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!