How To Double Your Profits (Without Hiring or Spending) with Daniel Patterson | 105

You don't have to be an everyone pleaser.

And in fact, if you are trying to please everyone, your dream

clients aren't gonna feel special.

The guys who are, and the companies and the individuals and the

businesses that are actually an amazing fit for your business.

can just feel just part of the crowd when you're trying to please everyone.

Welcome to Architecture Business Club, the show that helps you

build a better business in architecture so you can enjoy more freedom, flexibility,

and fulfillment in what you do.

If you're joining us for the first time, don't forget to hit

the follow or subscribe button so you never miss another episode.

We're joined by Daniel Patterson, a former RIBA part one with

nearly two decades of experience helping businesses grow and scale.

He's the founder of masterplan Pro and branding Agency, hy and has worked with

RIBA and RSAW to deliver CPD training on business and marketing strategy.

Daniel is also the creator of the Architect's Master Plan, a 12

month growth system for architects.

You want to escape the tender trap and run highly profitable, sought after

practices to discover how much profit your firm is missing out on each year.

Head to master plan pro slash profit gap and use Daniel's free

Architect's profit Gap tool.

Daniel, welcome to Architecture Business Club.

John, it is an absolute pleasure to be here.

Thank you for having me.

You are very welcome.

I've been looking forward to this one, Daniel.

We've been talking about this, um, a little bit over the last month

or two, so, I'm glad that we could make this happen today actually um,

international Podcast Day, the day that this recording is taking place.

Hi about that.

You've just hit a hundred guests.

It's international podcast day.

Wow.

This feels like quite the pleasure.

Indeed, John.

Thank you.

Daniel, before we get stuck into the topic that we've got today

could you tell me a little bit about what you like to do outside of work?

A lot of things, John.

I'm a musician when I'm not when I'm not, when I haven't got the drawing pad out or,

or working on business plans, et cetera.

I but like yourself, you've got your guitar there, don't you?

My drum kit is it's not in our house now.

Had to be, my wife threw me out for having a drum kit, so I've got a,

well more, I think more likely threw the drum kit out rather than me.

Yeah.

So music a big part of her life.

I love just walking, John, going out for walks, exploring, adventuring.

Any opportunity we get to travel, we'll take it as well.

Bring on a bit of photography as well.

We in Formula one season as well.

I gotta say my dad was very much a petrol head and those gene

seemed to pass on to me as well.

So I, I can't get enough of motor racing either.

So there's a lot going on outside of work, John, but I gotta say

what I love to do the most is just spending quality time with the family.

Yeah, we've got a lot of um, shared interests there, Daniel.

Um, Particularly in music.

I, I bet your neighbors were glad when the drums got thrown out.

Do you know, I'm a bit of a purist as well.

I'd rather have no drum kit than have an electric drum kit as well.

A little bit controversial perhaps, but uh, yes, relegated the drum kit back to

church and can only practice there now.

We'll keep at it though.

Yeah.

Great.

Hobbies to have all of those.

Daniel, we are going to talk about how to.

Double your profit without hiring or spending more on marketing.

This is a great topic, really looking forward to this one.

Why do you think so many firms struggle to stay profitable even

when they're doing great work?

The big question, John, isn't it?

In fact, profit doesn't seem to come up.

Money doesn't come up a lot in a conversation, and yet it's absolutely at

the heart of the business, which it is.

Of course.

Architects love to create and you know, I've, it's what I wanted to do as well.

It's what I went to university to do too.

And the dream for most architects that I speak to is to create

wonderful architecture and the business side of things gets.

Separated and set aside.

And so the conversation of money doesn't come up.

And yet that is the very tool and resource that's going to enable architects to

put more time and resource into the projects that they love the most.

And so why do architects not talk about it?

Why do architects not bring it up?

I don't really know.

comes across perhaps as taboo, John, to talk about money, a bit like the

way marketing might sound like within the architecture space as well.

It almost signs and comes across as if I talk about money, I am

cheapening my own reputation.

And to some degree I, I understand that I've got a lot of empathy for

wanting to retain a measure of.

Prestige and honor within the architecture, especially the

chartered architecture space.

But we have to recognize that it is, as I said, it's that pillar really for

enabling the growth and enabling the types of conversation and creativity

that architects want to roll with.

If we wanna do that creative work and work on the types of projects

that we really want to work on, then it's really fundamental that we're not

ignoring money and we are profitable.

Because if we're not, then we're just, we're not gonna be able to do the work

that we want to do, to work with the types of clients we wanna work with.

It's so important that we bring this up and uh, you know, raise

some attention around this topic about money and, and profit.

What do you think it is that holds architects back from making more money?

John, I think it's two or three things.

I've spoken a to a lot of architects in the last year particularly, and as

I'm sure you have as well, and for the listeners listening to, perhaps you

can relate to a couple of these things, especially once you transition out of

a solopreneur, a solo practitioner, into having, multiple people working

for you and building your business.

Then there's an onus on the principle to keep those bums in the seats.

There's an onus to keep families fed and what ends up happening a lot of

the time is there's a chase for money, not just general, but any money.

And what happens is I mean from the architects that I've spoken to a lot, it's

number one aim is to get on frameworks.

It's to get on tender systems.

