Free calculator for architecture firm owners
How many active projects does an architecture firm need to break even?
Staff working on projects move with the work, while principals, the office and software stay fixed. Break-even is the number of average active projects that covers the fixed side.
Break-even point
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active projects a month to cover every cost
Profit at today's level
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per month, before owner pay
Cushion above break-even
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how many you could lose and still cover costs
The starting numbers are an example for an architecture firm. Replace them with yours.
The worked example
Each active project brings in $16,000 a month and costs $7,000 to serve. That leaves $9,000 toward fixed costs of $70,000 a month. Divide one by the other and you need 8 active projects to break even. Every active project past that adds $9,000 to profit.
Ways to lower break-even in an architecture firm
- Raise utilization before adding staff.
- Bill monthly by percent complete instead of by phase.
- Charge for additional services and redesigns as they happen.
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