Here at Dysfucntional Studios Ltd. I just came across a document that includes my hourly billing rate... Interesting stuff.
Although I'm still finishing up my undergrad degree, I have pretty much the same responsibilities on the project as those who have finished their M.Arch. degrees, IDP, and who are preparing for the ARE. My billing rate is the same as these people, but I'll eat my hat if my take-home pay is the same.
On average, roughly what percentage of your billing should be your take-home pay? Does that number include health insurance and benefits?
all i know is we charge 150/hr for my work, i am only 22...and god knows i don't see anything remotely close to that number. maybe if you remove a zero...and then some...
WHOA. 150$/hr??? what city are you located in? That seems REALLY high to me, for an intern. That's how much our principals' time is worth to our clients.
My pay is about 29% of billing rate, depending on the project (we have slightly diff. contracts for each, depending on the year the contract was signed).
I've heard that 30% of billing rate is typ. for pay rate, but I am not sure where I heard that or how reliable it is or whatever.
most arch offices use a multiplier between 2.5 and 3. the larger, more corporate offices in large cities with lots of overhead and benefits justify a larger multiplier than that.
the multiplier is a multiple of your gross, not net pay.
It costs more to run a firm than to pay salaries, as El Jeffe suggests. Rent, insurance, computers, copiers, plotters, utilities, non-billable staff and other things all cost money. O and P--overhead and profit--is a standard line item in construction contracts, and is what is contained in the multiplier. When you get old and craggy and are running your own office, trust me, you will NOT be paying your employees equal to their billing rate (unless you marry rich, and are insane.)
Now, if you're underpaid, that's another matter entirely.
L.I.G. - one thing you have to take into consideration is rate of production...
an example,
at my firm the principles charge the same rate for me (8 yrs experience, march, idp completed, getting ready for ARE) as the do for a co-worker (barch, 4 yrs, just starting idp)
but i take home considerably more than he does, even though we have very similar roles on projects..
the reason: i can work a little quicker than him... i have to ask less questions of the principles, taking up less of their time, i never call in sick - while he calls in 3/4 times per year, etc, etc
the bottom line is - although we are billed at the same rate, they are able to pay me more because i use less resources and can complete more work...
maybe you could talk to your principle about your efficiency vs. the price you are billed out to clients - dont ask for figures, but ask where you can improve....
I understand that I won't (and shouldn't) be paid anywhere near my billing rate. But I'm trying to determine if 27% is reasonable, and if that includes health insurance and other benefits (which nobody has answered yet).
another thing to consider about the multiplier... it is not the end all decision for payrate. the multiplier would be equal to the maximum that the firm will pay you, if you are at the top of your game...
if a firm bills someone out at 90/hr - the maximum they will pay that person is 30/hr (you'll never see someone paid the max though - there would be no cusion)
if they are paying that person $15/hr - then either the firm is either cheap, or the employee doesnt produce enough work
if that employee is billed at $90/hr and is paid $20-$25/hr then they are right where they should be.
I'm at 25%. cln 1, you honestly believe that someone calling in sick 3 or 4 times a year versus no times a year is a factor that can justify a higher salary (I understand there are larger differences)? I could understand if said empolyee consistently uses their entire sick leave, but 3 or 4 sick days a year seems pretty average to me, am I off? How many sick days a year do most archinecters use??
Agreed... Anybody who never takes a sick day either has a superhuman immune system, or is somebody who comes in sick and infects the rest of the office. 3-4 sick days per year seems reasonable, and employees shouldn't be penalized for taking them for legitimate reasons.
calm down, that was just an example - this particular person calls out at awkward times which leads the principals to believe that he is blowing off work (sometimes during critical deadlines)
this creates a negative stigma towards that person, which directly relates to payroll - if the boss is giving out raises and there is one person who blows off work for no reason (unproveable) that person isnt going to get too good of a raise
Most financial statistics surveys for design firms will show that the average architectural firm will need to bill 2.7-2.9 times your raw salary to pay your benefits, cover office overhead and make a modest profit (i.e. 6-7% on Gross Revenue, before bonuses and taxes) on your labor.
Of course, this assumes all of the work is invoiced hourly ... fixed fee work makes the analysis a little more difficult. But, as a general rule of thumb, you should expect your billing rate (or "full job-cost rate" + "profit") to be something on the order of 2.5 - 3.0 times your actual hourly pay rate.
A caution: in my experience, some firms will establish a billing rate for a group of employees ... e.g. all 3rd Year Interns will be billed at $___ and all Architect IIs will be billed at $___; in such cases, the billing rate will be based on the average pay rate of the people in that group ... depending on how much wages vary within each particular group, for any individual the 2.5-3.0 multiplier mentioned above might, or might not, apply.
My main advice --- if you're curious about this topic, rather than just guess why not approach one of the firm's partners and politely ask for an explanation ... when this happens to me, I'm happy to explain how billing rates in our firm are calculated and I appreciate a member of my staff wanting to know. It's a really good basis on which to have a useful conversation about the economics of professional practice.
Aside from the issue of what an employee brings home for a moment... Ever wonder if what a person can actually provide in return for billing someone, say, 120 dollars an hour?
What can you actually do for someone -- in our profession that is, ya freaks! -- that is clearly worth 2 bucks every minute that passes?
Take your gross hourly wage and multiply it by three. That's about what you should be getting billed at. I'm skeptical of the firms that use multipliers less than that and assume they are working out of someones basement with 4 total employees and no non-billable employees. Even billable employees can't be billable 100% of their time.
That said, if you are a student working for $15/hr no firm is going to "give away" your talent for $45/hour. You are basically stuck in that spot where yes, you may be getting taken advantage of, but the common argument is that you cost the company more in training. Trust me, many times I've argued that isn't entirely valid. You are just stuck in a crappy place. Sorry dude.
I am intrigued by this discussion because it seems that many of you are in denial that the profession is the most underpaid of professions except for teaching. This is true not only at the employee level, but at the owner level. The only way to make a profit running a firm is (and this is in the words of my former boss) is to underpay the employees. There is no other place where you can cut expenses to the degree that impact the profitability of the firm. I think in comparison to what your dentist earns per hour, lawyer, or hockey player, we are underpaid as a profession, and will remain that way. Also, metamechanic's breakdown was pretty good, but omitted taxes, which depending on where you live, cost your bosses another 10-15% on top of your salary.
More disturbing than billing rates or salaries, is the issue of job and career advancement. As more companies deal with employees as commodities, licensing, connections and the ability to generate projects and sell work will count for more than anything
I agree with most of you guys,
One thing that has not been motioned id that it takes several month to get paid on jobs and most firms have open or revolving line of credit (with interest) from which they borrow money to make payroll , an keep the office running. Payroll is the greatest expense in any firm, and it should be watch carefully. 2.5 to 3.0 mentioned is very marginal in my experience, and the benefit anyone is getting are minimal, just above what the law requires, probably having to pay a portion of then out of pocket-
Taxes and personal time off are also taken in consideration while considering a multiplier. My experience in this subject is that firms that want to retain their staff will give additional perks such as dental, educational seminar allowances flex hours, and incentive bonuses are more in the range of 3-4 for a multiplier. At my last job it was understood that everyone should be at least 80% billable and a base line of 120k per person per year.
- for the record, i hold an architecture degree from a top school and an MBA from an ivy - i've been licensed for 25 years - i've studied the management side of professional practice for 30 years and i'm currently the business partner / ceo for a 75-person design firm in the mid-West - we win frequent design awards - our firm did 18% pre-tax / pre-bonus in 2005. - yes, i've "actually done billing and invoicing and writing contracts ... and I can guarantee i do it better than you."
you are an idiot because if the principals at your firm didn't bring in new business, you would not have a job and there would not be a firm. moreover, at most quality firms, the principals know more about design and document production and client management and construction than anybody else in the office - given the risk they take by stamping the drawings you create, the principals have a strong motivation to see that the work is done reasonably well. for the most part, principals are responsible for marketing and studio management - tasks that are infinitely more difficult to do well than putting a drawing together
your analysis is crap because you go through this long, rambling list of suspect analysis above to prove a point that firm's are making obscene profits by taking advantage of their employees and then close your post by saying "firms really do not make that much money"
then you proceed with "the only way to make a lot of money is cut your employees salaries" -- an absolute suicidal approach to profitability - at our firm, we concentrate on helping our staff grow more productive, through investing in training and technology - we pay above average salaries, provide solid benefits and we pay really good bonuses when we do well.
i stand by my original post ... you're an idiot and your analysis is crap
Geez - meta / digger catfight!
Let it go
meta - your analysis and digger's don't seem that opposed to me: employees should understand the realities of overhead (employers aren't out to screw them - if so - quit), and employers have to be sensistive to the needs and aspirations of the employees (to ignore them is suicide).
