Fees for Small Firm Architects
We’re a disgruntled bunch of professionals.
There are hundreds of articles, forums, blog posts and comments discussing how we architects are not paid enough and how our clients don’t understand what we do. The most popular discussions at the EntreArchitect Facebook Group are always those where we discuss the “forbidden fruit” of topics; compensation. Post after post, comment after comment, I’ll read the complaints of architects blaming society, our clients and past generations of architects for the financial ditch in which we find ourselves.
We are not compensated at the levels commensurate with the efforts we extend, nor the value we contribute to society and, boy… are we tired of it!
We are not compensated at the levels commensurate with the efforts we extend, nor the value we contribute to society…
To become an architect, we spend at least five years in college and often another three years training as an “intern” (or whichever term we are using this month). Many of us choose to pursue additional education and often work many more years than is required before taking the exam to become a licensed architect. The current Architect Registration Exam requires passing six divisional tests, which often take months, and sometimes years to complete. During a typical architectural project, we make thousands of decisions, work hundreds of hours and are responsible, by law, for the health, safety and welfare of the people using our buildings.
We are worth more.
AIA Antitrust Guidelines
In my opinion, the profession was severely damaged when the American Institute of Architects was accused of violating federal antitrust laws.
In reaction to these suits, the AIA developed their Antitrust Compliance Statement and Procedures and established AIA Antitrust Compliance Guidelines for use within the organization. These documents, created by AIA legal counsel, ensure that the organization will never again find themselves accused of violating federal antitrust regulations. Essentially, they direct AIA members to never discuss fees or compensation, anywhere, anytime.
Whenever I post the topic of compensation at the Facebook Group or here on the blog, I inevitably receive a well intentioned warning from a fellow architect, saying that I should not be discussing such topics.
We find ourselves in a most unfortunate position.
We are not taught the basics of business during our formal education and, as professionals, many of us have a misguided fear of discussing fees among fellow architects. To clarify the issue; antitrust regulations forbid collusion, not discussion. And any forum outside the jurisdiction of the AIA is not covered by their antitrust guidelines or their compliance statement.
Discussing compensation among architects (and even openly comparing fees) is not against the law.
Discussing compensation among architects (and even openly comparing fees) is not against the law.
Through trial, error and super secret double agent underground discussions (shhh… don’t tell anyone), we learn what others are charging and how to structure compensation for our services. Rarely are we developing pricing with the understanding and engagement of the basic principles of business.
We Alone Are The Problem
I am not going to compare architects with other professions, which is often the default argument presented. My suggestion to you is that we alone are the problem.
As creatives, our passion seeks the art of design and the process of developing a concept into construction. Rarely are we motivated by money and often reject the notion of making a profit, in fear that it will corrupt the purity of our passion.
The cause of the problem in which we find ourselves will be found by looking within ourselves, individually and as a profession.
The value of architecture and the services we provide are established by you and me, not our clients. As business owners, WE establish the value of our products and services. It is time that we look within our businesses, understand the value we bring to our clients, and to society as a whole, and raise our fees to the proper levels required for a healthy, profitable business.
Question: On what do you base your compensation as an architect? Have you learned how to set your fees at levels required for a profitable business?
Photo Credit: Shutterstock / Zerbor
It’s refreshing to see people in the profession standing up and taking action. I’m developing a fee schedule that takes each phase in the process and assigns that phase a fee. because the percentage of construction cost doesn’t seem to work well with the smaller projects I have been doing lately my fees are either hourly or a cost per square foot. And because smaller projects can take just as much time as larger projects I have a minimum fee for any project regardless of how small.
We recently raised our hourly rate to $125 per hour. (located in Portland, OR). However, we usually offer lump sum fees for our project proposals. For our ADU projects we charge around $12,000 although we break it down by phase. It is just barely enough to cover our time and make a small profit. However, there are lots of firms who do similar project types for lower fees. It’s a tough market.
Firstly I need to say that I live and work in Australia. ($1AUD = $0.77USD). We work on a percentage of cost of work. This equates to about 10% for const work over $1m – 3m and 8% there after.. 11% for $900k, 12% for $800k, 13% for $700k.. etc.. This is for full services for single domestic.. We find that in order to find profit everything has to move smoothly. The most important thing is to have a client architect agreement that covers you if any changes occur. Any changes resulting in additional design or documentation, after the sketch design phase, is at an hourly rate.. The most design intensive projects are are often the least profitable (but the most necessary for company profile). The bread and butter (simple) projects where one can predict an accurate design program and hire accordingly are the most profitable as they are often strait forward and result in very few architectural changes and thus wasted time..
I do a lot of expert work so I get to see what other architects charge. Let’s just say there is a very wide range regardless of whether it is flat rate, percentage, or cost per square foot.
Two things. Those who charge less simply don’t value their own services or their time and often don’t make enough to do the job right. Or perhaps they just don’t provide the same level of services by making CA optional for instance, inviting disaster when the contractor starts suggesting “money saving changes”.
And second, those who hire architects based on low fee often get exactly what they pay for. And often pay much more to set things straight or just live with poor results.
Even when I price myself (for design services) in the middle of the market I invariably lose out to someone willing to work twice as hard to make half as much.
I no longer indulge prospects in the reverse bid process. I move on and don’t look back. Bargain hunters and tire kickers are not in my target market.
I’m glad you touched on this Mark. As a younger professional I’ve always wondered why “fees” are such taboo. I’m excited to read more into these Antitrust laws. As you said, we often think that talking about money is bad for business and the creative-side. But there is a medium point between “passion” and “value-creation” and all successful businesses have this duality. I’m a firm believer that our passions keep us driven, and profit feeds our passion.
Any architect can talk about fees, just not any AIA architect.
Story
2 men are selling flats of eggs.
#1 sets his price at $50, #2 sets his at $40,
#1 reacts and moves his price to $30.
#2 looks over and buys out #1.
#2 now has all flats on his table.
#1 has no more eggs, he sold them all to #2 happy I suppose he can go home early.
#2 now owning all the eggs raises his price to $60
Not sure what this has to do with the business of architecture.
Other than each seller was happy with pricing until they were not.