It's to win the big projects to, keep the system running for the

next three or four months perhaps.

And the trouble with that comes with the second problem that comes up a

lot, which is you end up competing with everybody, not just other architecture

firms or chartered architecture firms.

If you're chartered, you're competing with everybody who's

wanting a piece in that pie.

And so what ends up happening is there's a system that's, that works for the

client, which I don't think it actually works for ultimately, but there's a system

that ends up happening where you've got one project and, 10, 20 architecture

firms competing for that one project.

The winner isn't always going to be.

Who delivers the best concept or who is in theory the best architect?

The winner often comes down to a subjective relationship or price.

And so it's a race to the bottom.

And if you keep racing to the bottom within your business, and if

everybody else is doing that, not only are you devaluing your industry,

John, not yours specifically, but the architecture industry, you're

devaluing the value of creativity and you're saying it's not worth a lot.

We just want to get the work, any work, and so profit ends up becoming

completely exhausted and we work at a just above break even scenario.

So that's not a great situation to be in.

That racing for tenders, racing to the bottom and competing against people who

are not at the same level of quality that you are just to get the work.

Architects need to be brave, John.

They need to be able to stand up.

They need to be able to say, these are my prices.

They need to be able to communicate their value much better than

they currently are at the moment.

Relying on systems like frameworks to win work, there's another route to get there.

And those other routes, John, are so much more profitable.

Yeah.

Yeah, that's situation that you've described there, it must be so common

for so many practices and it can lead to.

As you say, it can lead to eroding any potential profits and just scraping

by, but also probably working on some projects that actually you're not really

that interested or excited in either.

So the work doesn't end up as fulfilling as it could be because

you're not positioning yourself and, going after the types of projects

that you really wanna work on.

Yeah.

Yeah.

Sticky situation for some practices, for sure.

Bringing it back to straight, back to money though, what, why do you think

so many people treat money like it's a dirty word, like a lot of people

are really uncomfortable around money.

Why do you think that is?

I could ask you the same question, John.

I dunno.

It perhaps comes down to a self sense of virtue and credibility

to not talk about money.

When you see products that are on the shelves shouting about

their price, generally speaking.

They're of the lower value types of products.

If you're going in a, going shopping in a high street, for example.

However, if you end up going into, a I was trying to think

of a very specific example.

Perhaps somewhere Rolex on, on, in London, I would be surprised if

they've got 200 products out each with a little sticker tag on them.

There's something about the idea that high value shouldn't

need to talk about money now.

And I think there is a measure of value and worth and understanding that

talking about money publicly, there's a place to keep some things withheld

in order to retain that level of.

Brand authority, but within certain circles, within client

conversations, we need to be better at understanding and talking about

money and not shying away from it.

In fact, a lot of our clients, we would encourage to, to talk about money right

at the beginning of conversation, rather than waiting 2, 3, 4, 5 rs maybe a day

or two after discovery to come up with a concept before talking about money,

just to recognize that the fit's not there and that the expectations are way

off and you've just wasted two or three days potentially of time and work, which

could have been used as billable ours, or seeking and searching for high value work.

And so there's that, again, that spiral that we end up wasting a

lot of time within this industry.

Also that time wasting isn't just your time, it's also the

prospective client that prospects that you're having the conversation with.

It could be completely wasting their time as well.

And you could be so much misalignment, particularly I think this is a particular

problem with smaller practices that work with a lot of domestic clients

where if they've never done a home renovation project before and never

worked with an architect before, then they may have no clue whatsoever.

Like e even what ballpark that your fees are in.

They may not know if, if your fee is 500 pounds, 5,000 pounds, or 50,000 pounds.

So actually not even giving a range or a ballpark, I, I

completely agree with you on that.

I think that, it's such an easy way to waste a ton of your time and also

mess around that person as well.

And actually having those upfront conversations at the beginning and

just gauge things quickly, I think is.

Very, Very sensible thing to do for sure.

This movie actually feeds back into John something

that I see a lot with architects, which is being a people pleaser.

We don't wanna disappoint clients, we don't want to go near the topics that

are taboo or risky or could turn away pe turn people away from potentially

working with us or referring us.

Whereas inadvertently, what you might have just done in this

scenario explained there, John, is you've wasted that client's time.

And if you go back to old marketing speak, this is going back 20, 30 years

perhaps old marketing speak says a client generally needs to have 10 good

experiences before they'll tell somebody.

And on the flip side of that, if somebody has one bad experience,

they might tell 10 people.

That these days with social media, with the networks that we've

got, that's no longer the case.

One bad experience could reach hundreds of people.

And so there's a sense of carried and measured risk in every conversation that.

If I get this conversation wrong, if I talk wrong, if I don't present myself

in the right way, then you know, I could build a negative reputation for my brand.

But actually by holding back on the crucial conversations, you're not just

postponing the inevitable, you're missing more time, and therefore increasing

frustration from of that client, it'd be far better in that particular

scenario to say, lovely to meet you.

You know, We typically operate within, for our domestic projects,

operate within this range.

Is this a good fit for you or can I help you find somebody else?

So right away, yes, you've turned them down if they're not a good fit,

but you're actually in that instance actually offering them an opportunity to

be helpful, for you, to be helpful and guide them and continue to guide them

even if it's away from your practice.

