection firm has the ability to create their own variables and fees.
- Hourly cost of an inspection: $300/hr.
- Inspection square footage/hour
- Office space/closed space: 2,000 /ft2
- Warehouse/open space: 4,000 /ft2
- Additional inspector: $250/inspector
The subject building has a total square footage of 35,000, including a warehouse and an office space. The office has two stories and occupies 10,000 square feet of the subject building.
- Identify the square footage for the spaces:
35,000 – 10,000 = 25,000 ft2 for the warehouse, and 10,000 ft2 for the office
- Calculate the total hours for the office space: 10,000 ÷ 2,000 = 5 hours
- Calculate the total hours for the warehouse space: 25,000 ÷ 4,000 = 6.25 hours
Total hours = 11.25
- Inspection fee calculation: 11.25 x $300 = $3,375 plus $250 for a second inspector
Consistency is key for calculating inspection fees, and it can be challenging to identify a starting point. This is why many inspectors choose to survey their local market. Investigating other firms’ pricing will help you understand how your prices compare to your competitors’. It may provide a clue for setting competitive rates for your firm and determining your relative constants and variables for calculating your inspection fees. CCPIA members can download the Calculation Template for Pricing Jobs for further assistance. It’s a worksheet designed to help members determine their constants and use the calculations.
Article Written By: Rob Claus, CMI®
Additional Resources for Commercial Property Inspectors: