Decoupling revenue from time [9]
Designing a Design Business
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This newsletter covers the things that I’m thinking about on a daily or weekly basis. From my frustrations with auto-centric city design, to design work that I find inspirational, or people who are doing great things, my goal is to share observations on the built environment, the practice of architecture, and ways design impacts how we live.
Lately my thoughts have been focused on how to improve upon running a design firm. What are the lessons I have learned from starting a firm, working for other people, and serving residential clients over the past 10 years? How can I start a new company that is more successful, more profitable, and most importantly, more enjoyable? What are my design values and how can I attract clients that share these values? How do I design a new business from the ground up to reflect how I want to work and what I want to work on?
I have a few general thoughts that I’m working through as I design this new business:
Selling time is not a good way to run a business.
It isn’t scalable - your profit is limited by how many hours you can work.
It doesn’t value experience - if you are efficient and can get a task done in less time, you make less money.
Hourly fees aren’t associated with value - the value you provide your clients isn’t based on how much time you spend creating a drawing, but rather value is associated with the quality of the end result.
Hourly fees create conflict - clients don’t necessarily understand how long things take and different tasks can take significantly different time commitments to do right. It makes invoicing unpredictable and opens it up to questions and debate. Discussions about money distract from discussions about design ideas and value.
Fixed-fees address many of these issues. It creates cost certainty for both sides. It is predictable. It rewards the designer for their experience and being efficient while it provides the client with the same value regardless of time spent.
People understand buying products more than purchasing services. How can I make a fee structure that reflects what people are comfortable buying in other places? How can I learn from software subscriptions or how Apple sells iPhones?
Passive revenue streams provide flexibility and freedom
Generating revenue from products that don’t take up time, allows me to focus on the things I really want to do and be more selective on projects that I take on. This then allows me to better serve the clients I work with.
Selling products can have a bigger impact and make design attainable to a wider market. Not everyone can afford to hire a designer - design services mostly serve the top 1%. Yet everyone can benefit from a nicely designed home. How can I package work I have done into a product and make it available for more people?
Passive revenue can come from monetizing work you have already completed. Example: an author doesn’t sell a book once, they sell it thousands of times. Designers should do the same.
Having a range of revenue streams makes the business more economically sustainable and resilient.
The Power of Niche
I’m at a point in my career where I have worked in a range of offices on a wide variety of projects. I now have a clearer understanding of what specific project types I like working on and which I’m good at designing.
By narrowing in on a niche market it makes it easier to identify and attract better clients.
Saying no. If the project isn’t the right fit and doesn’t reinforce my values I’m going to turn it down. If the client isn’t the right fit or doesn’t share my values, then we shouldn’t work together. If the budget isn’t appropriate or someone is trying to cut corners, that isn’t the project for me. Say no to work that you don’t want to do.
Marketing is hard, especially when trying to set yourself apart in a very crowded and competitive design world. By focusing on core values and specific project types it allows me to target a very defined audience - to build stronger connections to a smaller reach. Now I just need to craft the story that will resonate with this audience.
Who is my audience? People who want custom homes, vacation homes, or weekend cabins with a strong connection to nature. People who are moving out of the city, or want a weekend escape from the city. People who want to build sustainably with high-quality materials and high-performance systems. Clients who would rather do things right rather than do things fast or cheap.
Things I’m Selling
I’m starting my experimentation with passive income/selling products by offering pre-designed ADU plan sets. I’m reviewing the ADU designs I have worked on over the years and editing the drawings to strip out the site-specific information. The idea is that these products will be a great starting point for people who are looking to add an ADU to their property. Hopefully these will make nicely designed ADUs more attainable for those who can’t afford or don’t have the time to go through a full custom design process.
ADU Plans
I currently have 14 designs available and will be adding more over the coming weeks. There should be a layout that works for almost any need and a range of styles to choose from.
If you know someone who is considering building an ADU on their property, please share the link to plan store with them.
Will this work? I’m not sure, but I think so. I’m basing this idea on the fact that over the years various people contacted us and asked if they could buy previously designed plans. I think there is a demand for it. I also found that many people were interested in ADUs but when they heard the cost of the design work it didn’t fit their budget. Hopefully these will help solve that problem - making good design more affordable.
Things I’m Writing
With a content marketing strategy for my new website, design services, and ADU plans, I’ve started writing blog posts to answer frequently asked questions. As most of you can guess, the number one question I get asked is about the cost of doing projects. I’m focusing on residential projects for my business, primarily sustainable custom homes and Accessory Dwelling Units, so I’ve started by analyzing the cost of these project types.
