We architects have deeply rooted positive passion for what we do.
As artists we love to manipulate form and space, in order to impact the lives of others. We are thrilled every time we walk through one of our structures. Our fuel is the excitement and emotional reaction that others have for our art. We love being architects. We are making the world a better place with every new project and we would do it for free if we could.
…and that, right there may be our biggest problem. We would do it for free if we could.
The Starving Artist
When it comes to money and the thought of having to charge for what we do, we squirm in our seats. We become very uncomfortable. We feel an underlying sense of guilt for charging for the art that we love to create.
Intellectually, we know that we need to charge. This is our profession. This is our livelihood. This is what feeds our families.
We’ve read the EntreArchitect blog and listened to the podcast. We know that we must be profitable. We have learned, and we seek assistance for understanding how much we need to charge. We may even perform the calculations explained in the free EntreArchitect Profit Course and discover the amounts of revenue needed to flow into our firms in order to be profitable.
But knowing this number, we wonder if we are really worth that much.
Will our clients pay that amount? Do they see the value in what we do, to the extent that they will be willing to pay the amount that the calculations say we need? How little can we charge, so we don’t feel guilty for sending that invoice?
Does this describe you, or someone you know?
Every week, I speak with architects who feel this way. Don’t worry. You are not alone. The culture of the Starving Artist is alive and well and it pervades our profession. We have been trained to be artists, not entrepreneurs… and that must change.
The Power of the Profit First Culture
We must shift our mindset from “starving artist” to “profit first”. Remember this… Profit, then Art.
As a small firm entrepreneur architect, profit makes everything better. Profit allows us to do our best work. Profit allows us to serve our clients better. Profit allows us to give more. Profit allows is to pursue our passion and make more art.
The greatest architecture in the world is created by profitable architecture firms.
Our art is the result of our ideas and inspiration. It’s based on our years of education, experience and knowledge. Others cannot do what we do. Architecture is not a commodity. We don’t sell rolls of paper and ink. We sell a healthy home, a productive workspace or a safe place to shop and play.
Raise your fee on your next proposal.
Then raise it again on the proposal following that. Continue to incrementally raise your fee until you meet the resistance of the market. You are worth every penny that your clients are willing to pay you.
It is Our Responsibility to Make More Money
It’s our responsibility to embrace the power of the “profit first” culture for our firms.
It’s our responsibility to ourselves as artists and entrepreneurs; as architects and firm owners. It’s our responsibility to our teams, our families and our profession. It’s even our responsibility to our clients. When compensated properly, we are empowered to perform our best work and provide our best service. When we embrace the power of the “profit first” culture, we can be better architects.
Raise your fee and feel the power of the “profit first” culture at YOUR architecture firm.
Question: Profit First or Starving Artist?
Photo Credit: Pixabay / EdiNugraha
This mindset of the “starving artist” wraps up my business challenges in a nutshell, especially as I entered the field of architecture through being a Fine Arts major, with a concentration in Studio art. My architecture school focused on the artistic aspect of being a designer and not one bit on the business of being an architect. I have been a sole proprietor for the past twenty years, and I still frequently undervalue myself and my work.
Mark, thank you for continuing to foster ‘the call’ to encourage our design profession colleagues to let go of the ‘myths about money’ – it is not evil, only the ‘love of money’ is evil; so says the Good Book.
To respectfully piggyback on your comments, if I may, the most prevailing myth I have found is that ‘Money is bad’. It seems that so many design professionals, especially architects, believe that a concern for financial return is secondary and for some, even incompatible, with their commitment to design principles or their personal philosophy about the profession of architecture. This dangerous myth relegates so many of our professional colleagues to being a marginal professional status compared to other project team members, i.e.: owners, contractors; and diminishes their status and influence and could lead to a career of struggle and a financially insecure future.
As you have stated “We know that we must be profitable. We have learned, and we seek assistance for understanding how much we need to charge”. And I completely agree with this encouraging statement. However, it has been my experience in serving my professional colleagues, the issue is not that they ‘need to understand how much’ to charge for their services, but ‘how’ do they go about making that determination. Almost everything in the marketplace for continuing education on the topic of profitability is misleading, at best and for the most part a great disservice to our industry. It is my assertion that most of the methods for determining what to charge for any specific project is either based on what was charged for the last, similar project, with necessary adjustments for scope of services, or a lack of the accurate way to include the percent of profit in the total fee. Without realizing it, this last issue, if done incorrectly, could lead to as much as a 20% reduction in the profit percentage, depending on the targeted profit margin, to be included in the fee. Far too many of my professional colleagues mistakenly think that a ‘mark-up’ on the break-even cost is the same as a percentage of the final total fee to be charged.
Example:
Assume a break-even cost (B-E) of $300,000 to cover direct labor and overhead and a targeted 15% profit margin.
As a mark-up on the B-E: you would multiply the $300,000 by 15% for a profit of $45,000.
As a percentage of the total project fee: you would divide the B-E by the complement of the targeted profit margin, or 85% (100-15=85). This would provide a profit of $52,941, almost $8,000 (~15%) more than the mark-up method.
This clearly demonstrates how not understanding how to properly calculate and include the profit in the final total fee could seriously diminish the profit potential of any firm.
It is also my philosophy that we, as highly-educated, intelligent, creative design professionals deserve to earn a minimum of 20% net profit on almost every project. This means the targeted profit percentage has to be more than 20% in the total project fee, to account for unforeseen project expenditures not included in the firm’s calculated overhead rate.
Thank you for the privilege to offer my thoughts on this critically important subject for our industry.
Respectfully,
Steve L. Wintner, AIA Emeritus
Thanks for sharing your knowledge Steve. Always appreciated.
Thanks for this article Mark. Some serious food for thought. As an architect (I work with Cantrell Crowley) I think it is very important to treat architecture as an art form. However, I agree with @ElisabethH.Sloan, this mentality is fed into architects from the start of Architectural training. Therefore I think this article raises some interesting questions, particularly about fees for projects. I would second Mark’s call to read this article on ‘’How to re-write the story of our profession’’ – it also highlights some fascinating outlooks about ‘’industry norms’’. Ultimately, it is important that the architecture industry continues to grow and expand.