if it's that fucked up find another job. You are saying something as well by taking it.

I like cheese steak strombolis

Through a big part of my early career writing fee proposals was basically a service for potential clients so they could grind the fee down and get a couple different firms to trip over themselves to cut their fees.

It was so sick that I just stopped doing it. I still get the odd request but I do find that I get better at sniffing out the grinders and always ask is the job based solely on fee. If it is I'm out of there.

Its starts at the top so if someone's working for $10/hr. chances are the principle bid the job too low.

Personally, I think this is a very interesting thread ... it's basically espouses the idea that the economic problems of our profession are self-inflicted...that collectively we are shooting ourselves in the collective foot. Let's think about that for a minute.

Rule #1: Unless you believe that your boss is deliberately trying to take unfair advantage of you (which some participants in this forum truly do believe) most firms provides a combination of salary, benefits and bonuses that is linked closely to the economic prospects of the firm at that point in time. Firms that violate this rule for very long either fail as businesses due to a mismatch between expenses and revenues, or have such excessively high turnover as to become inneffective as a firm.

Rule #2: Firm's make money in one of three fundamental ways ... a) the firm's services or design talents are so overwhelming as to command premium fees in the marketplace; b) the firm operates very efficiently ... usually by focusing on a narrow range of project types and learning how to execute those quickly; or c) the firm has huge volume of work and can be very efficient in the way it uses overhead and in the way it divides up the work. (Note: these three approaches are NOT mutually exclusive ... however, most firms will tend to gravitate to one or the other.)

So, what part of this problem is self-inflicted ?

For reasons examined fully elsewhere in other parts of this forum, few firms besides the "starchitects" really are able to command premium fees.

Efficiency in our profession mostly is the function of staff focus and knowledge and motivation. It would seem by the amount of time people spend on this forum -- presumably much of that time while at work -- that we're not doing so well on those dimensions.

Efficiency, as defined in other industries, would not seem to be a high priority in our world.

So, if the ability to generate high fees is limited ... and the ability to operate efficiently is difficult or not fun ... where does that leave us ? What are we able and willing to change to break up this logjam. Are we ... as individuals ... willing to change ?

jabber'S analysis is very insightful. I found my self spent quite sometime at this forum. There are several reasons:
1. I'm very efficient, I can get the work done very quickly, have to waite for the boss to get his act together.
2. The bosses seems don't have enough work line up, or they don't have control of the schedule. The clients seems not in a hurry to get projects started. I wish they can just go out find more work to do, so I can be more productive and make more money. (Think about how relax I am at work comparing to my husband who is a programer, constent working, long hours, I think my money is not that bad.) But I would rather work harder and make more.
3. The forum is pretty informative, many good informations, a good break during the day.

For reals?

stromboli - you are screwed! But your screwedness is the grease that will oil the wheels of industry and keep our fine nation strong. You are a patriot sir. Keep up the good work!

Had a situation just the other day where I met a potential client for a single family home appropriate budget for the anticipated scope of work, nice enough guy liked the work we had done in past but when I gave him the fee proposal he was shocked. he was expecting a anumber less than half of what we gave him. ( he's an experienced builder too.)

So I told him that we don't plan to drop the fee so he best find somebody else. It wasn't a nasty discussion at all I just said that this was what it was going to take to do the job we expect to have to do. He was disappointed
and said that he could get somebody else to do it for half and I told him that they probably weren't charging what they should.

I did find it to be disturbing but I also realize that some folks just don't value what it takes to do good work ( not over top stuff ) but work at a good level that we would be proud of and that they actually might save some money with good design, bad design can be very costly and don't even think that someone can charge a pitiance of what you quote and they you end up spending a shit load of cash into a foundation that makes your fee look like
a drop in the bucket.

But then again I just wait for the results and have my laugh after.

whistler ... good for you, man !

whistler - I'm interested, since I've never done a single family residential, what do people expect to pay for the design of a house?

This is an interesting topic. I left an employer because he wanted to do prototype buildings and based his fee on that, but then he had "ethical" issues with that and spent a fortune on redesigns of the proto. Basically let the client make a custom building from a prototype schematic.

Case in point, yes, we are partly to blame for our financial situation. I think most architects are terrible business people. For far too few of us financial thinking doesn't co-exist with design thinking.

10 dowwa sucky sucky

Funny thing though as had a similar situation during the summer where another experienced builder ( a guy I have known socially for years ) asked for the same kid of thing( two spec houses on neighboring sites, during a site visit we talked fees and I gave him a pretty good sense of where we would be with fees. Then did the proposal and then the guy never called me back I've seen him several times and he hasn't said a thing.