As you can maintain your reputation and maintain it within.

A bracket that your dream clients live for and can work within.

I love that approach, Daniel.

I I have tried something similar in the past when I was, architectural services

and working on those types of projects with a lot of mainly domestic clients.

What, what would happen is I'd actually managed to turn a, what?

An inquiry.

That was a, not a good fit for me.

Somebody I couldn't help.

I've, on more than one occasion, they've left a testimonial for my business,

even though we didn't work together, just because when they got in touch

and we had that initial conversation.

We've quickly worked out that we weren't a fit, but I've managed to then direct

them to another company, another provider, or just directed them to whatever piece

of advice or whatever it was they needed to fix that problem that they had.

And that's resulted in a review for the business that, for, from somebody that

actually wasn't even a customer, like how great is that to have, to be able to get

testimonials and reviews from not just your actual customers, but from prospects

that come in that aren't a good fit.

Wasted opportunity, I think, isn't it?

If you are not helpful in that way, in those conversations.

That's a great example, John.

That's brilliant.

And I'm delighted that was the outcome for you.

You knew your boundaries.

You knew what would be a good fit for your business and what wouldn't be, and

you were able to communicate that well.

And that's something that we need to get better at doing is understanding that

there are ways to say no that don't end up in clients, throwing dirt at our business.

It's like playing ninja tactics really, but it's not manipulation.

It's simply understanding scope and being helpful.

And you can be helpful even with firmer boundaries in place.

You don't have to be an everyone pleaser.

And in fact, if you are trying to please everyone, John, your dream

clients aren't gonna feel special.

The guys who are, and the companies and the individuals and the

businesses that are actually an amazing fit for your business.

It can just feel just part of the crowd when you're trying to please everyone.

Yeah.

And so it's a big topic and perhaps another con

conversation to have John, but price needs to be one of those boundaries

that gets talked about early.

Absolutely.

Just one final thing on that thought before we move on.

I thought another thing that about maybe some of the people in architecture feel

like money's a bit of a dirty word.

I think often that the, as creatives that we can get very emotionally

attached to our work, we can become very emotionally invested in it.

Particularly if you are running a practice where you are still.

On the tools so to speak, if you are still actually working on those projects

and doing some of that design work that you know, that you enjoy doing that can

be something where, because you can get really emotionally invested in it when

it comes to talking about money, you can take that if they're not a good fit

or it can feel a bit like a rejection that can feel personal you're so closely

tied and associated with your work.

You know, I think that's particular problem for creatives and also

particularly for those smaller size companies where they're

very hands-on with everything.

They can feel like it's like the business and themselves are so

intrinsically tied together that they're like one and the same.

And then any kind of knock backs, particularly around pricing conversations,

you can end up taking it quite personally.

I think if you can learn to separate that and not take it personally,

then it does make it a lot easier.

That actually just an acceptance that not ev you're not gonna be a good fit for

everybody and it's absolutely okay because just because they're not a good fit for

you, you are not a good fit for them.

It doesn't mean that in the next conversation, you're not

gonna find somebody else that is a perfect match for you.

Yeah.

I think John, it's another good reason to talk about

price right up the beginning, before you start investing emotionally in the

relationship and in the design and in.

Whatever's gonna be produced.

Having a really clear understanding at the beginning, is this

a good fit for us or not?

And by the way, that goes both ways for you, but also for the client, you

might not be a great fit for them.

Let's figure that out straight away and then dive in and invest

emotionally into the project.

It's interesting, John and I might be diverting ever so slightly, but it is

still related to the topic of price.

There's a, an architect that I'm working with at the moment who had

a referral had a dream client knock on their door for a project grit.

They did not want to lose it, and they were willing to work a

lot less just to get the work.

This is before I was working with them, John, by the way.

But.

What they ended up doing was doing about twice the amount of work for the

client that they were really invested emotionally in because they knew it might

be a great piece for their portfolio.

It might reflect the type of work that they want to do more of.

And so they wanted to knock it outta the park and do a brilliant job.

But the trouble with that is that they essentially ended up working

for half the price and you can't sustain a business doing that.

We've gotta be better at communicating value and communicating that value

upfront before we dive into the project.

Shying away, reducing our prices to, in order to secure the deal

isn't good enough for a quality.

Service such as architecture.

This is a massive investment for clients.

Doesn't matter what client it is, it's a massive investment and they need to

feel like they're in good, safe hands.

And a good way to do that is to charge a lot of money.

It feels like when somebody's investing a lot of money, it's safe.

If I was paying for eye surgery, John, I would feel a lot more secure

and safe spending 10,000 pounds on eye surgery than I would someone who

offered it to me for a hundred pounds.

I would remortgage my house if I had to save my eyes.

And it's the same with your homes or your property, your investments.

These are the biggest investments of your life or your business, potentially.

And so we need not shy away from the idea that expensive is a dirty word.

No.

What it's doing is it's securing and solidifying your position

as the expert in your field.

That's a really interesting way to frame it, to think about it.

I think as well that sometimes the price in itself if something's more

expensive, there is a preconceived idea that thing is gonna be better.

