Transform your architecture practice with the 3P questions

Written By Rachael Bernstone

How much do you know about the performance of your architecture practice, and whether your current business development and marketing activities are capable of generating a sustainable and profitable livelihood for you and your team members?

If you’re like many of the architects I work with, you might currently view “profit” as a dirty word. There seems to be an unwritten understanding across the profession that “no-one will get rich from working architecture”, and that others in the construction sector will reap the greatest financial from the design and building process.

Geoff Hanmer – who is an Architect and MD at ARINA and Adjunct Professor at the University of Adelaide and Professional Fellow UTS – summed up this sentiment when he wrote on Twitter:

“Salaries for a graduate architect after a 5 year degree are lower than for a 3 year degree in construction management. That tells you a lot. Developers make the serious cash, builders make a profit and architects make a lasting contribution to society.”

It’s my view that this is a belief – admittedly one that is deeply entrenched and widely held across the architecture profession, here in Australia and around the world – but it’s not necessarily true.

If you intentionally go looking - and ask the right questions of the right people - you will find plenty of examples of successful architecture practices that do make a reasonable profit. These practices are often so in-demand that they have waitlists for their services; which means they can afford to be more discerning about the types of projects and clients they choose to take on, and the type of impact they can have in the world, as a result of their success.

So what are the key questions to ask about your practice and your business, to get visibility over your current performance and to pinpoint where there may be opportunities for improvement?

I’ve developed 3 questions that revolve around Proposals, Projects and Profits, and I call them the 3Ps questions.

They are:

  1. What proportion of  your Fee Proposals (or tenders, EOIs etc) do you actually win?

  2. What proportion of your Projects actually get built?, and finally,

  3. What is the annual Profit margin in your architecture practice?

Let’s unpack these one by one, and see how they intersect and inform each other.

Here’s the first question again:

1. What proportion of  your fee proposals (or tenders, EOIs etc) do you actually win?

One architecture firm – let’s call them ABC Architects – disclosed their answer to this figure at a public forum; it was about 24%. And the co-founder explained that they had increased that figure from a lower number by focussing on who in the practice was compiling their submissions, and deciding which projects were most suitable for them to bid on.

(Source: https://aca.org.au/sydney-recap-the-engine-of-growth/)

Another architect – from XYZ Architects – disclosed their answer to this question on social media, where they wrote:

“In 2021 we had a staggering 80% (40/50) conversion which is why our books were closed for ages.
In 2022 we only opened secretly to interesting enquiries we’d popped on a waitlist and converted 67% (16/24) of them and this year we’ve used the same strategy as for 2022 and 50% (13/26) converted. 
We are officially opening the books again tomorrow with clear criteria about the types of work we are interested in so we will immediately filter out some… then they complete an online survey… we review them all as a big batch and filter, only choosing projects and people who we want to meet on/with… we then meet with them and prepare the fee proposal after that.”

(Source: https://www.instagram.com/p/CxEwLfAs3w0/)

Can you see from these two responses – which run the gamut from about 1-in-4 successful proposals to about 4-out-of-5 successful proposals – why this question (and your own answer to it) is so important?

In case it’s not apparent from the explanations provided by XYZ Architects above, increasing your proposal success rate can have a significant impact on the overall success of your practice.

(This practice announced that it would cease to offer architecture services in 2024, to focus on other parts of the business, responding to a series of external factors, including changing market conditions and the owner’s health issues.)

What are the benefits of winning more of the right types of projects and clients?

  • More successful bids = more discernment about the projects you take on.

  • And less time and energy is wasted on proposals that don't succeed.

  • Also, aligned clients really understand and appreciate your value.

  • And more projects actually proceed to construction.

  • That leads to a larger pipeline of happy clients – who can become ambassadors for your practice! – to inspire new clients and help you win more new projects.

  • And ultimately? You'll have time and freedom for the things you REALLY want to do...

Now can you see how increasing your results for single metric can kick off a virtuous cycle that enhances every part of your practice, and your life?

OK, let’s move on to the second question, which is:

2. What proportion of your projects actually get built?

Going back to ABC Architects, the co-founder said that 27% of their projects actually got built.

Anecdotally, another architect told me that the figure is closer to 80% at their practice.

Yet another architect posed a great follow-up question: Did you get paid - in full or part - for the unbuilt projects?

