When starting out in a young firm, understanding architectural fees and knowing how much to charge is crucial, yet the information offered on this subject is incredibly fragmented and inconsistent. This is thanks in large part to the high number of different factors that can affect the figures, including project complexity, geographic, economic and social contexts, scope of services, reputation and more.
Via Michael Hanson/The New York Times
Attempting to make sense of it all, the website Architectural Fees is an independent resource that aims to untangle this subject for young architects and the wider public. The website describes itself as “a free and honest public service disclosure … of many historic architectural fees, rates and methodologies for various types of projects over the last half-century … along with disclosures as to the complexity level of various project types, as this has a direct bearing on the amount of time required by an architect to devote to a project.”
Residential vs. Commercial
The author has amalgamated the statistics from many different sources, including recognized bodies such as Royal Architectural Institute of Canada and smaller independent sources such as Bob Borson, architect and creator of the Life of an Architect blog. The fees, displayed as a percentage of construction cost, are shown for two broad building typologies, residential and commercial. Each table shows how the scope of services (for residential projects) and the relative complexity (for commercial projects) affects the percentage charged.
As an example, the fees for “Basic Services” for the design of a custom house of different construction costs is shown below:
In this case, “Basic Services” covers four stages of a project: Programming, Schematic Design, Design Development and Construction Documents.
The website notes that many notable architects have tended to charge more than the figures shown here, particularly when services included the design of furnishings and other interior design elements. This is backed up with historical evidence: An old letter reveals a 15-percent fee charged by Marcel Breuer for the design of “building and furniture,” noting that this number does not include “the cost of blueprints, long-distance telephone calls and traveling expenses.”
Marcel Breuer’s assistant’s letter to a client in 1953; via Architectural Fees
For commercial projects, the table is broken down into five columns that represent increasing levels of project complexity (bespoke residential projects are classified as Level 5 here). The first section of the table — showing fees for projects up to $20 million in construction value — is shown below:
To help clarify the reasoning behind the numbers, the site also includes sections that define architect services, project complexity and cost of construction.
Profit Margins
Within a chapter on the origin of hourly rates, the site challenges the perception in some quarters that architects make a lot of money, stating that “if you are thinking that architects have a high profit margin, this is typically not the case.” They give a typical example:
“It is quite common for the overhead and profit rate for an architectural firm to be a multiple of 2.3 to 3.2, with around 2.8 being the approximate average … Most firms have only around a 6 percent profitability, and this can drop in lean times. Very few architects are getting rich.”
The following example shows how this multiple can be used to break down the hourly rate to offer a target salary for an average architect for a small firm:
“Let’s examine the $150/hour rate, which is quite common.
$150/2.8 = $53.57. That’s often at the upper end for many small firms.
$53.57 x 2080 (number of salaried hours) = $111, 428 per year.
“That’s not a bad income in North America these days for a professional person, but certainly not in the upper category,” the author says, pointing out that “when the market drops and no business comes to the architect, he/she doesn’t get a paycheck. So, that ‘salary’ is largely imaginary for many companies, particularly in challenging economies.”
Contrary to the belief of some, architects’ fees are not sky high when compared with the valuable service provided; image via Illusion.
Hidden Costs
The example is extended to examine an architect’s overheads, which some clients do not fully take into account when evaluating the value of an architect’s services: “Out of every $150 the architect’s company earns, $96.43 is going to run the office and pay for everything necessary to maintain their ability to be available to their clients, whether clients decide to hire them to design a project or not. What things do architects have to pay for to maintain their availability?
“Electricity, maintenance on the building/office space, taxes, employee benefits … marketing costs, computer replacement, new software, bookkeeping, accounting, legal fees, insurance of all types and more. So, when viewed in this context, the architect’s average fee rate is a bargain.”
According to recent figures released by the NCARB, it takes some 13 years for the average architect to make the journey through school and practice to secure their license. After such a marathon, one would hope to have developed skills and knowledge of great value to clients and therefore be able to charge accordingly for professional services.
The takeaway here is that some architects do just that, while others do not — the range is incredibly broad. Click here for a full breakdown of fee ranges cited by 18 different sources, and if you have any personal stories relating to fees, share them with us on Facebook.
Top image via Illusion. Facts and figures shown here are solely by the author of Architectural Fees and do not reflect the views of Architizer. The information provided here is intended for reflection only and should not be used as official advice for conducting business.