Cost of designing and building a custom home
I break down a typical project budget and discuss design fees, permitting, costs, and construction costs. If you are considering building a custom home, this is a good place to start.Cost of designing and building an ADU
With their smaller size, ADUs tend to have a much higher cost per square foot basis which often causes people to miscalculate how much these actually cost. For a sneak peak, I would estimate $200,000 for the base price to build a simple small ADU in the Portland market, while a higher-quality project, or building in a more expensive market can easily get these up into the $300,000 to $400,000 range. In the article I break down the construction cost of one of the ADU projects I designed in Portland.
Weekly Design Inspiration
Field House - Lookofsky Architecture
A beautiful and modest home sitting in a beautiful landscape on the Swedish island of Fårö. It hits all the right notes for me: simple, small, natural materials, large windows, connection to nature, warm and inviting.
Cove House - 30x40 Design Workshop
Like a lot of the design inspiration I share, this project aligns with my values of integrating architecture into the surrounding landscape. The way the house is nestled into the hillside and the views from that deck are incredible.
I also want to give a quick shout out to Eric Reinholdt the architect behind 30x40 Design Workshop. Along with being an excellent designer he is inspiring in how he is willing to experiment with new ways of running a design business. I have been learning a lot from following his work and reading about his other business initiatives (like the two books featured below) as I set out to design my next career move.
Book Club
As I’ve been rethinking my career and strategizing next steps I’ve been reading a lot of books about running businesses, attracting new clients, developing alternative revenue streams, and how to market creatively to find the right clients and the projects you want to work on. Below are four books I’ve recently read that have been very helpful. The first two are perfect for those who are thinking about starting an architecture or design firm or who have recently gone out on their own. I also think they should be required reading for any Professional Practice course in Architecture School. The third is applicable to almost any business as it focuses on how to think outside the box to better market your product or services. Although the stories primarily draw from the world of sports, they can be applied to any industry and I love how he emphasizes being different than your competition. Finally, the last book is ideal for all of those architects/designers out there who are interested in taking the plunge and self-developing a project - something I hope to do within the next year. This book did a great job at breaking down the process of getting a development started and making it feel achievable.
I highly recommend buying and reading each of these books.
Architect + Entrepreneur: A Field Guide to Building, Branding, and Marketing Your Startup Design Business. Vol. 1
by Eric ReinholdtArchitect + Entrepreneur: A How-to Guide for Innovating Practice: Tactics, Models, and Case Studies in Passive Income. Vol. 2
by Eric ReinholdtMarketing Outrageously Redux: How to Increase Your Revenue by Staggering Amounts
by Jon SpoelstraArchitect and Developer: A Guide to Self-Initiating Projects
by James Petty
If you have read any of these books and would like to talk about them I’d love to connect (you can email me at lugray@gmail.com and we can set up a video call). Or if you have suggestions for other books about startups and running better businesses please send me your recommendations. I’m always looking to learn and get better at the business side of design.
Sharing the love.
I have posted some quotes from Seth Godin on this newsletter from time to time. His blog is on my Feedly list and I often find his thoughts and words inspiring and helpful. Most recently I watched an interview with Seth on Jeff Echols and Katharine MacPhail’s Context & Clarity show and thought he had a very refreshing message for architects and designers. Check it out:
Seth’s Blog
Daily thoughts and words of wisdom. Quick reads that often make me think about a problem differently or simply be inspired.Seth’s Podcast, Akimbo
This links to a great episode of the Akimbo podcast titled The Architecture of Architecture. Like the interview above, Seth makes some good points about why architecture is the way it is, and how a relatively small group of people could have an outsized impact to change the way we practice and design for the better. Contact me if you want to collaborate on making this happen!
Places you can see my work and learn more about me and what I’m passionate about:
My website for Custom Home Design and Art: https://www.lucasgraydesign.com/
[I’m actively looking for new clients, referrals welcome]My Textures Insta: https://www.instagram.com/talkitect/
My Design and Drawings Insta: https://www.instagram.com/lucasgraydesign/
My LinkedIn profile: https://www.linkedin.com/in/lucasgray/
My not so active blog: https://www.talkitect.com/
I’m on Pinterest too: https://www.pinterest.com/LucasGrayDesign/
Brilliant and very concise, well-written insights, Lucas!
Lucas. Thanks for sharing this take on the subject. Our profession needs more conversation like this. If more architects chose a niche, then there would be more happy and compensated architects, and there would really be more work for everyone! Hope to catch up soon! Keep up the great work.