Is your project number sustainable?
Something I noted in my own time in architecture: I had no idea how many billable hours I was working.
That sounds silly, but actually most practices make this number up, and make it align with their expected fee.
And I feel like this is the start of a lot of Architectural business stresses. If you don’t objective know exactly what the pipeline needs to attract, how can you possibly run a successful architectural business?
This is more common in architecture than the profession tends to admit.
- Principals know their project count.
- They know their deadlines.
- They know which clients are difficult and which projects are behind programme.
What they often don’t know is the specific number of projects their practice needs to be running at optimal efficiency. Not to stay busy, but to be financially sustainable while keeping the principal’s working life at a pace that doesn’t grind them pulp, ready to be turned into Architectural paper.
Once you learn your real numbers, you can understand if staffing makes sense, because sometimes growth does not equal business improvement.
The Number Most Architecture Principals Have Never Calculated… and never will?
Not true! We’re going to calculate them today!
Ask most architecture principals how many projects they need and the honest answer is usually “more than I have.”, or ‘approximately 20‘.
Ask them to put a specific, set-in-stone number on it and the conversation gets vague.
The reason is that the calculation required to arrive at a specific, defensible answer involves sitting down with the practice’s actual cost structure and doing math. But really, we should all be thinking about this more like a design exercise – knowing our ‘enough’ is the first step in building out our business brief.
The number exists, it’s calculable, and knowing it changes how a principal thinks about every new project they consider taking on, every fee they quote, and every hire they consider making. Most importantly, knowing your number gives you freedom to reject projects, or come in higher with your pricing.
The “mathematics of enough” applies to an architecture practice in exactly the same way it applies to any professional services business. The starting point is not project count but the gross profit the practice needs to generate to cover its overhead and produce a liveable income for its principal. Let’s have a look at it now.
A Working Framework: What Each Person in the Studio Needs to Generate
Before we go deep into math, it’s good to establish some rules of thumb first, so that we can react to the numbers.
I am NOT a financial advisor – I’m an Architectural business coach, so it’s critical that you do your own math, and if you’re at all uncomfortable, call your accountant for a special session.
With that said, a fairly good place to start is with a roughly 1:3 ratio.
Staff billing ratio (1:3 or better): Every staff member roughly needs to earn three times their base salary (or more) in fee revenue to sustain the business. This reflects the reality that a salary is not the full cost of having someone in the building:
- superannuation,
- professional indemnity insurance,
- software, equipment,
- rent,
- hiring, onboarding, and churn expenses,
- mistakes,
- and the non-billable overhead of running the practice all need to be covered from the revenue each person generates before any net income reaches the principal.
Applied to a graduate architect on a typical Australian base salary, this ratio implies a billing target in the range of $4,000–$6,000 per week (2026, anecdotal).
Whether that figure is achievable in your specific practice context depends on your charge-out rates, your project type, and your billable hour recovery; those are worth calculating before you continue.
Projects per staff member: In terms of project capacity, a rough ceiling used in residential practice is four concurrent projects per person, based on approximately one active day per project per week cycling through the workload.
Commercial projects, which tend to carry significantly higher complexity and coordination demands, generally reduce that ceiling to one concurrent project per person at a time. These are not hard rules; they’re starting points for thinking about what the practice’s staff can realistically carry without quality deteriorating.
What I’ve found in my own time in Architecture is that a single staff member is approximately able to handle $6 million of total construction costs worth of work in a year. So an $18 million project may need 3-staff-years to accomplish (most likely, 2 staff for one year, and 1 for the rest).
Of course, the nature of this math is so practice-specific that you’ll need to come to your own number.
With those rules of thumb in mind, we may now be able to work backwards towards finding our target number of projects.
How Many Projects Does an Architecture Practice Actually Need: The Working Backwards Calculation
With the per-person framework as a reference point, the practice-level calculation runs in four steps.
Step one: calculate the non-billable overhead.