And this also is something that I've seen in the instance of like how not

dedicated, that's not the right word, how invested clients are with something

that a good example is coaching that you could have two coaching programs.

They could be exactly the same program.

One of those programs is free or low cost, and the other one costs 10 grand.

And who do you think is gonna get the better results on that program?

Easily every time the person invests

Yeah, for

when you've got skin in the

Skin in the game.

That's the one, that's the phrase

That's the one that is exactly the type of client that you

want, where it stings, where they're not going to let their investment go to waste.

John I've been running a creative agency for good you part of 15 years now.

And as much as we love doing work on a pro bono basis for charities, registered

charities when we can, they are by far every single, not every single time.

I need to put a caveat there, but the risk of that project derailing

and being devalued is so much greater than the clients we work with that

are willing to actually pay the money.

So even though we might give the same level of value, our scope creep, extra

revisions that come in, the delays for clients getting back to us, all

of those things are much, much worse.

With our pro bono projects the guys that we give work away to for free

simply because it's not valued.

They don't have skin in the game.

They might want it, it might be a nice to have, and they approach us and they

might ask us, we might offer it, but until somebody's willing to put their, until it

hurts to pay and it should hurt to pay.

If I'm talking about that eye surgeon, if I'm paying 10 grand and I have to

remortgage my house, I'm gonna do whatever that surgeon says to prepare for that

surgery and do every single exercise afterwards to protect my investment.

I'm gonna work with and lean into the expertise of that

consultant or that surgeon.

It's exactly the same in the architecture industry, John.

So Daniel, you talk about doubling profit without hiring

or spending more money on marketing.

This sounds too good to be true.

Like how is this even possible?

Oh, this is why we're here listening, isn't it?

How do you double your profit without spending more money on

marketing or hiring extra staff?

Believe it or not, in the architecture industry, it's

actually not that difficult.

It sounds really farfetched.

It requires a few different things.

It requires confidence and boldness.

It requires courage.

It requires you to also understand your value and not just compete

on price like everybody else.

It requires you to step in, like in, in our program that you introduced, in our

master plan program, we go through as up to as many as 182 different points to.

Maximize and optimize the profitability of an architecture firm, specifically 182.

It's sitting at the moment, but John, what I could maybe do is we'll maybe have

a look at two or three of the biggest hitters that you can apply and your

listeners can apply straight straightaway.

There's two core areas in which you need to be able to double your profit,

but before I reveal what they are, John, let's just take a look at what

a typical scenario might be for a, let's say, a small architecture firm,

and you'll realize and recognize it's not as farfetched as what

the title might seem to suggest.

There are companies that would be doing great to have a 10% increase.

We're talking about a hundred percent of profit increase, right?

What I'm not talking about is doubling your revenue and your turnover.

We're talking about doubling your profit.

Ultimately, the take home money.

That extra money that's going to enable you to have more time, that extra money

that's going to enable you to invest in the future of your business and put

more money in your pocket ultimately.

If we take a scenario of a small firm that has maybe three, four

people perhaps let's, for the sake of keeping numbers round, let's say a

firm is turning over 400,000 pounds.

I think for a small firm with two or three people that's probably in an around

that space, maybe three or four people.

Okay?

400 grand.

Now, if we take the benchmark of gross profitability, so that is after

everyone's salaries have been paid, after your overheads and your studio

fees and your printing costs and everything else has been paid for,

you are left with your gross profit.

Now, the benchmark within the industry is between six and 15%

within the architecture space, which is ludicrously low already.

If you were to con compare that with solicitors, for example, they are

running at 50, 60% upwards, and yet architecture firms are six to 15%.

But if we took this particular scenario, John, if turnover's 400 grand and we

use 10% as an example, what might that firms gross profit be for the year?

John?

If my mathematics is correct, that would be about 40 k.

You are spot on.

Put you on the spot so you're talking.

Yeah.

10 grand per quarter.

10,000 pounds per quarter.

Now in order to double your profits, all we need to do is find an extra 10,000

pounds of clean, clear profit per quarter.

It's not farfetched.

That is very achievable and we do it in two areas.

John one is, seems a bit more obvious than the other, but one

area, one key area is reducing spend.

Right?

There are many ways to reduce unnecessary.

Spend to increase your profitability.

And we've talked about a few of them already.

I'll give you the top two or three here.

And the first one, John, is one we've talked about already, which is

understanding how to get around client friction and client delays, that scope

creep, revision, creep, all unpaid.

How do you get over that?

It starts by actually being able to identify who your dream client

is and communicate and build your brand specifically for them.

That's the long, hard way to go about doing it.

But if you can master that, you will have a line of dream clients ready to work

with you at a high value high value rates, and who will lean into your expertise.

And enable you the time to be creative.

That's one, that's what we want, right?

That's what we were sold in architecture school is the Peter Zither type

who has, he can pick any clients he wants because he's got so many

people lining up to work with him.

Which is wonderful.

But that starts with recognizing who you wanna work with.

If you're trying to please everybody it just doesn't work.

You cannot specifically position your business in a way that says, we

specialize in this type of client.

Not even a type of architecture, a type of person perhaps, that

you serve to exist and you become exactly what they need otherwise.

Yeah, you've got those delays.

You've got people who don't value you.

