New salaries, old business model

One of the clearest pressures in the AEC industry right now is rising salary expectations. 

This is not a temporary blip or a short-term recruitment problem. It is the reality firms are operating in, and it is becoming harder to ignore. The issue is not just that firms need to pay more to attract talent. It is that too many firms are still trying to support today’s salary expectations with yesterday’s fee structures, yesterday’s client expectations, and yesterday’s mindset. 

That is where the squeeze shows up. 

Firms are being forced to pay more for critical hires, particularly in specialized and highly competitive roles. But when fee structures have not kept pace, every compensation decision starts to feel reactive. A higher salary for one key hire creates pressure on internal equity. A bonus may solve the immediate problem without addressing the structural one. Before long, leaders are not just talking about compensation. They are talking about margin pressure, pricing, growth, and whether the business model still works. 

Why rising salary expectations are putting pressure on AEC firms 

Zweig Group’s 2026 Fee + Billing Report shows firms are already adjusting. Billing rates increased by a median of 10% over the past three years, while fee rates increased by a median of 10% over the same period. Most firms are also revisiting pricing regularly, with 83% updating billing rates annually and 81% updating fees annually. Those are steps in the right direction. 

But the same report also suggests many firms are still giving back pricing gains. While firms are updating rates more regularly, the data also shows that discounts remain common. Among firms that discounted fees, the median decrease in billing rates or multipliers was 5 percent, and the median decrease in final price was 10 percent. In other words, some firms are raising rates on paper while still conceding margins in practice. 

Why pricing strategy matters more than salary alone  

Raising rates alone is not enough. The deeper issue is positioning. If your clients fundamentally buy your work as hours, effort, and labor inputs, then every salary increase feels like a threat to margin. If your fees are still anchored to time-and-materials thinking, rising compensation becomes something you are constantly trying to absorb rather than something your business is built to support. 

Which is why this conversation has to move beyond salary bands and into value. Too many firms are asking, “How do we pay people more?” The better question is, “Have we built a business model that can support the talent we need?” It starts with knowing your value and charging accordingly. 

Too many firms still underprice because they are overly focused on what they think the client will tolerate instead of what the work is actually worth. But the fee data makes clear that the market is not as one-dimensional as many firms assume. In commercial development, 64% of firms report using “whatever the market will bear” as one way they determine fees. In industrial facilities, that rises to 78%. In power and utilities, it is 70%. Even in federal/state/municipal work, where hourly billing remains dominant, 50% of firms report using a value-based market approach as part of fee determination. 

Leaders should pay attention to that. 

Value pricing is not fringe behavior. Firms are already doing it. The issue is whether your firm has the confidence, positioning, and client mix to do more of it. 

How the right clients support stronger pricing and growth 

Client mix matters more than many leaders want to admit. If your core clients only buy on hourly rates, resist new pricing structures, and do not recognize the full value your team brings, rising salary expectations will keep creating pain. You can keep trying to force better economics out of the same relationships, or you can start building a client base that is more aligned with the value you actually create. 

This is where growth mindset matters. 

Growth is not just about selling more work. It is about redefining the kind of work, clients, and opportunities that allow the firm to become what it needs to become next. That may mean diversifying into adjacent markets, reshaping your ideal client profile, or pursuing project types that give you more room to price around expertise and outcomes rather than hours alone. None of that happens overnight. It takes patience, strategic planning, investment, and a willingness to let go of the assumption that the way the firm has always priced work is the way it has to keep pricing work. 

That shift is critical because the market has already changed. 

Firms that remain frozen by outdated salary bands or legacy pricing models will continue to feel squeezed. Firms that are willing to rethink how they price, who they work for, and how they define value will be in a much stronger position to compete for talent without destroying margin. 

You cannot build a stronger workforce on weak pricing. You cannot keep discounting your way into margin pressure and then act surprised when salary expectations feel unaffordable. And you cannot expect high performers to join or stay if your firm refuses to evolve while the market around it does. 

You can't pay top talent competitive compensation while discounting your own value. 

Struggling to attract, retain, and develop the talent your firm needs to grow? Zweig Group’s Talent consulting team helps AEC firms strengthen recruiting, improve retention, enhance employee experience, and build high-performing teams. Learn how we can help you unlock the full potential of your workforce.