These 5 tips will make your Architecture Business more Profitable


how architects can earn more money and increase their profits

Architecture is a business, just like any other business.

So also for architects profit matters.

Profit is not a bad thing you know :) Focus on profit does not mean you’re an evil person, swindling clients and squeezing employees.

In fact, profit is almost a prerequisite for a relaxed and joyful business and life.

Why?

Profit gives you flexibility. If you’re profitable …

  • you don’t have to accept projects you don’t like
  • you don’t have to work like crazy to be able to pay all the bills
  • you can afford to take a day off if you need it
  • it’s easier to be generous towards clients and colleagues
  • it’s easier to focus on great work

I’m not saying it’s not important to love your job. But I don’t get it why it should be the one OR the other. People often say “I prefer a job I like over making a lot of money”.

But why shouldn’t it be possible to have both? Why not go for a job you love AND make a decent profit?

Without profit no business and no work you love …

As Blair Enns, an entrepreneur and writer would say: “It’s money that creates the white canvas that allows you to create art. So, instead of fighting it, let’s accept the fact we need money to make our art.

Here is some advice on how architects can become more profitable.

But first, one more thing. Don’t believe in a silver bullet, or in massive profit growth on the short term. Instead, think of incremental growth. Think about things you can do today, this week or this month to start improving your profitability. It’s the compounding of all these little things done right that will pay off big time in 3-5 years from now.

1 / Focus on value

As an architect, you have a special and unique expertise that can generate a LOT of value to your clients.

Selecting the right materials can significantly decrease the maintenance cost of a building for example, or a particular design decision (e.g. incorporating an extra room in the attic or additional parking) can increase the value of a property with 5 or 10%.

These are not minor things we’re talking about. These are things where your expertise and effort can really make a big impact.

When talking with a prospect (possible client), first try to understand what they want to achieve, what is important to them, so you know what “value” means for him or her. Is it design, is it cost efficiency, is it energy efficiency, or is it practicality and space optimization?

Next, explain to people how they will benefit from taking the right decisions, how much your service will help them achieve their goals and solve their problems, or what the impact of design mistakes would be.

That’s what people want to hear, that’s the kind of info that will make them trust you and that will make them want to work with you … even if you charge more than your competitors!

Conclusion: explain the value of your work to your potential clients. If you focus on the value, the price becomes less and less critical. If you don’t focus on value, the only thing you can talk about is price.

2 / Increase your rate

You are aware of the significant value you can bring to a project, and by focussing on this value your client is aware of it too. The client is not perceiving you as a cost any longer, but as an important asset to achieve his goals. Based on what you said during that meeting he knows that you have the right expertise and skills to make sure the right choices and decisions will be made.

Remember, these are choices and decisions with a big impact! We’re talking about energy or maintenance savings of thousands of dollars, extra property value of tens of thousands of dollars, enjoying a practical and or beautiful house for the rest of a lifetime …

Believe me, if you were able to convey this value during that meeting, your clients are not going to choose a competitor for a couple of hundred (or even thousand) dollars.

So, just do it. Increase your rate on your next project. Then raise it again, and then again.

What’s the worst thing that could happen? Fewer projects?  Yes, maybe, but that will be compensated by a higher rate on your other projects.

On the other side, here are the advantages of charging more:

  • You’ll attract the right kind of clients: those that see and understand the value of your work instead of those that shopping for the least expensive on the market.
  • Charging a higher rate will allow you to go the extra mile, and spend more time on doing a great job for your client. This will result in higher quality, more happy clients, that will recommend you to their friends and family …
  • You’ll make more profit, without working more hours.
  • Some people will choose you BECAUSE you are more expensive. “Architect A is twice as expensive as Architect B? Then Architect A is probably very good at what he does and clients must be lining up. Architect B is probably not that good. He is ‘cheap’, so his quality will probably be lower.”

Read our popular blog post on this subject here: “Architects, Contractors, Engineers: double your hourly rate. NOW.

3 / Losing track of time while doing design work? That’s fine, but you NEED to stay within your budget

Remember, it’s the profit that facilitates a sustainable and enjoyable business and life. It’s profit that allows you to do what you love. Without profit, no business, and no design work.

So although we tend to forget the notion of time when we’re doing work we love – when we’re in “the flow” – we need to make sure that all design time is billed for.

You can’t keep on throwing hours at a project, just because the artists in you pushes you towards better and more beautiful design.

Like it or not, budgets are a fact for anyone working in the service industry – where you’re basically trading hours for money.

Think about it: you’re selling a project with 10 hours of budgeted design work, at $90/hour. If in reality, you spend 20 hours (giving away 10 hours for free), you’ve decreased your actual rate to $45/hour. You just gave your client a 50% discount, and he didn’t even have to ask for it! Being Leonard da Vince and Mother Teresa is just too much, even if you’re an architect.

4 /Don’t only charge design work

Time is your most valuable resource. Unlike material things, you can’t lose time and get it back again.

So never give away a single hour for free!

That means you need to budget and invoice the non-design work too.

You need to factor in time for things like project management, client meetings, travel time, administration, …

Btw, if you’ve no idea how much time you’re actually spending on your projects and how much you should budget for your next ones, it’s time you start using a time tracking app. We’ve listed some in this article.

5 / Go niche

If you try to do everything for everyone, you’ll be perceived as average. A gray mouse.

Don’t be a jack-of-all-trades.

Different clients are willing to pay different amounts for the same service.

This is important, so I’m writing it again and you can let it sink in a bit more:

Different clients are willing to pay different amounts for the same service.

So you want to targed the niche of clients who will value your services most — and therefore pay the most for them, too.

People will ALWAYS pay more for specialists. Business who focus on one single domain or niche, are so much more attractive to buy from when you need exactly that service or product.

Refuse projects which are not in your specific domain or niche. Become an expert in one thing. Clients will queue up once your name gets known.

Focus on what interests you and what you already know a lot about. Examples could be energy-efficient homes, wood construction, modern architecture …

Clients looking to build a modern architectural bungalow, are MUCH more likely to hire you when they see a website full of references with modern buildings, versus a website with a mix of random projects.

Check for example this website: https://www.bailliearchitect.com.au/

It says

A portfolio of David Baillie Architect projects that incorporate Ecologically Sustainable Design (ESD) to enhance lifestyle while reducing energy costs. Projects that combine innovative building design with outstanding energy efficiency, whether building a new project, renovating or extending an existing home, in the residential, commercial and health environments.

An excellent way of differentiating yourself, going niche, and as a consequence, be suppah attractive for potential clients in that area that are in need of an expert in the field of energy-efficient building design.


And that’s it for today folks. I hope that these tips will help you generate more profit and – as a consequence – enjoy your business and life even more. Remember, you can have both, profit and fun ..

Take care, Jerry