You've got everything that we've just mentioned, John, and that's

the long and hard way to do it.

It's build a brand for them.

It's worth doing, worth starting right now.

The short way to overcome that is to explicitly put better clauses in

your contracts explicitly state how many revisions they're gonna be.

Anything above that comes at a cost.

So at least your time is paid for and you're not doing it unpaid.

Equally if you are, if you put clauses in for response times as well, John,

we expect our clients to respond to requests from the firm within 24 48 hours.

Anything beyond that risks the project being paused or canceled, and at

which point, if they wanna reopen the project, there's a reopening

fee and perhaps it's something like 10% additional cost of the project.

So there's.

There's onus on the clients as well to get their heads in the game and

respond so that you're not wasting time and thus, therefore, wasting money.

So there's a couple of big ones there.

Building a brand and better contracts.

Two really, really good places to start.

The third here is it's billable time.

It's understanding your staff's capacity and capability and potential.

Now, far too often what I do see is architecture firms that are

growing particularly, they might have even 10 or 12 architects.

And that's what they have.

They've got architectural assistance and architects, all who are trained to

deliver projects, who's delivering the financials and the operations, and the

administration, and who's doing the social media, who's doing the marketing.

It's all the people who are in the business who have the potential

to have a very high billable rate.

And, if we just take the example of an architect doing some basic administration

work or doing meetings for the sake of meetings let's say their billable

time is worth a hundred pounds per hour to the company, just for the

sake of r numbers and arguments again.

If, 10 hours of their week is spent doing, admin tasks for the business and social

media and all those other things that are necessary to keep a business running, you

as a principal or as a shareholder in the business are paying a hundred pounds an

hour to have somebody doing photocopying and scheduling posts on social media.

That doesn't make any sense.

No, it doesn't.

Not from a, not financially anyway.

It would be far more profitable for your business to not necessarily go out of

your way to hire an administrator, hire a marketeer, but to find ways to do fraction

and to receive fractional support.

You can have an administrator for five hours a week if you want.

You could have a social media person working in your business or for your

business, 10 hours per month, and you don't have to pay and put them

on payroll and have the liability of the staffing issue as well.

And so by freeing up a lot of that administrative time, John

and, that enables your team to take on more work, right?

They're not doing any extra hours, but they can take on higher profitable work.

And that's a little bit more tricky, a game to play in terms of leading a team.

But that can start with just you on your own and you can grow that up

to any size until you, of course, you can build in departments

that, that do those jobs for you.

But it's about optimizing and maximizing that time.

So that's what I would call reduction.

So profit by reduction.

Of course, there are many other ways, John, I've got, as I

said, I've got a list of 182

unfortunately we don't have time to go through

all sort of 180 plus of those.

But yeah, that, that was a, that's a really good tip.

It's that thing, isn't it, of using the resource that is of the the right level

of quality and the lowest overhead.

So whether, you know that's a, a person within your team or somebody that's an

outside team member that you bring in, as you say, could be on a fractional basis.

And yeah, I could totally see how that could absolutely work.

Absolutely.

Yeah.

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Now let's get back to the show.

I will dive into the our top three four increase now that

we've reduced our overhead and spend, we've got ways that we can add layers.

Into the business to increase.

John, this is probably one of the simplest things that we could do,

not just as a principal, but as an architect working on a project.

It's something that I see architects shying away from, but it's by far

the easiest thing to do, John.

It's to simply ask for referrals.

Ask for the sale.

If every client who you work with and came through your door had not I was

gonna say, had a good experience, but for every client that did come through

the door, if you ask them for three names of people that might be in the

market within the next six months for an architectural project, you're going to

start building warm leads a lot faster.

And if you're a team of four or five and you're all doing that.

Then, my goodness, you're not gonna need to have to work very hard

to build up that waiting list.

And these are all people who are already pre-qualified because they

know the person who's just had a, an amazing project with you.

It is, is by far the easiest thing to do.

Have an exit survey.

Have a handover on the handover date, even if it's before then, if the project's

going from the beginning, even I know of other creative agencies would say.

If you're coming to work with us, great to have you on board.

Just so that you're aware, as we go through this project, I'm gonna start

asking you to think of two or three people to refer to us because we

wanna deliver an amazing project for you, that it's gonna be an easy ask.

And by setting that expectation right at the beginning, it doesn't feel awkward.

And it feels very bold to say so, but simply asking is an amazing

way and something that's completely free to do and something we need

to get better at doing as well.

I love that.

That's such a good idea.

So I'll be asking you after this call John

for three referrals, right?

Ask away Daniel.

Ask away.

Yeah.

I think that's, I think that's a tool from Pat.

Tracy is a he's written about a hundred books on sales, become

learning how to sell better.

It's it goes into that sort of money dirty category, I think for a lot

of architects learning how to sell.

But sales does not need to be sleazy.

It can be a service that we're providing, and it's simply about being able to

ask better questions and build rapport.

With an expectation that comes at the end of it.

So great.

That's the first one I'll give you.

I'll give you two more.

One I'm gonna gloss over very quickly, and that is to have a better pricing strategy.

Now, John, I suppose this is a little bit of a plug because in our master

plan process, we spend a lot of time diving into pricing strategy.

