How to determine the billable rate for an architectural project?

How to determine the billable rate for an architectural project?

Assessing your fees depends on various parameters. Each company or independent architect can apply their own pricing grid based on multiple factors. This is referred to as the billable rate. How to understand, calculate, and optimize your fees according to your project? Let's explore.

The billable rate

The billable rate represents the amount an architect charges for a project: it's the sum of the fees presented to the client during a service, which can vary from one project or phase to another. But how do you determine this rate?

Let's consider an example: You and your client have agreed on the terms of a phase billed at €10,000. This amount, expressed in euros, must be translated into the time spent, which is the basic unit for managing an architectural agency.

Who will handle this phase and what is their daily rate? For the same amount, a senior project manager at €1,000 per day will need 10 days of work, while a junior architect at €400 per day may require 25 days.

The calculation of the hourly rate

Essential to estimate its value, whether an architect works independently or in a company, the goal is to sell services at a rate that ensures a comfortable margin. However, there is often uncertainty about the parameters to consider in the calculation to ensure that all the different expenses inherent to the business are covered.

To address this, the MAF (Mutuelle des Architectes Français) and the Order of Architects offer advice and assistance to combat undercutting and assist with recovery. The Order of Architects also provides a "simple method for calculating the hourly rate of the agency," considering various factors. Suitable for all modes of practice, from salaried to self-employed architects, this method aims to answer the question:

Given the time spent working on all matters, once the hours of internal administrative work, which are inherently non-billable, have been deducted, how much should each hour be sold to achieve a certain level of income (BNC or "equivalent salary," salary)?

The resulting calculation of the billable rate enables each architect to determine the amount of their services. You can download the full explanatory note, prepared by the Order of Architects.

While waiting for OOTI's integrated calculator, soon to be launched, the website "outils Compta en" provides one of the few calculators specifically designed for architects, accessible here: http://outils.compta-architectes.com/. It allows you to estimate the billable rate for each member of a project according to their role: project manager, project lead, technician, etc.

Managing your fees with OOTI

Optimizing your financial management through an ERP (Enterprise Resource Planning)

It allows you to consolidate all your fees on a single platform. You can easily compare the amounts associated with each service based on their nature and adjust the hourly rates of teams as they evolve. OOTI enables you to set a default rate for each member of the agency within the "Team" tab and then "Roles." This rate can be further adjusted based on the specific project from the "Settings" tab and then "Roles."

OOTI's constant evolution

This functionality will soon evolve to provide even more precise control, and we'll keep you informed about it. Integrating these elements will allow you to generate valuable data for analyzing your financial management. Depending on hourly costs, time spent, and profit margins achieved, the management of your agency will be optimized, and your profitability considerably improved!
Don't wait any longer; request a demonstration from our teams by scheduling an appointment here.