I'm not impressed, I think he's embrassed. I like it that he can't even phone to discuss the fee really tells me a lot about the guy. I don't think its such a bad idea to just ask people what they expect to pay. I would rather have it in the open early. Many architects just want the job and are afraid to discuss the financial aspect. Most experienced business people know that its a part of the job and if they are put off by the idea of discussing fees then perhaps they are not the right client. they don't ming spending money on the sub-zero but won't work through the process of design to make a project, effective, efficient, lean and pleasant, and perhaps even more cost effective over time.

whistler is teaching us that there is a price associated with courage and conviction ... he's sharing experiences that suggest a) we have to ask for what we think we need; b) we have to demonstrate some backbone when the client/employer falters; and c) we have to be willing to walk away.

we also have to be prepared to stand by and watch some other architect -- presumably a less qualified architect -- takes the job for a lower fee / salary ... the client/employer probably will suffer ... but, sometimes, I wonder if the client/employer really knows that he/she is suffering.

let me pose another question, please ... if we live in a world with perpetual price competition, what circumstances must exist for us ... as a profession ... to be able to deliver higher quality at a lower price ... how could we organize our skills and our work so that we can produce great work at prices our consumer base finds to be a good value ?

to some extent, I'm asking the "Target / Michael Graves" question ...

i've got this theory - it applies to work, being an employee, or self-employed.

it's called the "watching tv theory" it goes like this:

if it's cheaper and easier for you to sit at home watching tv than to do the work, then don't take on the work.

ie: don't give yourself away. you need adequate compensation for your time.

There's a follow up theory: "do less for more, not more for less"

ie: you don't want more work, you want to make more money on the work you do. it's better to have one job at a million dollars, than a million jobs at one dollar each.

how? give good work for a fair price. give good service and good design quality. don't buckle on price. your good clients will stay with you, bad clients can go bother some other schmuck.

Gruen.... I'm with you on your theory. One bad project / client can suck the whole office into a black hole. ( poor fees, pissed off clients, internal strife, over worked staff, etc ) in a small office like mine that produces absolute kaos.

I refer to my theory as "gone skiing" as I like to think that at least I 'm better off mentally and physically for not working on a dog of a project, and at least a little healther than watching TV. IN the words of a Structural Eng friend " you may not make any money .... but your not losing money either"

johnprolly, you're really good at injecting misogynism into every thread

Gruen and Whistler. . .The issue is much more nuanced than that.

When we started our office (about 6 years ago) we had to make a decision on whether to focus our attention on "the job" or on "the client". Meaning, do we take on less work (focus on "the job) and focus our efforts on getting larger jobs/less work/more money/better portfolio-projects/etc. Or do we focus on "the client" and not worry about the size of the job, but focus our efforts on working for the clients that we want to work for.

We decided to focus on the client, because ours is a business of referrals. We thought (and continue to think) that we should have as many loyal, happy clients so that they can do our marketing for us. It would also help during a downturn when work was scarce since we had so many in our referral network. Thankfully, we have not experienced any downtime, but we have not spent a single dollar on marketing to date. After about 3 years we were doing the larger projects anyway and have never not been insanely busy.

But, back to fees, when you lower your fee, you take down the entire profession. We have never lowered our fee for a job (we have a range between 14% and 16% depending upon the size of the job) and have passed on many jobs because of it. But, I will say that we have gotten job referrals from people who did not hire us because of our fees (and the fact that we were truthful about construction costs), and found out that we were telling the truth and wished that they had hired us.

About, employees salaries (hourly rates) I would say. . . If I could buy interns for what they were actually worth and sell them for what they thought they were worth, I would be a very rich man. The fact is that young interns cost the company money. I know that most will not believe this, but it is absolutely true. We hire them because we hope that the expense will pay off in the future and the fact that we think of ourselves as a teaching office, but the fact is that they cost us money. I would never go so low as $10 per hour though.

What sort of interns are you talking about tyvek? I'm sure a summer intern would cost a firm money and I don't doubt an intern fresh out of school would cost a firm something in his/her first year or two, but beyond that I'm not sure. At what point does the payoff start? Seems like it would be about three years...I see lots of want ads looking for interns with 3 years experience.

consider: how do we eliminate the "client" from the whole equation?

tyvek - I agree you have to take care of your good clients - emphasis on *good*. I agree with your policy of pricing your services and not underestimating construction costs. You provide a good service for clients who are willing to pay for it.

My argument is not with offices like yours, but rather with offices who undercut themselves to get jobs with clients who won't pay, and only will refer other bad clients - a loosing proposition for the office.

I think that part of the reason that it's difficult to pay ourselves enough (at any level of the profession) is that there are so many firms willing to do work at a loss. To make up the loss (somewhat) they have to underpay themselves. Interns shoulder much of this burden.

Here's a question - with billing at roughly 15% of const. cost, what is your profit margin? Average in the USA is 14% profit - some firms do up to 40% - but many smaller firms are under the 14% point.

If you are over the 14% point - what do you do to get your firm there?

Bryan. . . I think that after a year in our firm the "young intern" does not cost us money any more. This is also why I look very carefully at applicants that have completed undergrad degrees but might have grad school aspirations, because I cannot afford to lose money for a year on a "young intern" and then have them go to grad school. Unfortunately, the cost of doing business sometimes gets in the way of teaching/helping - even though we love teaching.

