{"id":10601,"date":"2016-11-17T14:00:00","date_gmt":"2016-11-17T14:00:00","guid":{"rendered":"http:\/\/architizer.wpengine.com\/young-architect-guide-double-your-hourly-rate\/"},"modified":"2022-05-31T08:01:09","modified_gmt":"2022-05-31T12:01:09","slug":"young-architect-guide-double-your-hourly-rate","status":"publish","type":"post","link":"https:\/\/architizer.com\/blog\/practice\/details\/young-architect-guide-double-your-hourly-rate\/","title":{"rendered":"Young Architect Guide: Why You Should Double Your Hourly Rate Today"},"content":{"rendered":"

Peter Eerlings is creator of Archisnapper<\/a>, an intelligent site management app that helps architects create field reports. HE also hosts a series of informative articles about technology and business for architects on the Archisnapper Blog.\u00a0<\/em><\/p>\n

(Up-front warning: For simplicity, we only talk about hourly rates in this article, but the same is true for fixed-per-project pricing.)<\/em><\/p>\n

Defining your hourly rate is a difficult thing. Many architects, contractors, project managers and construction engineers are afraid to set their hourly rates too high, especially when they are just starting their businesses and clients are not yet queueing up. Here are the two main reasons (or rather assumptions) for a low hourly rate. This is what you might think:<\/p>\n

1. Setting a lower rate will attract more clients.<\/p>\n

2. With a lower rate, clients will not expect too much, they will complain less and expect less from you.<\/p>\n

I have shocking news: Both are not true. In fact, the opposite is true! Here is why:<\/p>\n

Assumption 1: A lower rate attracts more clients.<\/h2>\n

A lower rate does not attract MORE clients. A lower rate attracts DIFFERENT clients. In the eye of the client, your \u201chourly rate\u201d<\/b> is a direct representation <\/b>of your value<\/b>. Here is how a client thinks<\/b>:<\/p>\n

\u201cArchitect A is twice as expensive as Architect B (per hour)? OK, then Architect A is probably twice as good as Architect B. His work is probably better, he works faster and more efficiently. He must have more experience to justify this higher rate. Architect B is probably not that good. He is \u2018cheap,\u2019 so his quality must be cheap, as well<\/i>.\u201d<\/em><\/p>\n

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Via <\/i>emaze<\/i><\/a><\/p>\n

Not convinced yet?<\/i><\/b><\/p>\n

Think about how you would judge a web developer needed for your new website. The first web developer tells you that he has plenty of time. In fact, he can start tomorrow, and he asks $15 per hour. The second one tells you that he is fully booked for the next three weeks, but after that he could pick up your project. His rate would be $50 per hour. Let\u2019s assume you know nothing about web development, and you need to judge which you should hire for your new site.<\/p>\n

If budget is really tight, you might take the first one. But if budget is secondary (your architecture business is doing quite well) and quality goes first (the nephew of your sister\u2019s boyfriend who made your first website for $50 really left a bad taste in your mouth), then you will definitely<\/i> hire the second one. A higher rate? Totally booked for the next three weeks? This guy must be good at what he does.<\/p>\n

When it comes to architecture, there are ALWAYS clients with budget constraints, as well as there are ALWAYS clients where quality is more important. With your rate, you just define from which pool you will get clients. A low rate will attract more \u201clow-budget\u201d<\/b>clients<\/b>, while a high rate will attract more \u201cquality\u201d clients<\/b>. In other words: You will NOT get more clients if you set a cheaper rate. You will have a different kind of client. With a rate below the market average, you will attract clients that focus on the price<\/b> and prioritize cost cutting<\/b>.<\/p>\n

Imagine a wealthy project developer. They make plenty of profit each year transforming old buildings into retirement homes and then renting out the buildings (resulting in a big monthly recurring revenue stream). They just spotted a new potential project, and because all of their in-house architects are occupied with other projects, they are urgently looking for a freelance architect that is available to start as soon as possible.<\/p>\n

By raising your rate to a \u201cpremium rate\u201d level, you will start attracting higher-end clients.<\/b><\/p>\n

Do you think they will go for the cheapest<\/i> architect? No. They will it play safe and are willing to pay more in exchange for quality, a fast project kickoff and avoiding any project risk or failure. They have strong and predictable revenue streams and cannot afford to hire a cheap stranger who lacks competency and risk screwing up this business opportunity.<\/p>\n

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Via Architect\u2019s Trace<\/a><\/i><\/p>\n

Assumption 2: Given a lower rate, clients will not expect too much; they will complain less and expect less.<\/h2>\n

As said before, with a lower rate, you do not attract more clients, you attract a different clientele<\/b><\/em>. Clients who go for the architect with the lowest hourly rate see you as a \u201ccost.\u201d They focus on how much you will cost<\/b> them, rather than on the value<\/b> you provide.They are more stingy, and their goal is to minimize costs and not to maximize output value.<\/p>\n

Often they also try to get more from you. They call you on Sundays. They pay their invoices late. They are not seeking a long-term collaboration, but rather the cheapest service provider in town. If tomorrow, someone else is cheaper, they\u2019ll ask you to lower your rate. They want more done for less money. They try to extend the scope of the project for free. With a low rate, you attract cost-obsessed clients. Cost-obsessed clients are often also very demanding clients.<\/p>\n

Clients that focus on value creation are less obsessed with cutting costs. They focus on the bigger picture and understand that in order to create additional value<\/b>, they\u2019ll have to hire quality input. I\u2019m sure that if you have been in business a few years, you already experienced the client that always asks for more, changes their mind constantly, tries to negotiate lower fees all the time, tries to get things outside of the original scope for free, pays their invoices late, comes up with unrealistic expectations and deadlines and so on. Their focus is on receiving stuff from others and not on collaborating on a long-term project.<\/p>\n

Setting a low fee attracts this type of clientele.<\/b><\/p>\n

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Via Entrepreneur<\/a><\/i><\/p>\n

Double your hourly rate.<\/h2>\n

Before launching ArchiSnapper<\/a>, I had been working in the freelance software business<\/a> for many years and made serious mistakes \u2014 one of which was being very cheap. I attracted cost-obsessed clients with very big expectations, willing to pay peanuts. Sometimes I felt like I was the \u201cnecessary evil\u201d for the client to get their software project done.<\/p>\n

One day, I decided that I needed better clients. Clients who see the real value of my work. Clients who see the big picture and realize that by working with serious software developers (even if they cost more) will benefit everyone in the long term. Clients that are fair enough to pay for more hours when they ask things outside of the original scope or if they change their minds. Clients that understand that a good long-term relationship between client and supplier is best for everyone in the end<\/b>.<\/p>\n

So, that same day, I decided to increase my rate to attract a better clientele. I didn\u2019t double it in one day (maybe I should have, in fact \u2026 ), but I slightly increased it for new clients. I increased it a bit more for later clients and did so a couple more times. The results?<\/p>\n