I'm in a place where understanding on both parts happens - as I suspect is the case at most successful firms.
Nobody ever knows fully what the previaling opinion on the other side is.
F
geez, this thread has gotten nasty. easy up everyone.
nevermore, money isn't everything, but architecture is a business and one that is notorious for those involved being underpaid. the more we understand the financial implications of our decisions, the better off all in the industry will be.
since starting my own business, i have made huge efforts to focus on the financial end. to make money? yes. you betcha. i also do it because i do not seek out clients based on money. i seek out clients based on what they do, and they do not always have money. i do a lot of work for non-profit organzations, so the better i understand my financial position, the better i am able to help them out. my business is profitable. i have money in the bank, and i did it without borrowing a dime.
nevermore, did i ever say that architecture wasn't about those things? i think most on this site do not discount the passion involved. that is true of any business. if you do not love what you do, you will not be successful. and just for clarity, success does not only mean financial rewards.
sorry nevermore. that was a tough one to read especially when you came back with the second jab at this discussion.
superHeavy, thx. stay focused with your t-square. the world needs it.
meta, pointers are tough especially since the focus of my business is not architecture. each of my clients are different. their focus, needs, resources, size, how much they stand to make off of the work that i create for them all factors into my decision of what to charge. there are similar issues on my end. how important is the work of my client to me? does it open new doors? if they do not have great resources, am i in the financial position and time to donate a portion of my services to a client in need? relationships, of any kind, are extremely complex and need to work for all involved. i know i am speaking in generalities, but i think we all need to start with that and then move to specificities of how to get there.
i have one potential client that i am hoping to get and probably will. they have started a organization to make films focusing on the human rights struggle around the world. the first film is on augusto pinochet, the former dicator of chile to justice.
this project is important to me because of the very subject of human rights struggles, but also because my wife's family left chile in '73 due to the pinochet coup. my father-in-law used to work for the allende government and saw his friends and family being killed and tortured. will i make much money at this? no, but i have other projects that are highly profitable that allow me to do this one. i also know that doing this will lead to other work just because future clients will find it of interest. all relationships involve a give and take, and it is that balance that i strive for.
for the record, i hold an architecture degree from a top school and an MBA from an ivy - i've been licensed for 25 years - i've studied the management side of professional practice for 30 years and i'm currently the business partner / ceo for a 75-person design firm in the mid-West - we win frequent design awards - our firm did 18% pre-tax / pre-bonus in 2005
Not calling anyone a liar, but in pretty much on every message board/blog everyone's got that awesome degree, great job, excellent experience, is an award winner and pretty much knows everything.
If you really want to know how all the finances of your employer works just ask. If they don't want to tell you it's probably writing on the wall that you're either underpaid or the firm isn't doing so well. Simple plain fact is that many many firms take huge advantage of the young in their profession. And yes, we are all underpaid from the lowly intern to the principal in the corner office. I think a simple way to figure what your fair hourly wage should be is using a multiplier of 3, or 1/3 your billable rate. I've seen this used in medium-large sized offices with generous benefits. Of course the finances of every office is unique, but if you're getting less than 1/3 billable, there is another office out there that will pay you that.
you gatta going on, I love the idea of the project you mentioned above- Chile holds a special place in my Heart just because my Genoese grandparent started a new life there after WWII, and my mom was born there, I personally spend 5 years at the UC playing soccer and travel down there to teach a studio at UC . What a small world-
I hope you get the client and you can do your thing-
A, i love open and transparent businesses. i once worked for a woman in san francisco doing contemporary homes and small residences. there were only 4 employees and she laid everything out for all to see and comment on. we all had different duties associated with making the office run. i was the that was responsible for collecting everyone's hours, calling the bank, and making sure people got paid. we all knew what each other made. knowing this demanded that my boss paid us a decent and fair wage.
southpole, good to hear your story and thanks for your thoughts. where did your grandmother live?
i have only been there once. a few years ago. my in-laws moved back to santiago after they retired. the odd thing was that the day they landed, pinochet was arrested in london to face extradition to spain. that event showed how raw the issue of pinochet still was amongst chileans. it's nice to see chile elect their first female president, and given her families history with pinochet, i think it is the first significant step to healing. my wife and i plan to go back soon. i've posted them before, but here are a few pics of our trip.
