How Much Do Architects Make?

Hey, Eric here with 30 by 40 Design Workshop,
answering one of the most common questions I receive, which is, “how much does an architect
make?” It seems everyone cares about compensation
and certainly, I get, it but I actually think it’s not the only question to be asking because
it doesn’t capture one of the most important dimensions of your financial life. But, I do want to answer the question right
up front and then I’ll get into what I think are the more important questions – the ones
we should be asking – as well as my recommendations for how you can earn more no matter what you’re
doing right now. So, stay tuned for that a little later in
the video. So, how much do architects make? Well, according to the Bureau of Labor Statistics
here in the US, the median salary for an architect in 2016 was about 77 thousand dollars. Now, the top 10% earned more than 130,000
and the bottom 10%, less than 47,000. Where you’ll fall within that range depends
on factors like: geographic location, firm size, your level of experience, and the project
types you’ll be working on. For a more granular look at these data check
the Bureau of Labor Statistics website as well as the AIA site, which has a compensation
calculator. Both are linked up in the description below. When I graduated from architecture school
with my BArch and stepped into my first job as an intern architect, I earned something
like $24,000 a year. To figure out your hourly rate divide the
annual salary by 2,000. So, 24,000 was roughly $12 an hour. Woo man; that was more than 20 years ago. Now with a salaried position all that overtime
you work is unpaid. And so, the effective hourly rate was probably
a lot lower. Of course, salary is only one component of
your total compensation. In that first job, health insurance was also
included as well as a 401k plan and I think there was even performance-based profit sharing
in place. And so, the value of the compensation package
was certainly higher than the $12 per hour I mentioned. However, and this is important, having health
insurance didn’t directly help pay off my student loans or to pay my rent. So it goes without saying that your cost of
living is an integral part of this discussion too, and this brings us to the more important
questions we should be asking ourselves when it comes to figuring out compensation. And that is, “what are your expenses?”
and “how much debt are you in?” What’s left for you to do as you choose after
you pay all your expenses each month. These are your net earnings, that’s the number
you really care about, right? It’s possible to make a lot less in earnings
and still come out ahead of someone making much more than you if your expenses are lower
than theirs. The best part about this is it’s something
you can control and change, today even. In business terms, this is your profit and
to figure out profit it’s very simple: profit equals gross revenues minus expenses. If you only focus on gross revenues the, “how
much does an architect make?” question, it wouldn’t accurately reflect the
amount of money you have left over, the amount you can use as you please, whether that’s
reinvesting in your business, or for leisure, or travel, or a new home, or whatever you
choose. Addressing only the revenue, the compensation
side, while ignoring the expense side is just bad business, especially when you realize
how it truly impacts the compensation equation. Let’s use my first job as an example. Graduating architecture school with a mountain
of debt meant the compensation that really mattered to me at the time was cash. Now, that’s not to say that having health
insurance didn’t matter but it mattered a whole lot less at the time than making the
monthly student loan payment, and paying the rent, and food, and beverages. The liquidity of compensation is something
you should care about and the expenses you carry directly impact it. The higher your expenses are, the more liquidity
you want because it allows you to direct your monies where they matter most to you. Now, it’s obvious that the best scenario is
having as few expenses as possible, which again, allows you to choose where you apply
your resources, not your creditors. Now, on to the thing that everyone wants to
know: how can you earn more? I want to start by saying that earning more
requires a value exchange. Simply asking for more because you think you
should be paid more; don’t do this. Always ask yourself, “what’s the value exchange?” Bringing more experience, or expertise to
the table, is worth something. Products propose a value exchange. Specialized services, skills, or assumption
of responsibility, or risk; these are all value exchanges you can negotiate around. Okay, here they are. Start by understanding your full financial
picture. You need a budget to show gross revenues minus
expenses. Now, you don’t have to own a business or run
a detailed profit and loss – although you may choose to – anyone can do this. Every dollar you reduce your expenses increases
your net earnings. Think about it, you’re giving yourself a
raise here. You want to strive to run a debt-zero business
– and life – if you can, which gives you an enormous amount of negotiating room and optionality. No debt means you’re in control, not your
creditors. Now, I realize this isn’t possible for everyone,
but your budget is necessary to flag these problems and make them explicit. I hear from so many people not only architects
who complain they’re not being compensated fairly, but are financing vehicles and homes
that are well beyond their monthly net earnings. Now, not all debt is bad, it often to makes
sense to carry some debt if you can leverage it for tax purposes, but it shouldn’t enslave
you to taking work or projects that aren’t a good fit just to keep the lights on. Number two, control your time and put it to
work for you. Time is the most precious resource we have. When you recognize that time can be manipulated
to your advantage you’ll see it as an asset to be strategically deployed rather than something
working against you. Divorcing time worked from income or fee earned
can be life-changing. I recommend reading the 4-hour Workweek by
Tim Ferriss, which fundamentally changed the way I think about my relationship to time. Check the cards for the link. Make things once to sell many times rather