But understanding how to communicate value is immense.

It does not, you do not need to be pricing based on the number of hours you think a

project's gonna take and who says you have to do 5% of the construction cost, either.

I sat down with an architect, John, I'll give you a bit of a story.

And I sat down with an architect a few months ago and we had a project

a potential project on their hands.

Now, this particular project, I'm gonna change a scenario a little bit,

but this particular project let's say, was it a Million Pine Build.

And it was a developer that ultimately was going to go on and sell that

property on to somebody else.

Okay?

So the architect comes in and says, okay, it's a million pound build, right?

Our fees are going to be, let's say 20,000 pounds or which is 2% or, up

to 50,000 pounds maybe to deliver the whole project you up to 50,000.

So 20 to 50,000 pound.

Here's the thing.

Every other non-architect, architect, architectural technician, even

contractors, builders who are putting in for the design work,

they're gonna be pitching in and around the same sort of money.

So what makes you any different?

This is a challenge, right?

However, John, what we ended up talking about in terms of pricing strategy was not

just looking at the numbers as arbitrary figures, but trying to understand the

value that you can bring as an architect.

As a brilliantly qualified architect who specializes perhaps in that particular

type of project, what value do you bring?

And so the conversation we were looking at was, let's say it was a

million pound project and the aim was to sell that project on for a

million and a half pounds, 1.5 million.

So they were hoping to eventually make half a million pound profit.

This is hypothetical right now.

This particular example, we've got plenty of examples with our

clients, but I use this one.

What if you didn't just produce the building and the drawings

that the contractor were expected?

What if you had a better understanding of the local area?

What if you understood the what if you understood the goals and ambition of.

The owners of the property, which was to make money.

What if therefore you could rework the entire brief with that client

in order to produce a building that could sell for two and a half

million, not one and a half million.

Now, a great architect would have that commercial capacity to increase

the value of that project, and so by increasing the value of their project

by an additional million pounds, John, I'll ask you the question, what

is that worth to that client now?

It's worth a heck of a lot more than than what

they would've been paid for.

Sure.

It's worth a million pounds extra to

a million pounds.

And so in, in that particular scenario

then what would be a fair fee?

For them to gain an additional million pounds than they would

compared to the competition.

That's what's up for debate.

It's anything between the difference of what

they would've been paying and the extra money they're gonna get.

So potentially it could be a really generous fee.

What, even if we use a scenario of 10% of the additional fee, so

let's say it was 20 grand, which is what everybody else was putting in for now

you're having a conversation that's worth 20 grand plus an additional 100 grand.

That's 120 grand.

Your profitability in that particular case just went up an additional five

fold, went up 500% because you were.

Primed and positioned better to have a conversation that, that

help that client meet their goals.

And it's fair.

And there's not a huge amount of extra work, not a, not an enormous amount

of extra work that goes into it.

You would've been delivering the project anyway.

It's simply a case of understanding value.

That's what we did fulfill recently, which was a client of ours who turned a

50 grand project into a 250 grand project.

He did go up fivefold by simply being able to have better conversations

that aligned with the client's goals.

And guess what, John, the client couldn't have been happier to sign that contract,

Yeah, I

and they didn't need to add any more staff in order to fulfill it.

Yeah.

So just by being able to convey and communicate the value that you are

already able to offer, that you are probably gonna be delivering anyway,

that you can make far much more money on those projects, make a much

better profit margin than before.

Yeah.

And if you were doing that on every project, oh, that, that's a very

particular, particularly massive win that would've been in that particular case.

But if you were able to bring in that level of additional profitability,

you could slow down the rate at which you have to pump things out and be

more selective about the types of clients that you want to work with,

and architecture and the quality of your work goes up as a result, and you

end up building a better reputation than you could have done otherwise.

So that upward cycle starts to fall into place

I love that.

Such a great example.

Daniel, I was gonna ask where do you see the typically the biggest

profit leaks in architecture firms?

I mean I suppose we've covered probably

quite a few areas already.

I think in our conversation if there were any other profit leaks.

The biggest thing is going back to tendering systems, I think,

there's gonna be lots and lots of different ways companies can

leak cash and leak profitability.

But by staying in the rat run and the race in the tender trap, then

you know, you've got 20 companies competing against one or competitions.

There's a competition in Denmark a few years ago, 2017 I think, where there was

like something like a well over a thousand architecture firms competed for it.

I still don't think they've.

They've delivered the project anyway.

So there's something like 50 million pounds worth of resource went into that.

Who's paying for that?

The architecture firms are, whereas if you were positioned in a way that you are

irresistible to your dream client where they come lining up working for you, you

can charge whatever you want or need to, that's a far better position to be in.

And that comes at the cost of being more specific and being willing

to say no to clients that are good, but they're not a great fit.

Yeah, that's it.

There's a power in the use of the word no.

Absolutely.

About being more selective with the clients that you choose to work with.

Daniel, did you want to share any other stories about a firm

that you've worked with that has.

Improve their profits.

I could give you lots of examples,

listen, John, a lot of it starts with understanding who your dream client is.

And I haven't really even defined what I mean by that.

I think a lot of people would think dream clients and people are just

willing to pay you and pay you on time.

Absolutely not the case.