Hey metamechanic- I am not sure why you are so upset by Digger's post. Seems to be centered on you thinking that Principals/owners don't do squat? Ok, so I did not go to an ivy league school, but I am 50, and do own a firm that employs 20, like your example. We pay good salaries, big bonuses, and make more than the 18% profit tht Digger's company makes. (the average firm makes less than 10% profit, so both of us are doing pretty darn good, by the way.) You can make money by doing things smart, and getting people to pay you more than average because you are worth it. Most architects squander money on overhead. We have the best technology, we have free food in the office, great health benefits, etc. If it gets us back something, we pay for overhead. however, we only have two support people. I personally bill 80% of my time. I spend about 15% of my time on marketing, and do most of the marketing for the firm. 5% of my time is on office managment, the rest on projects. My billing rate is exactly 2 times that of the lowest paid draftsperson or intern, but I can do certain tasks 10 to 15 times faster. (and better too.) Billing rates for my employees average 2.85 times their direct salary, about 50 % of our work is hourly, and we still make money. That's becaue our produtivity is higher than most firms, and our overhead lower. (the average number of hours worked per week, excluding me, is 41 hours per week, by the way. Billing rates become kind of arbitrary for most architects anyway. Most projects have a fixed fee, so really, the earned billing rate changes depending on how effecient you are. we have had projects where 50% or more of the fee has been profit. We have also had projects where we lost lots of money because it took us longer than we anticpated to do the project. I can't tell from your post if you are just trying to taunt digger, or if you really do want to learn something about running a practice. If you do, post a question, and I will sincerely try to answer it.
I see that there is not a very defined way to go about getting the right methodology of billing for an architectural practice, it all depends on the many factors motioned here, what it is clear though, is that for those out there that are employed by firms there is a multiplier added to the base pay to cover the overhead.
But for those of us out there doing our own thing, there is much to be learned in the way of fee structure, scope of services, contract negotiations and so on. It seem that most of the younger generation of architect are willing to bust ass to get projects built and client happy, at a very low fee, and some client seek this young eager talented individuals. Until that individual has enough built work to be selective and demand a higher fee to do the work, this period of “proving oneself†to the professional clientele takes years
I would like to hear more on that topic, how low is to low of a fee, how do you negotiate with a client on small project, how much work are you willing to do for free to get the job…and so on.
e-
my grandmother lives in costal city of Algarobo, about one hours west of Santiago-
"I give Digger three days to respond, probably on a Sunday since he is a business partner and surely is too busy to waste his time with idiots like myself."
at my last firm, it was quite understood that billing out the younger employees was how the firm made money, had nothing to do with "principals didn't know how to do anything", which is nonsense. Principals kept off the jobs until they were needed.
one of the banes of our profession is this incessant and excessive focus on hours - we never will start earning what we are worth until we stop focusing on time, and the cost of that time. this kind of thinking leads to commoditization ... i.e. one grain of wheat is pretty much worth the same as another grain of wheat
would it not be much better to start focusing more on the economic value of the solutions we produce ? and then price our work accordingly !
while my comments here are aimed mostly at firms, there's a parallel train of thought for individual architects ... an hour of one 3rd year intern does not have the same value as an hour of the next 3rd year intern ... there's a real need for each of us to be thoughtful and articulate about what we really DO contribute (not what we think we contribute) to the process ... find a way to demonstrate that value, not just assert it's existence
Billing rate vs. pay rate
Here at Dysfucntional Studios Ltd. I just came across a document that includes my hourly billing rate... Interesting stuff.
Although I'm still finishing up my undergrad degree, I have pretty much the same responsibilities on the project as those who have finished their M.Arch. degrees, IDP, and who are preparing for the ARE. My billing rate is the same as these people, but I'll eat my hat if my take-home pay is the same.
On average, roughly what percentage of your billing should be your take-home pay? Does that number include health insurance and benefits?
Inquiring minds want to know...
all i know is we charge 150/hr for my work, i am only 22...and god knows i don't see anything remotely close to that number. maybe if you remove a zero...and then some...
Yikes... Our principals charge $175/hr. My take-home pay (not including benefits) is about 27% of my billing rate.
yea i think our principal charges over 200. a bit ridiculous but we do only high-end. but i am quitting tomorrow, so frankly, i don't care.
WHOA. 150$/hr??? what city are you located in? That seems REALLY high to me, for an intern. That's how much our principals' time is worth to our clients.
My pay is about 29% of billing rate, depending on the project (we have slightly diff. contracts for each, depending on the year the contract was signed).