Gruen. . .I think that the biggest misconception within the profession (especially in forums like this) is that we are the only profession with these problems. Every profession has to deal with pricing pressures from competitors that "undercut themselves". Heck, just look at how Wal-Mart undercuts other retailers. To your other question, we have a nice profit margin, although I wouldn't know the exact figure off hand. How do we get there? I wouldn't know how to say. I do keep very close tabs on our spending and our top line income. I know exactly what we have to bill each month in order for my partner and I to pay ourselves as well as keeping the lights on. So we can then plan how we are going to bill that each month. Sometimes it works as you plan, sometimes it doesn't, but it all works out if you bill more than your goal more often than if you bill less. I think that one of the biggest failures of Arch. offices is not knowing what you need to bill each month, not setting profit goals, and not figureing out how you are going to meet that goal.

All of this sounds like the business end of our work is much more important to us than it really is on a day to day basis.

Tyvek... I agree completely. About the young interns " who love to draw" unfortunately I have to edit all their work after they were so proud of doing it. It does get better I agree after some exposure to how we work they are a little more cost effective. But the mistakes keep coming. We also rely on clients to do our marketing for us. When it comes time for finding a role for young folks I would rather they stick to purely graphic stuff until they get a better sense of true construction documentation as it truly takes a long time to get good at ( that's why it's always the old guys in the office running that part of the job ) being exposed to seeing how its done properly is very helpful. I just ending up stripping a ton of graphic mess off a drawing as they really don't understand the role of a construction drawing or how it works with all the other details in the package. The young intern is a lost leader, I would rather they work a a consistent rate of pay and as they improve they receive bonuses as they "get it " or start to become more profitable. I think a good point of working in a small firm is that you see the need to be more business like and I believe that a small firm can be very lean and profitable if eveyone is aware of there role and how they bring value to the firm.

I don't see a way around it other than the manner in which you run your office ( and I too ). Good work and good client relations goes alot further in getting you more work than a hot web site.

before i left my last job i just starting to get involved in the financial side of things as a project manager (i.e. i worked on developing project fee proposals)...while i was doing this i had several lengthy discussions with my boss about overhead and the costs of running an office...he said that for our firm, with 4 different offices throughout the US ranging from 5 people to 40 people per office, the cost of overhead/break even point was $30-$35/hour per employee...thus an office of 10 people with similar overhead costs would need to bring in $300-$350 per hour just to break even...this overhead cost included things such as office rent, liability insurance, employee salary, health insurance, etc.

- you get what you pay for $low/hr = not much brain power

- a company isn't going to hire an intern at substantial wages if he doesn't know how to do anything productive. sometimes taking a paycut is necessary for first-timers

- they call them CAD monkeys for a reason. otherwise they'd be calling them Brilliant Bastards right?'

- Brilliant Bastards aren't cheap. Living on only water, instant noodles & free office coffee will fry their brains after a while. An investment needs to be made in their health and welfare.

- if you've hired an intern who proves to be inefficient after 2-3 months don't complain and lower all wages of future interns. let him go. it's called a probabtion period.

- not much brain power = $low/hr

- if you're working for an architect who cuts you down for every unexplained bad thing you do or doesn't effectively communicate how you can do better, quit. you don't need the stress and you're not learning anything.

- complain, bitch, and be disgruntled all you want about the intern that's screwing up. if you don't tell him in a constructive manner you're contributing to the problem

- a good intern will know what he's worth. disrespect this and he'll jet.

- if you're good & effienct intern but continue to work for low wages, you're contributing to the problem. don't be bitter when you find out the new intern with only half your experience is making more than you.

- in undercutting your competitors you're shitting yourself. how the hell do you think you're going to produce the same project at 70% of the design fees you'd normally require - profit not included?

- if you keep shopping for the lowest priced designer, most likely you'll end up hiring one who's undercut in order to get the job but has no idea how he'll pull it off.

- shopping for a firm to design your project isn't like shopping for a bottle of Coke from store to store looking for the best price. There's a reason they call this a profession and a skilled trade.

- no one's as nice as to sacrifice their car, home, savings in order to provide you with a project 100% in quelity and thoroughness when you only pay 70% of its worth

- learn how to budget your design fees.

- students and interns talk to one another. everyone knows who the good firms are and who the bad ones are.

- so you might have finally tendered off the project you've grossly undercut or neglected to budget through a mixture of extremely low paid CAD monkeys, crunched schedule and general lashing of the whip while keeping your shirt & roof intact. congratulations. i doubt anyone had fun working on it including yourself. you may want to count the casualties and save up your strength for the addendum & construction period. and if by some miraculous reason you're not contracted to work on the construction portion, heaven help the bastard that picks up your pieces - hopefully he charges by the hour. doubtful he, the contractor, the subs will not emphasize every mistake of your work to the client and cripple your reputation. whining and bitching about all the headaches someone else has laid out to you is not a quality restricted to architects & designers.

performing anything requires a finite amount of time.

that's true. you'd have to buy an incredible number of cokes before you lucked upon the one with the cockroach in the bottom of the bottle.

e909 ... whatcha smokin, man ?

e909 im with you 100%

economics should be included as a significant part of any curriculum

re6el9uy10 ... how i\on earth did you derive that comment from what e909 wrote ?

the fact that the core of economic thought has just a bit to do with the use of finite resources, i.e. time