And at XYZ Architects, the answer to Question 2 is:

“Definitely more than 80%. The ones that didn’t in some cases might yet still. Most that haven’t been built stopped part way through design usually after we continued to warn about rising build costs. In all cases we got paid except for a few that choose to rudely ignore the balance invoice associated with their final stage (but you get that, sadly).”

That's a huge difference, isn’t it, between 27% of projects being realised, to more than 80%?

Admittedly, there may be differences in how these stats are measured – for example, where is the “starting point” to track projects from initial conversation to completion.

Should you measure from the initial enquiry? Or the point where a concept design is agreed? Or the point where a DA is issued? Or somewhere else?

This milestone may vary across practices, but this is still a useful question and metric to monitor in your own practice, as a barometer of your overall business development and architecture delivery methods.

So, do you know the answer to Question 2 at your practice?

And if it's at the lower end of the range, how much opportunity for improvement do you see?

How and where would you start making changes to your internal systems, processes and outward-facing messaging to increase your performance?

For me, it's all about working with the right - that is, aligned - clients, and being able to lead them through your process in a clear and legible way. So they aren't scared off by nasty surprises or budget blowouts, which have the potential to derail projects, by giving clients reasons to put them on hold indefinitely, or abandon working with you altogether.

And that leads us to Question 3, which is:

3. What is the annual profit margin in your architecture practice?

The metrics of success in architecture have tended to focus on external criteria such as awards and getting published - that speak more to how your peers and others might view your projects - than internal criteria that relate to overall functioning, performance and culture within your practice.

I think it’s time to change how we perceive and rate “success” in architecture.

To be fair, there may be a correlation or even causation between awards and publication-worthiness of the work and the performance of the so-called “best architecture firms”, but without transparent access to confidential financial data, it’s hard to know if these relationships do indeed exist.

Because financial performance data tends to be harder to gain access to, it tends to not be discussed publicly, and I’m not suggesting that practices should disclose this information.

But in my search for information about performance and profit in architecture, I came across everything from “profit is a dirty word” to “you should be earning more than 20% in profit and 30% is excellent”.

And I discovered - to my surprise - that there are several sources of aggregated data around turnover and profit, which you can refer to to determine how your practice’s net profit compares.

For example, in the USA in 2023, “firm profitability as a share of net billings (income) averaged 13.2%”, according to the Key Findings of the AIA Firm Survey Report 2024.1.

More recent data from the USA revealed that average profitability had dropped to approximately 12% in 2024, with 52% of firm leaders reporting that their firm’s profitability topped 10% in 2024, and 11% reporting that it was 25% or higher, according to the AIA/Deltek Architecture Billings Index (ABI) from February 2025.2.

In Australia, by comparison, the IBISWorld Architectural Services in Australia report from August 2023 quoted an average profit margin of 17.4%, noting that: “Tumbling construction activity has eroded profitability in recent years. Nonetheless, architecture firms have benefited from easing wage and purchase costs pressures.”3.

I haven’t been able to located more recent Australian figures, so let me know if you have a source for updated data, and I can update this article.

It’s worth stating that profits may be overstated if architecture practices aren’t paying fair wages to employees, and The Wellbeing of Architects 2021 Practitioner Survey, Primary Report touched on this, with a quote from a respondent who said:

“Make companies realise that they should treat all staff fairly, that means paying for work done. If we can't do the work within the fees we as a profession are charging, then the fees need to be higher! Your company cannot be considered profitable or successful if it is only so on the back of unpaid junior labour.”4.

More importantly though: are you keeping tabs on your profit margins, and how they compare with industry standards?

And do you know how to boost practice profits, or how to attract better performing projects and clients?

That’s where benchmarking data about practices can be incredibly useful.

There are various other reports that compile financial and other confidential data from practices for benchmarking and comparison purposes, such as:

Other useful reports and data sources about the financial performance of architectural practices include:

So, now that I’ve shared the 3P questions with you – and lifted the veil on the answers from two practices that are operating at either end of the spectrum – let’s consider why these issues are not on the radar of most architecture practices (in Australia at least; I haven’t yet completed my research in relation to other countries).

Why is business development so poorly understood in Australian architecture practices?