than offering a one-for-one exchange of time for dollars. Designing products for sale or developing
productized services are two of the ways that I do this. Now, number three: diversify your income. This goes along with the previous example. Selling products is a scalable revenue model;
selling your time isn’t. Don’t just sell your time. When you tie yourself to a single form of
income, let’s say the standard service-based model, where you’re working one-on-one with
clients, you’re far more likely to suffer when something related to that income stream
changes. Clients put projects on hold, they trim their
budgets, there are economic downturns and all kinds of unforeseen circumstances. Diversifying your earnings tempers the extreme
swings and once you’ve recouped the cost of making your product, it’s all profit. Build it without spending anything and it’s
profit from the first sale. Number 4: become indispensable. If the lowest 10% of our profession in the
US is paid less than 47,000 and the highest is paid more than 130, that’s a huge divide. Where do you think the experts fall on that
spectrum? When you become the best at what you do, higher
compensation follows. And this doesn’t mean you need to wait until
you rack up 20 plus years of experience, you can be the best at anything you choose if
you put in the hours and seek to become the expert. Now, I don’t know everything there is to know
about drones, but if I know just that much more and have just that much more experience
here locally, then I become the local resource. And, when people hire me I get more experience
and a little more name recognition. This builds over time. Pick the thing people come to you most often
for and own that niche; this will make you indispensable and pay dividends. Number five: work for yourself. About 20% of our ranks are self-employed,
myself included, and speaking from experience, I can tell you this is one of the ways to
make practicing architecture very lucrative. Most of us start out working for someone else
as a consequence of the professional training that’s required of us. As I transitioned from working for others
to working for myself I was forced to learn the business of architecture. Set a reasonable professional billing rate
and do the math. Let’s say you bill out at a theoretical 150
dollars per hour and about 50% of your time is billable. In a year, that nets roughly 1,000 billable
hours and when you multiply that by your hourly rate you’ll gross 150,000 dollars annually. Now, of course you’ll have operating expenses,
which you’re gonna keep as low as possible, and taxes, insurance costs – not to mention
all the risk you’re assuming – but I’d be willing to bet that you’d still be ahead of
where you’re at now. And, the bonus is that you’d be building equity
in something that’s yours, not someone else’s. Now, I know this isn’t for everyone certainly
but it’s a good way to quickly earn more and it doesn’t have to be a full-time gig necessarily
either. Is this something you can start on nights
and weekends? Yes. Number six: get licensed. Now, you can’t set off on your own and expect
to bill out your services at $150 per hour without a professional license. Passing your exams and achieving this professional
milestone confers distinct advantages and a much higher earning potential is one of
them. Do you need to be licensed to do what you
do? Maybe not, but consider where the top-end
commission’s will go when you’re contemplating whether or not to seek licensure. Will they go to the ones who have the title
of architect, or to the ones that don’t? Now, this isn’t said to disparage anyone who
isn’t a licensed architect, only to say that in my experience, architects get first pick
of the really good projects and clients, the ones with the budget, the ones who will gladly
pay for your services, and ultimately fund the kind of architecture you’re capable of
designing. To truly become wealthy, I think you should
be asking yourself, “what do I want out of this profession?” or more importantly,
“what do I want out of life?” I’ve said this before, but I want to repeat
it because I think it’s really important: start by defining precisely what success means
to you. Now, I recorded video on this topic and I’ll
link it up in the cards. If money is the primary motivating factor,
the thing that defines success for you, practicing architecture probably is gonna leave you unfulfilled. There’s so many other professions that pay
better than architecture, but for me – and I think for most – success isn’t defined solely
by how much money I have in the bank, but rather how happy I am in life. Success for me is defined by three things:
the freedom to do what I choose, a purpose – that is to say something driving me forward
each day – and finally, relationships, having family and friends to share life wit. Notice money isn’t in there? Sure, money is important, but it isn’t driving
the decisions I make each day. Does this make me wealthy? Well, I think so, but not by any real objective
measure. It certainly makes me happy. And, I don’t share this to brag, only to show
that it’s possible to feel wealthy and successful without all the trappings that people seem
to correlate with wealth these days: the fancy cars, the swimming pool, and expensive clothing,
exotic vacations. Imagine for a moment if for every dollar you
earned in a month, half of it was spoken for with debt to finance the visible trappings
of societal wealth. How very different that existence would be,
if every hour you worked, 30 minutes went to paying off your debt. That’s a fundamentally different transaction. Even if you’re working for yourself, you’re
not actually working for yourself, you’re working part-time for your creditors while
you pay them back. In that relationship, who’s leveraging time
and experience, you or them? They are, right? Focus on flipping that relationship and you’ll
be rewarded in countless ways. Please smash that like button if I’ve helped
you at all and comment below, tell me what you think about these ideas. Doing this helps me grow the channel and to
know that I’m making the kinds of videos you like watching. We’ll see you again next time. Cheers!


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