I've heard that 30% of billing rate is typ. for pay rate, but I am not sure where I heard that or how reliable it is or whatever.
ny - been more or less running the project, which has been an interesting first experience in the working world...
my pay rate falls right at 28% of my billing rate, sounds pretty typical from the posts above
i guess im just getting exploited. awesome!
most arch offices use a multiplier between 2.5 and 3. the larger, more corporate offices in large cities with lots of overhead and benefits justify a larger multiplier than that.
the multiplier is a multiple of your gross, not net pay.
Does the multiplier of your gross typically include benefits such as health insurance, or are those expenses counted as part of overhead?
It costs more to run a firm than to pay salaries, as El Jeffe suggests. Rent, insurance, computers, copiers, plotters, utilities, non-billable staff and other things all cost money. O and P--overhead and profit--is a standard line item in construction contracts, and is what is contained in the multiplier. When you get old and craggy and are running your own office, trust me, you will NOT be paying your employees equal to their billing rate (unless you marry rich, and are insane.)
Now, if you're underpaid, that's another matter entirely.
L.I.G. - one thing you have to take into consideration is rate of production...
an example,
at my firm the principles charge the same rate for me (8 yrs experience, march, idp completed, getting ready for ARE) as the do for a co-worker (barch, 4 yrs, just starting idp)
but i take home considerably more than he does, even though we have very similar roles on projects..
the reason: i can work a little quicker than him... i have to ask less questions of the principles, taking up less of their time, i never call in sick - while he calls in 3/4 times per year, etc, etc
the bottom line is - although we are billed at the same rate, they are able to pay me more because i use less resources and can complete more work...
maybe you could talk to your principle about your efficiency vs. the price you are billed out to clients - dont ask for figures, but ask where you can improve....
I understand that I won't (and shouldn't) be paid anywhere near my billing rate. But I'm trying to determine if 27% is reasonable, and if that includes health insurance and other benefits (which nobody has answered yet).
another thing to consider about the multiplier... it is not the end all decision for payrate. the multiplier would be equal to the maximum that the firm will pay you, if you are at the top of your game...
if a firm bills someone out at 90/hr - the maximum they will pay that person is 30/hr (you'll never see someone paid the max though - there would be no cusion)
if they are paying that person $15/hr - then either the firm is either cheap, or the employee doesnt produce enough work
if that employee is billed at $90/hr and is paid $20-$25/hr then they are right where they should be.
yes, the multiplier includes all expenses
health, computers, paper, pencils, printer ink, electrical bill - everything that you as an employee uses.
I'm at 25%. cln 1, you honestly believe that someone calling in sick 3 or 4 times a year versus no times a year is a factor that can justify a higher salary (I understand there are larger differences)? I could understand if said empolyee consistently uses their entire sick leave, but 3 or 4 sick days a year seems pretty average to me, am I off? How many sick days a year do most archinecters use??
Agreed... Anybody who never takes a sick day either has a superhuman immune system, or is somebody who comes in sick and infects the rest of the office. 3-4 sick days per year seems reasonable, and employees shouldn't be penalized for taking them for legitimate reasons.
calm down, that was just an example - this particular person calls out at awkward times which leads the principals to believe that he is blowing off work (sometimes during critical deadlines)
this creates a negative stigma towards that person, which directly relates to payroll - if the boss is giving out raises and there is one person who blows off work for no reason (unproveable) that person isnt going to get too good of a raise
it is all tiny pieces of the large picture
Most financial statistics surveys for design firms will show that the average architectural firm will need to bill 2.7-2.9 times your raw salary to pay your benefits, cover office overhead and make a modest profit (i.e. 6-7% on Gross Revenue, before bonuses and taxes) on your labor.
Of course, this assumes all of the work is invoiced hourly ... fixed fee work makes the analysis a little more difficult. But, as a general rule of thumb, you should expect your billing rate (or "full job-cost rate" + "profit") to be something on the order of 2.5 - 3.0 times your actual hourly pay rate.
A caution: in my experience, some firms will establish a billing rate for a group of employees ... e.g. all 3rd Year Interns will be billed at $___ and all Architect IIs will be billed at $___; in such cases, the billing rate will be based on the average pay rate of the people in that group ... depending on how much wages vary within each particular group, for any individual the 2.5-3.0 multiplier mentioned above might, or might not, apply.
My main advice --- if you're curious about this topic, rather than just guess why not approach one of the firm's partners and politely ask for an explanation ... when this happens to me, I'm happy to explain how billing rates in our firm are calculated and I appreciate a member of my staff wanting to know. It's a really good basis on which to have a useful conversation about the economics of professional practice.
