Ben SnapeThe fee race to the bottom is real
In UK architecture people often talk about “fee wars” and a race to the bottom. It’s probably the best way to describe what has been happening with architectural fees over the past few years.
The story seems to start back in the 1980s when mandatory fee scales were removed. In 1982 the RIBA’s fixed scales were abolished under competition law, and by 2009 even the suggested fee curves were dropped.
Unlike some other built-environment professions that kept informal guidance or found work-arounds, architecture largely lost any shared reference point for pricing. That opened the door to steadily lower bids.
Today, many public-sector frameworks and private clients weigh tenders heavily toward cost, often 60/40 or 70/30 in favour of price.
A practice quoting what it believes is a realistic fee (say 8-10 % for a school or housing scheme) can find itself undercut by bids at 4 %, 3 %, or occasionally even lower. The pandemic and Brexit likely made this sharper: pipelines shrank, overheads stayed high, and firms probably felt they had to chase whatever work was left.
In practice, it often means that jobs won on fees that are hard to deliver properly. Teams stretch across more projects than they can comfortably handle, junior staff pick up extra hours, and there’s less time for detailed drawing or coordination. Variations and extra costs tend to appear later on site, but by then the architect’s margin has already gone.
Some offices appear to treat early stages or competitions as loss-leaders in the hope of recovering money later; others simply step back from competitive tenders altogether.
The effects show up in salaries (qualified architects probably earn around £13,000 less on average than surveyors), in bids that arrive at a fraction of a practice’s own calculated cost, and in stories of perfectly good schemes being lost to much cheaper offers.
Rising insurance premiums, new duties under the Building Safety Act, and the extra work needed for net-zero targets all add cost, yet fee levels seem to keep drifting downward.
Clients, especially public bodies or first-time developers, are likely to see the lowest submitted figure and assume it must be achievable, because another registered architect has offered it.
Until either the procurement rules shift or enough practices decide not to bid unsustainably low, the pattern looks set to continue: fees gradually easing lower, workloads growing, and the gap between what’s asked for and what can realistically be delivered getting wider.
The main reasons for fee wars
In UK architecture, the fee race to the bottom likely draws from more than just deregulation and tender scoring.
Several interconnected factors seem to push practices toward unsustainable pricing, often amplifying the pressure on smaller firms.
Outsourcing and arbitrage
Outsourcing plays a big role. Many UK practices now offload drafting, modeling, or even full design stages to companies and freelancers in lower-cost regions like Eastern Europe or Vietnam, where labor runs 30-50% cheaper.
This keeps overheads down in the short term, but it can undercut local rates by flooding the market with bargain services.
Firms might win bids by quoting slim margins, knowing they can subcontract cheaply, yet this erodes in-house expertise and pressures everyone to follow suit. Clients, spotting these efficiencies, start expecting rock-bottom fees as standard, widening the gap for those who can’t or won’t outsource.
Foreign market participants
Foreign companies add another layer. International giants, often from the US or Asia, enter UK bids with economies of scale and global back-office support. They might absorb losses on domestic work to build a footprint, pricing out locals. Smaller practices, without that international scale, find it harder to match, leading to a consolidation where only the biggest survive.
Market saturation
An oversupply of architects likely fuels the fire. With student numbers up 28% since 2010 and 40,800 chartered pros chasing work across just 6,000 practices, there’s constant pressure to accept whatever pays the bills.
Graduates flood the market, willing to take entry roles at cut rates, which drags averages down. Combine this with rising fixed costs like indemnity insurance (up sharply since 2022) and software licenses, and margins get squeezed further, prompting more corner-cutting bids.
If you’re a recent architectura graduate, check these tips to stand out in this market.
Economic climate
Economic volatility rounds it out. Stagnant residential pipelines and client budget squeezes make firms desperate for any win, even if it means 2-3% fees that barely cover basics. Until procurement evolves or the profession pushes back collectively, these threads probably keep pulling fees lower, testing the viability of the whole field.
How to avoid fee undercutting and survive the fee wars
Here’s a list of practical moves for architects and smaller firms to push back against the fee race.
