24 July 2020 Pricing of services for architects and designers
by Mirella Corrêa
Perhaps you are going through this right now, or have already gone through it and will remember, with that feeling of leaving college and being a little lost, not knowing which way to go, how to start, what to do. Except for those who become employed right after graduation, and who in a way can be more relaxed about these questions, the vast majority feel insecure at the beginning, afraid of making mistakes, not knowing how to attract customers and the key point: HOW TO PUT A PRICE ON YOUR WORK?
Unfortunately, colleges (as well as schools), in general, do not have in their curriculum a subject on financial practices. This leads a large part of professionals to not know the basics, let alone how to run a company. Yes, a company! It can be a little scary, but if the intention is to sell your service, you stop being just an architect or designer, and become a businessman in the construction industry! The moment you perceive yourself into this new position, you understand the range of responsibilities involved, and one of them is learning to manage your business!
Managing, a complicated matter, which has no direct connection with professional practices, but which is extremely important for them to work! The first thing that needs to be demystified is that it can even be complicated because it is not part of our routine studies, but it is possible, as long as it is focused on what we do! Thus, the second point that needs to be understood is that we sell a service and not a commodity, and that will make all the difference in planning. So, it is essential to search for content that brings you information related to this topic.
As we sell a service, reaching the right and fair value can be a little difficult, especially early in your career. Some professionals use an X value per square footage to get to the price for the client according to the size of the location. The failure of this form of collection is mainly related to management, as it makes it impossible to measure the quantitative amount related to operating expenses and profit. The system that has been spread among several professionals is the methodology per hour worked, or, as I usually say, by load/amount of work.
Thinking about hours worked brings real control over the amount of service provided, and in this way it is possible to assess whether the amount charged for that service had the expected result: PROFIT! After all, if it is already understood that it is a company, it needs to generate profit!
To sum it up, in order to reach the hourly value, it is necessary to relate the personal costs/expenses, which we will call the pro-labore (salary), and the costs/expenses of your professional structure. You also need to understand how many hours per month you will have to work (count only the productive hours). After listing all these values, add the pro-labore to the office expenses, and then divide that total by your productive hours of the month, so you will have the value of your hour!
Follow this example: pro-labore of R$ 3,000 and professional structure of R$ 4,000. Consider 7 productive hours per day and 20 working days per month, which will result in 140 hours per month. By adding the two values and dividing by that total of hours, we arrive at the result of 50 reais an hour.
Once the value of the hour is defined (which may be constantly changing, caused by changes in costs/expenses, as well as by your professional improvement that must be taken into account), it is necessary to analyze/define how much time will be spent to carry out a given project. With this number raised and the hourly value in hand, just multiply the two and add a percentage of profit. Through this well-summarized explanation, it is possible to have the final value of the project/service!
After understanding and defining the value of your hour, as well as that of the service, it needs to be clear that this methodology only works if the amount of hours worked on a given project is noted to generate metrics, which should be analyzed to ascertain the results. These indicators make it possible to understand whether you are working hard, charging little, not making a profit, among other factors.
Normally in the first projects there is a greater difficulty, which can generate disparity of values and hours, which is extremely common, but as the technique is improved, the whole process works and it is really possible to find out if the company and the entrepreneur are having the expected financial return!
Those explanations were just a direction you could take! There is a lot of content that can and should be explored in order to become a successful professional with the help of management.
You only have to know: are you prepared to be truly an Architect/Designer Entrepreneur?