Aside from the issue of what an employee brings home for a moment... Ever wonder if what a person can actually provide in return for billing someone, say, 120 dollars an hour?
What can you actually do for someone -- in our profession that is, ya freaks! -- that is clearly worth 2 bucks every minute that passes?
This should be good...let 'er rip.
Take your gross hourly wage and multiply it by three. That's about what you should be getting billed at. I'm skeptical of the firms that use multipliers less than that and assume they are working out of someones basement with 4 total employees and no non-billable employees. Even billable employees can't be billable 100% of their time.
That said, if you are a student working for $15/hr no firm is going to "give away" your talent for $45/hour. You are basically stuck in that spot where yes, you may be getting taken advantage of, but the common argument is that you cost the company more in training. Trust me, many times I've argued that isn't entirely valid. You are just stuck in a crappy place. Sorry dude.
Rim Joist - Ok, I'll bite.
What makes an auto mechanics time worth $100/hour?
Why are attorneys commonly worth $200/hour?
Why is the UPS truck driver worth $25/hour?
What the hell do doctors make per hour to see patients for only a few minutes?
I think that hiring an architect is probably one of the most valuable things you can do for the cost.
metamechanic
... you are an idiot and your analysis is crap
I know, "A"...I'm just sayin'...
Clicking on my mouse for 5 minutes: 10 bucks please.
personal experience:
job #1, billed out at 5.5 times gross pay. A bargain for my employer.
job #2, billed out at 3.4 times gross pay. A bargain for our clients.
Enjoying a sip of coffee: 30 cents.
Enjoying a sip of coffee, pausing to indulge a moment of creative brilliance, then, why not, another sip: 70 cents.
I am intrigued by this discussion because it seems that many of you are in denial that the profession is the most underpaid of professions except for teaching. This is true not only at the employee level, but at the owner level. The only way to make a profit running a firm is (and this is in the words of my former boss) is to underpay the employees. There is no other place where you can cut expenses to the degree that impact the profitability of the firm. I think in comparison to what your dentist earns per hour, lawyer, or hockey player, we are underpaid as a profession, and will remain that way. Also, metamechanic's breakdown was pretty good, but omitted taxes, which depending on where you live, cost your bosses another 10-15% on top of your salary.
More disturbing than billing rates or salaries, is the issue of job and career advancement. As more companies deal with employees as commodities, licensing, connections and the ability to generate projects and sell work will count for more than anything
I agree with most of you guys,
One thing that has not been motioned id that it takes several month to get paid on jobs and most firms have open or revolving line of credit (with interest) from which they borrow money to make payroll , an keep the office running. Payroll is the greatest expense in any firm, and it should be watch carefully. 2.5 to 3.0 mentioned is very marginal in my experience, and the benefit anyone is getting are minimal, just above what the law requires, probably having to pay a portion of then out of pocket-
Taxes and personal time off are also taken in consideration while considering a multiplier. My experience in this subject is that firms that want to retain their staff will give additional perks such as dental, educational seminar allowances flex hours, and incentive bonuses are more in the range of 3-4 for a multiplier. At my last job it was understood that everyone should be at least 80% billable and a base line of 120k per person per year.
- for the record, i hold an architecture degree from a top school and an MBA from an ivy - i've been licensed for 25 years - i've studied the management side of professional practice for 30 years and i'm currently the business partner / ceo for a 75-person design firm in the mid-West - we win frequent design awards - our firm did 18% pre-tax / pre-bonus in 2005. - yes, i've "actually done billing and invoicing and writing contracts ... and I can guarantee i do it better than you."
you are an idiot because if the principals at your firm didn't bring in new business, you would not have a job and there would not be a firm. moreover, at most quality firms, the principals know more about design and document production and client management and construction than anybody else in the office - given the risk they take by stamping the drawings you create, the principals have a strong motivation to see that the work is done reasonably well. for the most part, principals are responsible for marketing and studio management - tasks that are infinitely more difficult to do well than putting a drawing together
your analysis is crap because you go through this long, rambling list of suspect analysis above to prove a point that firm's are making obscene profits by taking advantage of their employees and then close your post by saying "firms really do not make that much money"
then you proceed with "the only way to make a lot of money is cut your employees salaries" -- an absolute suicidal approach to profitability - at our firm, we concentrate on helping our staff grow more productive, through investing in training and technology - we pay above average salaries, provide solid benefits and we pay really good bonuses when we do well.
i stand by my original post ... you're an idiot and your analysis is crap
Digger: Can I come work for you? I'm fairly certain that my firm's principals follow the metamechanic school of business management.