Stop bidding on pure-price tenders
Skip any framework where price outweighs quality by more than 50%. A quick note to the client “we can’t deliver compliant work at that budget” builds your case over time.
Quote in hours and day-rates, not percentages
Ditch the % trap. Lay out hours × loaded rates (overheads, insurance, profit baked in). It shows clients exactly why a 2% bid crumbles under scrutiny.
Pre-qualify clients before you spend a penny
Charge a small upfront “feasibility scan” (£1–3k) to weed out lowballers. Real prospects bite; others fade.
Form small bidding consortia
Link up with 2–3 local peers to alternate leads on frameworks. No undercutting pact needed, just share intel: it’s straightforward, lifts the baseline, and can sometimes work very well.
Publish your true costs
Be transparent and share a crisp breakdown of salaries, PI premiums, and profit needs early in talks. When clients see the math, absurd counters look off-base.
Specialise ruthlessly
Hone in on niches like retrofits or heritage where expertise justifies premiums. Clients don’t mind paying up if that means they will avoid generalist pitfalls.
Offer (and charge for) Principal Designer as a standalone service
Highlight your edge under the Building Safety Act; it’s a premium role that demonstrates value and compliance.
Switch to repeat, negotiated work
Target ongoing clients who trade tenders for trust. One steady partner beats endless pitches.
Use “target cost” or “open-book” contracts
Tie fees to actual effort with shared risk/reward. Such contracts eliminate fixed-price gambles and keep things fair as scopes shift.
Train yourself and your staff in negotiation and value-selling
One workshop on framing your fees as risk-mitigation pays off fast: turn “cost” talks into “value” wins.
Walk away sometimes, and tell people why
Post a neutral LinkedIn note on passing lowball jobs. Collective “no”s nudge clients toward better briefs, and they might help you build a better reputation.
Review your breakeven point regularly
Crunch historical data to nail your true costs per project factor in profit and risks. Base every quote there, no exceptions.
Monitor real delivery costs on live jobs
Track overruns weekly; flag scope drifts early and loop back to clients with a contract clause for add-ons.
Build in ‘what-if’ flexibility from the start
Kick off negotiations with scenarios for changes such as programme slips and extra regs, and agree on fee tweaks upfront.
Chase post-bid feedback every time
Ask what tipped the scales on losses. It reveals client blind spots and arms you for the next round.
Hunt marginal gains in your operations
Tweak utilization (aim 70–80%), trim over-delivery, and optimize staff-to-overhead ratios. Small efficiencies let you hold firmer lines: check out this post on KPIs to track.
If you try to do at least some of these consistently, you’ll likely spot the difference: fewer soul-crushing bids, steadier cash, and clients who get it.
How PlanMan helps you survive the fee wars
The project management suite PlanMan gives smaller firms three quiet but decisive advantages: bullet-proof communication, accurate document control, and reliable invoicing. Together they stop fees leaking away before you even notice.
With our communication module, there are no more unpaid extras because you can’t prove what was agreed. Teams also waste far less time chasing emails or WhatsApp groups: everything lives in one place, searchable, dated, and visible to the client if you wish, so variations are spotted early and charged properly.
Document management makes sure that every drawing issue, specification revision, and RFI lands in a single version-controlled folder with audit trails. That alone protects you when a contractor claims they built to an old drawing or when a client questions why fees went up after late changes.
With invoicing, PlanMan pulls live timesheets and expense data straight into invoices and can split them by stage, by team member, or by pre-agreed milestones. You can raise a variation invoice the same week scope creeps, send it through the portal, and get it signed off before the creep becomes “normal”. Percentage-based or hourly, the numbers are always current and defensible.
As a result, even on a thin 4–5 % fee you stop the slow bleed of unrecorded time, disputed variations, and late payments. You quote tighter because you trust the back-office to catch every pound you’re owed.
PlanMan quietly turns small practices into the ones who get paid what the job actually cost without ever having to race anyone to zero.
Get your free trial today and organize your workflow with PlanMan!