It's people who you can bring a lot of transformation to, whether it's

emotional or physical transformation.

It's people who are highly profitable and brilliantly advocate for you

and they're wonderful to work with.

Working with an architect locally here, we recognize that a lot

of their dream clients watch a particular type of television program.

And so we started knocking on the doors of television production

companies to see whether there's room in the market to start a new

television series specifically geared towards that dream client of theirs.

And when you can hit a massive audience of your dream clients

and you're suited directly to that audience, then that's a win-win.

I'm very hopeful that will go ahead.

We've already met the producers.

We've had a we met this this last week for an hour and a half, I

think it was maybe two hours.

And we went through ideas and we, and it's gonna be pitched within the next week.

So I'm very hopeful for that particular architect.

So there's no one way to answer that question of.

How do you make a, an architecture firm more profitable?

But there are ways that every firm can do.

And so I'm, I use the example of Phil who went from 50 grand to fi uh, 250 grand in

terms of profitability with good strategy.

We've seen other companies there's another company that we worked with who were

selling, and these were high ticket items.

So within the same kind of range of what an architecture firm might

sell, they were selling eight to 10 products in any given year.

And that was enough to run a small business.

We unlocked a strategy for them using some of the techniques that we're

talking about today, and they went overnight from selling it to 10 a year.

To the very next year, selling something like 85, 86 in that next year.

And they became the number one retailer of that particular product in the uk.

Simply by not working harder, but by figuring out how to get the right

product in front of the right audience.

And it's, it takes it takes you to be bold and brave.

It takes you to know who you wanna work for and how to

build your brand around them.

But when it's, when it works.

There's another other client of ours John who again, it was a product

based company, got a three minute slot on QVC, the TV shopping channel.

They sold out their entire warehouse in three minutes and they were invited

back again quite a number of times.

So that's great results when you get a number of these things aligned.

But it's absolutely evident in the architecture space that there's so much

money being left on the table, John.

For sure.

Yeah.

What would you say is one practical shift that could make right now?

To improve profitability.

You've already shared a number of examples.

What would you say is probably the sort of quickest win for people?

The quickest win is to charge more.

That's probably the quickest win I can give you.

I can give you another strategy that I think will increase your

opportunity for profitability.

Hmm.

And that is when you are pitching and proposing to clients, anchor

it against at least one other price.

So if you've got a project in mind and you say it's this is a

five grand project or a 50 grand project, give them two more options.

Don't be putting two different designs in front of them, or three different

designs in front of them to choose from, but create two or three tiers in

order to give your clients an option.

There is some it's built into every one of us, John, where if we were

only given one price for a particular purchase, it doesn't matter what it is.

It's absolutely natural to go knocking on a couple of other people's

doors to see what we're up against.

If you were buying a packet of sausages from your supermarket you look at the

price of your sausage sausages and you compare it to at least two others on the

shelf to make sure what you're buying is of good value, or at least it's anchored

well against what you're going for.

If you want the most premium one on the shelf, and you'll have a look around

to see what else is there and you're gonna pick the most expensive one.

For example, if you are only providing one option for your clients, you are

giving them license to go knocking on other firm's doors that's more

particularly suited for private arrangements, private contracts.

But if you provide them three options, number one is.

This is what you've asked for.

Number two, this is what we think would actually be good for you in this case.

And number three is all the bells and whistles you'll find.

People will step up and choose that middle one.

More often than not, if you look at statistics, it'll be about 80% of

people wanna be in the middle category.

And that gives them choice and it gives them permission to make a buying decision.

And so by psychologically giving them that space to do that within the frames of your

firm, then they will make the decision with you and they won't necessarily need

to feel the need to go and shop around.

Yeah, I love that.

I love that use of tiered pricing.

It, as you say, it gives them options.

It gives them autonomy um, to, to make, to put them in the driving

seat to make that decision.

They don't feel like they're just backed into a corner working with you where

there's just one way or the highway.

That's it.

And also the idea that have something that's like a premium level service

that that's such a great idea.

You might have something, the top tier, you might hardly ever sell it.

It might be something that's, five to 10 times the, potentially

the price of the other packages.

But the will still be.

there's still a minority, a small percentage of clients that will

decide to choose that, which you wouldn't have had otherwise had you

not presented that option to them.

And it's just such a fantastic way of making your other

options look really great value.

Yeah I think it's a great idea.

Brilliant.

What would you say though, what do you think is gonna be the blocker for

a lot of firms to make these changes?

'cause you've, you shared so many great ideas today.

What do you think is gonna stop people actually doing it?

The risk of failure, I think is what comes up a lot

from the clients that we talk to.

What if we try this and it doesn't work?

What if we try this and we lose a client?

What if they say no?

It feels safe to stay put and to stay in the space that you're

familiar with, and that works.

But my question to you is it actually really working?

Five, 10 to 15% profitability for professional firms and professional

organizations is not great.

Good.

It's just not great.

You compare that to accountancy firms as solicitors and even non-professional.

Agencies who are operating at a 50% profitability mark and above gross profit.

This isn't good.

There's no reason why architects cannot be highly valued and highly paid.

Those two things are very possible.

What's stopping people from what I gather, and maybe your listeners

can maybe comment, if there's an opportunity to do that, let us know.