Geez - meta / digger catfight!
Let it go
meta - your analysis and digger's don't seem that opposed to me: employees should understand the realities of overhead (employers aren't out to screw them - if so - quit), and employers have to be sensistive to the needs and aspirations of the employees (to ignore them is suicide).
I'm in a place where understanding on both parts happens - as I suspect is the case at most successful firms.
Nobody ever knows fully what the previaling opinion on the other side is.
F
are you guys architects or accountants ? ! ?! ?!
sheesh.
Money isn't everything in Life, gentlemen.There's ALSO art and music.
geez, this thread has gotten nasty. easy up everyone.
nevermore, money isn't everything, but architecture is a business and one that is notorious for those involved being underpaid. the more we understand the financial implications of our decisions, the better off all in the industry will be.
since starting my own business, i have made huge efforts to focus on the financial end. to make money? yes. you betcha. i also do it because i do not seek out clients based on money. i seek out clients based on what they do, and they do not always have money. i do a lot of work for non-profit organzations, so the better i understand my financial position, the better i am able to help them out. my business is profitable. i have money in the bank, and i did it without borrowing a dime.
e,
architecture is not only a business..how CAN you forget emotion and the spirit to create ?
feester?
e, in the words of a not so great man, "I like your moves, I like your style".
I'll have to look you up if my comments for this thread don't pan out.
nevermore, did i ever say that architecture wasn't about those things? i think most on this site do not discount the passion involved. that is true of any business. if you do not love what you do, you will not be successful. and just for clarity, success does not only mean financial rewards.
e
dude.
I was kidding.
sorry nevermore. that was a tough one to read especially when you came back with the second jab at this discussion.
superHeavy, thx. stay focused with your t-square. the world needs it.
meta, pointers are tough especially since the focus of my business is not architecture. each of my clients are different. their focus, needs, resources, size, how much they stand to make off of the work that i create for them all factors into my decision of what to charge. there are similar issues on my end. how important is the work of my client to me? does it open new doors? if they do not have great resources, am i in the financial position and time to donate a portion of my services to a client in need? relationships, of any kind, are extremely complex and need to work for all involved. i know i am speaking in generalities, but i think we all need to start with that and then move to specificities of how to get there.
i have one potential client that i am hoping to get and probably will. they have started a organization to make films focusing on the human rights struggle around the world. the first film is on augusto pinochet, the former dicator of chile to justice.
this project is important to me because of the very subject of human rights struggles, but also because my wife's family left chile in '73 due to the pinochet coup. my father-in-law used to work for the allende government and saw his friends and family being killed and tortured. will i make much money at this? no, but i have other projects that are highly profitable that allow me to do this one. i also know that doing this will lead to other work just because future clients will find it of interest. all relationships involve a give and take, and it is that balance that i strive for.
I love it...
for the record, i hold an architecture degree from a top school and an MBA from an ivy - i've been licensed for 25 years - i've studied the management side of professional practice for 30 years and i'm currently the business partner / ceo for a 75-person design firm in the mid-West - we win frequent design awards - our firm did 18% pre-tax / pre-bonus in 2005
Not calling anyone a liar, but in pretty much on every message board/blog everyone's got that awesome degree, great job, excellent experience, is an award winner and pretty much knows everything.
If you really want to know how all the finances of your employer works just ask. If they don't want to tell you it's probably writing on the wall that you're either underpaid or the firm isn't doing so well. Simple plain fact is that many many firms take huge advantage of the young in their profession. And yes, we are all underpaid from the lowly intern to the principal in the corner office. I think a simple way to figure what your fair hourly wage should be is using a multiplier of 3, or 1/3 your billable rate. I've seen this used in medium-large sized offices with generous benefits. Of course the finances of every office is unique, but if you're getting less than 1/3 billable, there is another office out there that will pay you that.
e-
you gatta going on, I love the idea of the project you mentioned above- Chile holds a special place in my Heart just because my Genoese grandparent started a new life there after WWII, and my mom was born there, I personally spend 5 years at the UC playing soccer and travel down there to teach a studio at UC . What a small world-
I hope you get the client and you can do your thing-
A, i love open and transparent businesses. i once worked for a woman in san francisco doing contemporary homes and small residences. there were only 4 employees and she laid everything out for all to see and comment on. we all had different duties associated with making the office run. i was the that was responsible for collecting everyone's hours, calling the bank, and making sure people got paid. we all knew what each other made. knowing this demanded that my boss paid us a decent and fair wage.