For a small studio where the director still bills time to projects, a useful convention is to treat approximately half the director’s salary as a non-billable overhead cost, reflecting the time spent on practice management, business development, and administration rather than fee-generating work. The other half can be attributed to billable time, so let’s start here and split the director’s salary into two parts: billable director time, and non-billable director time. 50/50 is a good starting point.
For a studio that has grown past roughly six people, the director’s role typically shifts to a level where their time is primarily non-billable: managing the team, maintaining client relationships, overseeing quality, and running the business. At that point, the full director’s salary should be treated as overhead rather than billable cost.
Add to the director’s salary allocation the practice’s fixed operating costs: studio lease, software subscriptions, professional indemnity insurance, accounting and bookkeeping, equipment, and any other overhead that exists regardless of project volume. The total is the non-billable overhead the practice’s project revenue MUST cover before any net income is produced; and regardless of the number of projects you have.
This number is our target gross-profit. The amount of money our gross profit must reach just to break even and be sustainable.
Step two: estimate gross profit per project.
Gross profit per project is the fee received minus the direct cost of delivering the project, primarily the staff time attributable to it. If you remember our rule of thumb billing target of $5000 per week before, in Australian residential practice, a realistic gross profit per project per week of active work might sit somewhere in the range of $1,000–$3,000, depending on the practice’s fee structure and efficiency.
Commercial projects vary considerably depending on scale and complexity; and also tend to have quite unequal profit across stages.
These figures are illustrative. Your actual gross profit per project should be calculated from your own fee history and time records, and if you haven’t done that calculation before, the result is often a real eye-opener about profitability in general!
Step three: calculate how many projects cover the overhead.
Once we know our ‘target gross profit’, and we know how much gross profit per week each project can actually generate, it’s a fairly simple process of pulling out the calculator.
Convert all of your numbers into monthly or annual numbers, so that all of your chickens line up nicely.
Divide the total non-billable overhead (our target gross profit) by the expected gross profit per project in the same timeframe. The result is the number of active projects per period the practice needs to cover its fixed costs and the director’s costs, before reaching any net income for the business.
Step four: check that number against capacity.
Divide the required projects per period by the number of billable staff and compare it to the per-person project ceiling established in step one.
If the required workload is within the team’s realistic capacity, the model is viable. If it isn’t, one of three things needs to change:
- fees go up,
- overhead comes down,
- or more billable staff are added.
Each option has different implications for the practice and the principal’s working life. Because more staff and more projects also equals more director stress.
What Sustainable Looks Like by Studio Size
A solopreneur running a lean residential practice, working from a home studio or low-overhead space with modest fixed costs and billing personal time at a rate that reflects their experience, may find that two to four concurrent residential projects covers their overhead and produces a liveable income.
The model is fragile below two: one client departure or one delayed project creates immediate financial pressure. Above four concurrent projects, the principal’s capacity to maintain design quality and client attention becomes the constraint. It’s a narrow band, but a sustainable one. It’s actually very challenging to maintain an Architectural practice as a solopreneur, and juggle the myriad of business hats.
A three-person studio needs proportionally more projects: the overhead has increased significantly with the addition of staff salaries and associated costs, and the required project volume rises accordingly. Rent at this size tends to be on the bloated side as compared to the amount of revenue.
Eight to twelve concurrent residential projects is a reasonable range for this configuration, depending on the fee level (do your own math). The principal at this size typically carries some billable time but is increasingly spending energy on managing the team alongside the design work.
A six-person studio faces a materially different challenge. At six people, with the 3:1 ratio applied across all staff, and with the director’s salary now fully in the non-billable category, the practice may need somewhere in the vicinity of twenty to twenty-four concurrent projects to cover its overhead and produce strong income for the principal. At an average residential project duration of roughly two years from inception to completion, maintaining that active file count requires winning approximately one new project every month.
That is not an impossible number. But it is a significant and often underestimated business development obligation, and it means that a six-person studio whose principal is still primarily doing design work has a structural problem, because the marketing and client development required to keep the pipeline full is a separate job in itself. At this scale, it’s almost time to consider dedicated marketing support, or lightening the load through practice management support. It’s a challenging size to maintain.