In Australia, the National Standards of Competency for Architects - which governs what is taught in architecture degrees, for registration exams and subsequently in CPD – has no requirement to cover either business development or marketing.

That means that generations of architects emerge from Australian university courses ill-equipped to communicate the value of architecture, or to run sustainable and profitable businesses.

Architects just don’t get taught this stuff at uni by successful business people. In my view, if architects taught you some of these concepts, you need to take those lessons with a grain of salt, especially if they were teaching concepts that they’d previously learned from other architects.

To be fair, not all architecture students aspire to run their own practice, so perhaps these skills aren’t essential for all students (although there are a lot of sole practitioner architects; and many of them are running expensive hobbies rather than profitable businesses!).

Part of the problem with the lack of grounding in these important topics in the NSCA is that architects are not incentivised by their Compulsory Professional Development framework to seek out this knowledge after they graduate.

So most architects who choose to undertake training or courses that focus on business development and/or marketing get little or no CPD credit for it.

(And in my experience, most architects don’t venture far beyond the CPD-corral when it comes to undertaking additional training!).

As I mentioned, I’m not familiar with all of the course requirements around business development, marketing and communications in other countries, so if you’re practicing in another country, please get in touch by email and let me know if your university education and/or Compulsory Professional Development (CPD) or Continuing Education (CE) frameworks include these topics.

What’s the upshot of this omission from the NSCA?

In short, the vast majority of architect-business owners are operating without the necessary skills to communicate the value of good design, and they lack the skills and ability to convince or persuade future clients to engage them over other types of professions and/or service providers.

And in the era of climate emergency – when the world needs good design more than ever – that’s a major blindspot across the profession.

If you’re ready to plug the gap in your own business development and marketing knowledge (and nearly every architect has this gap, because it’s baked into your education!) you can take my CPD course: Architecture Marketing 360.

It’s the only CPD training in Australia – perhaps even the world! – that provides the 101-style comms knowledge that should have been taught to architecture students in their university studies.

Other ways to access our business development and marketing services

Sounds Like Design offers a range of services to architects, including 2-hour Acupuncture Sessions to our 3-month Review + Reset consulting package:

  • Get out of overwhelm and obtain “clarity through action” with a short, sharp injection of expertise. Book a Zoom Strategy Session here to talk about any business development or marketing issues you’re grappling with, and tap into my knowledge, experience and connections. After our Zoom session, which we’ll record so you can refer to it again later, I’ll send you a follow up email with actionable insights and resources, all of which is completely customised for your practice and individual needs.

  • If you’re interested in expanding your mindset and skillset around Business Development and Marketing using the system I developed specifically for architects, you can take the Architecture Marketing 360 CPD course. You can purchase the self-guided program and start right away, here.

  • And if you’re interested in working with me directly, you can find details about the 3-month consulting package Review + Reset here. (There is often a waitlist for new Review + Reset clients, and we aim to help you achieve a waitlist for your architecture services, too).

Lastly, if you have any questions about this blog post, or any of my services, please click here to email me. I’m always happy to hear from architects who want to improve the way they communicate their value to future clients, and grow the market-share pie.

Feel free to leave a comment below or share this article with a friend or colleague, if you think they’ll find it useful.

References

1. Key Findings of the AIA Firm Survey Report 2024, The American Institute of Architects, https://www.aia.org/sites/default/files/2024-11/AIA_2024_firm_survey_report_Infographic.pdf, visited Wed 20 Aug 2025.

2. ABI February 2025: Billings remain soft at architecture firms as interest in new projects wanes, The American Institute of Architects, https://www.aia.org/resource-center/abi-february-2025-billings-remain-soft-architecture-firms-interest-new-projects, visited Wed 20 Aug 2025.

3. IBISWorld Architectural Services in Australia, Aug 2023, PDF report (not available online)

4. The Wellbeing of Architects 2021 Practitioner Survey, Primary Report, Shea, T., Cooper, B., Gusheh, M., Kinnaird, B., Stead, N., Orr, K., Battiston, L., Cox, J. W., (2022), Monash University. https://thewellbeingofarchitects.org.au/publications/the-wellbeing-of-architects-2021-practitioner-survey-primary-report, visited Wed 20 Au 2025.

Rachael Bernstone
Next

20 years of Sanctuary magazine: sustainable living with style