southpole, good to hear your story and thanks for your thoughts. where did your grandmother live?
i have only been there once. a few years ago. my in-laws moved back to santiago after they retired. the odd thing was that the day they landed, pinochet was arrested in london to face extradition to spain. that event showed how raw the issue of pinochet still was amongst chileans. it's nice to see chile elect their first female president, and given her families history with pinochet, i think it is the first significant step to healing. my wife and i plan to go back soon. i've posted them before, but here are a few pics of our trip.
beautiful country and people
sorry for the hijack.
Hey metamechanic- I am not sure why you are so upset by Digger's post. Seems to be centered on you thinking that Principals/owners don't do squat? Ok, so I did not go to an ivy league school, but I am 50, and do own a firm that employs 20, like your example. We pay good salaries, big bonuses, and make more than the 18% profit tht Digger's company makes. (the average firm makes less than 10% profit, so both of us are doing pretty darn good, by the way.) You can make money by doing things smart, and getting people to pay you more than average because you are worth it. Most architects squander money on overhead. We have the best technology, we have free food in the office, great health benefits, etc. If it gets us back something, we pay for overhead. however, we only have two support people. I personally bill 80% of my time. I spend about 15% of my time on marketing, and do most of the marketing for the firm. 5% of my time is on office managment, the rest on projects. My billing rate is exactly 2 times that of the lowest paid draftsperson or intern, but I can do certain tasks 10 to 15 times faster. (and better too.) Billing rates for my employees average 2.85 times their direct salary, about 50 % of our work is hourly, and we still make money. That's becaue our produtivity is higher than most firms, and our overhead lower. (the average number of hours worked per week, excluding me, is 41 hours per week, by the way. Billing rates become kind of arbitrary for most architects anyway. Most projects have a fixed fee, so really, the earned billing rate changes depending on how effecient you are. we have had projects where 50% or more of the fee has been profit. We have also had projects where we lost lots of money because it took us longer than we anticpated to do the project. I can't tell from your post if you are just trying to taunt digger, or if you really do want to learn something about running a practice. If you do, post a question, and I will sincerely try to answer it.
I see that there is not a very defined way to go about getting the right methodology of billing for an architectural practice, it all depends on the many factors motioned here, what it is clear though, is that for those out there that are employed by firms there is a multiplier added to the base pay to cover the overhead.
But for those of us out there doing our own thing, there is much to be learned in the way of fee structure, scope of services, contract negotiations and so on. It seem that most of the younger generation of architect are willing to bust ass to get projects built and client happy, at a very low fee, and some client seek this young eager talented individuals. Until that individual has enough built work to be selective and demand a higher fee to do the work, this period of “proving oneself†to the professional clientele takes years
I would like to hear more on that topic, how low is to low of a fee, how do you negotiate with a client on small project, how much work are you willing to do for free to get the job…and so on.
e-
my grandmother lives in costal city of Algarobo, about one hours west of Santiago-
metamechanic
what he said ... !
God, I love Fridays
This is the shit they never teach you in architecture school.
at my last firm, it was quite understood that billing out the younger employees was how the firm made money, had nothing to do with "principals didn't know how to do anything", which is nonsense. Principals kept off the jobs until they were needed.
one of the banes of our profession is this incessant and excessive focus on hours - we never will start earning what we are worth until we stop focusing on time, and the cost of that time. this kind of thinking leads to commoditization ... i.e. one grain of wheat is pretty much worth the same as another grain of wheat
would it not be much better to start focusing more on the economic value of the solutions we produce ? and then price our work accordingly !
while my comments here are aimed mostly at firms, there's a parallel train of thought for individual architects ... an hour of one 3rd year intern does not have the same value as an hour of the next 3rd year intern ... there's a real need for each of us to be thoughtful and articulate about what we really DO contribute (not what we think we contribute) to the process ... find a way to demonstrate that value, not just assert it's existence
this is hard ... but it can, and it must, be done
hey strawbeary ... how's your mile-high life ?
meta : I liked your idea about the website.
However I think you cannot measure pays across countries for the simple reason of the value of currency.
5000$ a month may be average in the US but thats apprx Rs 225000 a month in India. Thats a hell lot of cash here.
SO if we measure value of pay, that would be better.
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