Architecture Firm - Expected Gross Profit Margin

[Loki214th]

Hello,

What target Gross Profit Margin %, i.e. income after direct/indirect expenses but before Tax, should I be aiming for with a small architectural firm?

I've been trying to get some good benchmarks but can't seem to find any good guides to this Industry.

Cheers,
-Loki

[aaaaaadc]

did you get a reply? please let me know.

i'm a cpa; my experience has been that arch/design firms have about 1/3 of their revenues as gross profit. This means direct expenses (costs of the hours billed to a project) are about 2/3. From that, you subtract all your other costs (overhead and income taxes) to arrive at your net profit.

[Loki214th]

Hello,

No , no one responded.

I did download some industry surveys, which stated that net profit was about 10% to 15%.
However, the surveys did not precisely show what was removed from the Gross Profit to derive Net profit. For example, were Director's Dividends or payments made to Directors taken out before Company Net Profit was calculated?

It also described 'Cost of Sales' for each project, without identifying the elements of Cost of Sales as they would pertain to an Architectural project.

[WalkerARCHITECTS]

In theory 33% is profit in reality economic fluctuation destroys the profit in the down cycle so in reality there is no profit for the vast majority of firms. Architects rarely build wealth of any significance.