Commercial work has a different set of constraints, but the underlying mechanics remain the same.
The Real Problem With Growth
The numbers above reveal something. The relationship between practice size and financial sustainability is not linear, and the middle range (somewhere between three and six people) is often the most demanding configuration to sustain.
A solopreneur can run lean and be financially viable with relatively few projects. A large studio with significant staff depth and established systems can carry a substantial project load with distributed responsibility. The three-to-six person studio sits in a zone where the overhead has grown significantly, the principal’s time is still load-bearing (pun intended) across both design and management, and the project volume required to sustain the operation is high enough to make business development a constant pressure.
Many three-to-six person studios work, and work well. But the principals running them tend to be busier, more stressed, and closer to the financial edge than the studio’s professional profile might suggest, and that experience is often attributed to personal failing rather than the structural reality of operating in that configuration.
The wellbeing data bears this out: principals of small practices carry a disproportionate psychological burden relative to their income, and understanding the financial mechanics of why is a more useful response than simply working harder.
The 20–30% Gross Profit Lever
So what’s the fix for small practice?
If the project volume required to sustain the practice feels excessive relative to the team’s capacity, improving gross profit per project is the most direct fix available.
A 20% improvement in gross profit per project doesn’t add 20% more projects. It doesn’t add any extra projects at all.
A practice that increases its gross profit from $1,200 to $1,500 per active project week needs less projects than it did before, and that is like the steam valve opening and the pressure evaporating from the shoulders of the stress Architectural director.
In Australian architectural practice, fees have historically been compressed by market convention, by principals’ reluctance to charge what their work is actually worth, and by a professional culture that treats price competition as a proxy for quality competition.
The practices that push back against this (that price on the value of their outcomes rather than the convention of their competitors, and that hold that pricing when clients push) tend to find that their project count requirement drops significantly, their financial stress reduces proportionally, and the work they do carry is better resourced and better delivered.
What is the realistic scenario for a practice owner? I would say it’s this:
- Increase your fees.
- Win less work, but make more gross profit on what you do get.
- Get a bit worried in the short-term. It’s new territory and it’s natural to worry.
- Stay the same size overall or perhaps even reduce your staff. You may find yourself needing less staff to cover the same revenue.
- Own less stress. Less projects at the same overall profit is simply… less stressful.
- And eventually come out the side more profitable.
Once your practice adjusts to the higher fee system, you will find that your overall business health improves and you’ll be able to grow more sustainably in the long-term.
Raising fees by 20% in a practice that has never formally stress-tested its pricing is often the highest-return hour any principal can spend. The conversation about fee increases is a weird feeling the first time. But the empirical evidence is irrefutable.
Finding Your Number and Reviewing It Every Year
The calculation described in this article should be run for your specific practice at least annually.
Fee levels change. Overhead changes. Staff costs change.
A target project count that was adequate two years ago may no longer be adequate, or may now be significantly higher than necessary.
The last time I wen through this exercise with an Architect about his hourly rates system, I found out that it hadn’t been indexed for escalation in 3 years. That’s a lot of wasted profit opportunity.
The exercise takes a few hours the first time and considerably less in subsequent years. What it produces is a specific, defensible number: this is how many projects, at this gross profit level, this practice needs to be running to be financially sustainable.
Every project decision below that number is a warning signal.
Every project decision above it is a capacity question.
And when you’re hitting your number? Try raising your fee a little higher.
Most architecture principals have never had that number on paper. Having it changes the conversations about fees, new projects, hires, and where the practice is actually heading.
A 15-minute discovery call is the right starting point if you’d like to apply this framework to your specific practice. No commitment, no proposal; a direct conversation about where the practice is and whether the work I do is a fit.
Note: The figures and ratios used in this article are illustrative only and do not constitute financial advice. Architecture practices vary significantly in structure, market, and fee position. Consult a qualified accountant with experience in architectural practice before making decisions about your business’s financial structure.