What would stop you making a decision to take that chance on trying a few

of the techniques and a few of the strategies that we've tried today, Phil,

who I mentioned, who went from a 50 grand project to a 250 grand project.

He was exceptionally reluctant to give it a go for fear that the client

would say, no, this is ridiculous.

What are you thinking about?

And in that particular scenario, what I suggested to Phil was, okay, put your 250

grand option first in your presentation.

That's the one that you talk about.

Provide them the two other options that they could choose on the tail

end of the presentation to anchor the value of that first one, which

was significantly more expensive.

And that's what they did.

And the clients, as I said, were absolutely thrilled with that

first option because he was able to communicate its value better.

So as any good entrepreneur knows, a good calculated risk can pay off.

And just think what would happen if your profitability went

up two times if it doubled.

Yeah, what more could you do?

What's, what would that enable you to do?

Get excited about it.

It's possible.

And as we, we set at the top end of this podcast, John if it's, if you're just

at 10% and you're 400 grand, you're only looking at an extra 10 grand per quarter.

How many projects does that require a 10% uplift in price even?

It's not a lot, but what could it enable you to do?

Could it give you more time with your family to go hiking and traveling,

like how I would spend my time?

Or could it enable you to invest more into the projects that you want to do?

I think you've gotta not just dream about the end product of the project,

but dream about what your business could be like as well, and give it a go.

I love that.

What would be the main thing that you want people to take away from our chat today?

It is, it's doable.

You can do it.

And in fact, if anything, John, it's necessary for the industry.

It's necessary to not devalue the creative industry.

It's under a lot of scrutiny at the moment, really, and a lot of challenge

at the moment with the likes of AI coming up the back and taking, it's a lot easier

for people to just punch something into an AI system and come up with ideas.

And why do they need a creative genius like an architect to be involved?

That needs to be protected.

And in fact, creativity needs to be invested in and valued

more now than ever before.

But the gap is closing the gap's, closing from what somebody who had no experience

was able to do to what an expert could do.

That gap's closing.

It's really important that you're, that you find your voice and

communicate your value and charge what you're worth and don't undervalue

yourself and talk about money.

I love that.

Was there anything else you wanted to add?

We've covered an awful lot of ground today.

A lot of value here is, was there anything else that we've missed

that you wanted to mention?

Not specifically John, not specifically.

I think if anyone wants to know, if you're happy for me to say this, John, if

anybody would like to see what potential that they're leaving on the table, go

to master plan, do pro slash profit gap.

I've built a tool there specifically for you architects that you can go

in, answer five simple questions.

You might want to have a look at your books before you answer the questions.

I'm not asking for then anything specific, but those five questions, by the end of

those five questions, it will punch out a good estimate based on benchmarking

in the industry based on our experience of what's possible, what level of money

you could be leaving on the table.

And you might be surprised, head over there, see what it comes up with and

the tool as well will give you some good tips on what areas to focus on first.

Thanks for sharing that, Daniel.

That's gonna be really useful for everybody for sure, and

it's really quick and easy.

I think there was only five questions that um, you know, you needed to

answer, so you can very quickly uh, get some useful information from that.

There was one other thing that wanted to ask.

I'd love to travel and to discover new places.

I was just wondering if you might be able to share one of your favorite

places and what you love about it.

Oh, John, I could talk to you about this for hours, when

I was 18, John I spent a year traveling.

I had 16 countries in that year.

I've been to nearly 40 countries and been behind the scenes of behind

the curtain wall, as if it were in a lot of countries, which is amazing.

Life-changing.

One of the most life-changing places I ever went to was India.

And we, I went to India.

I was there for about six weeks after spending about three months in the very

affluent areas of the Middle East, which polar opposite in terms of culture and

wealth and quite amazing experiences.

If you ever get a chance to visit either of those, it's absolutely worth it.

It completely.

It just blew your mind in terms of how big the world is and how different it

can be in lots of different places.

But gotta say, the one place that we keep going back to as a family over

and over again is the Norwegian fjords.

I love places like Garanger Fjord, where we went kayaking in the Fjord, right up

against, a hundred meter high gorges, essentially cliff edges and waterfalls.

And I just, the world is an amazingly beautiful, wonderful place if you ever get

the chance to go to that part of Norway.

Do it.

That sounds amazing.

I have been to India.

I spent a couple of months there probably about 20 years ago now.

Amazing time visiting there again we could talk a long while

exchanging stories about that.

I've been to Oslo, but I haven't been to any of the fjords, but I am a keen

kayaker, so maybe that's somewhere that I should add to the bucket list.

Yeah, get up north there and on the West Coast.

Absolutely.

great.

Daniel, it's been an absolute pleasure to chat with you.

Could you just remind everyone where'd be the best place to connect with you online?

John, it's absolute pleasure.

As I said, thank you so much for having me.

If you want to connect with me, the best place to find me is on

LinkedIn, so linkedin.com/in/branding.

Dan is how you'll find me.

Equally Master Plan Pro.

If you want to see what services are being and making available

for architects and what free tools and resources are on there.

There's lots on there for you as well.

Awesome.

Thanks again Daniel.

Thanks a million.

I.

Thanks so much for listening to this episode

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