Quote:
I guess the salient point on the competition is that the firm must be so busy that the competition work results in work being turned away. 8 people for 6 weeks seems like a lot for some renderings, elevations and floorplans though. Otherwise when Starbucks makes a mocha instead of a late they are "spending" $4 for the coffee they throw out instead of the 50 cents it cost them.
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2 additional observations:
Generating renderings, elevations and floorplans sounds easy. Doing it well and on a budget is not. Think about a school project. A semester is how long 14 weeks? 10 - 12 weeks is spent designing a floor plan, sections, and elevations. The last 2 weeks is spent generating the presentation drawings, sections, renderings, and models.
The $4 cup of coffee costs a lot more than $.50 to make. The majority of costs that go into the $4 cup are not paying employees salaries. For an architecture company think about
:
- the rent payment due every month to the building owner
- the energy bill due the utility for heating, cooling, lighting
- paying the receptionist to answer the phone
- paying the accountant to count the money on the jobs that make money
- paying your insurance coverage
- paying your employees health benefits
- paying into you employees retirement plan (hopefully)
- paying your marketing director
The costs of chasing projects like these can be absorbed, but they are real costs. A general rule of thumb I have heard, is to assume for every dollar in salary think 2.5 times that for other costs. So if you pay an employee $25 an hour, all the other costs add up to something like $62.50 to break even. And this assumes every hour is used at 100% efficiency.