Interior Designers naturally love what they do, but love doesn't always pay the bills.
We get asked all the time about how different designers charge - its easily the most sensitive part of what designers do. Without a doubt, the best strategy we find is transparency with the clients, so that they feel like they are in control. Its great if you take the time to educate the clients as to what the pricing options are, as well as the pro's and con's - from their perspective.
Before you start your next custom rug or Interior Design project, check out this great advice from Linda Merrill of Williams-Sonoma's Designer Marketplace blog.
The Rug Establishment understands the dilemma of charging for your services, particularly when you are charging for products such as luxury rugs. If you have any concerns or are unsure how to charge for one of our rugs please feel free to speak with us or your local agent directly.
The pros and cons of the different ways to charge for your work:
I think I can safely state that the single biggest business issue for interior designers and decorators is around how we bill for our services. Let's face it; most of us would happily do it for free because we love it so much. Unhappily, many of us are, in effect, providing some part of our services for free whether we acknowledge it or not.
Best Practices: How to Price Interior Design Services
If you've ever significantly reduced your markup on a piece of fabric because you know it's the absolute perfect accent to your design plan and you worry your client will reject it over the cost, then you've offered your services for free (or nearly free). If you've handled the ordering and installation of retail purchases without adding a markup for these services, then you are giving your time away. The point is, does it make any sense for the designer to "subsidize" the design plan of a generally much wealthier client? Nope.
In my experience, being overly generous on pricing our time or the goods we sell always comes back to bite us in some way or other. Perhaps because the client doesn't respect the value of our time and the hours we spend working on their behalf, or it's that we don't leave ourselves with enough of a cushion to cover the financial risk we take on a daily basis.
A little over a decade ago when I started my business, I attended a trade conference for architects, builders and designers. I went to a seminar on pricing our services and was amazed at how many of the attendees had been in business twenty-five years or more. I would have thought they would have had it all figured out. One of the good things about our field is that there is considerable flexibility in how we work with clients, the services we can offer and subsequently how we charge for those services. This is also one of the worst things about the business as well because we are left unsure as to what's the right method of billing and if we're unsure, our client's are doubly so.
The standard methods of charging and their pros and cons include:
Hourly rate plus markup
The designer charges an hourly rate for their services on a project plus a markup on goods they are selling to the client. Usually, they estimate for the client how many hours they think the project will take and take a deposit against those hours.
Pros: If the project includes a little of this and a little of that (vs. a whole room or house project) it can be easier to just charge by the hour. The clients can control how much they are spending and the designer is less worried about project "creep."
Cons: The designer must keep track of every minute they spend on a project and fight the desire to round the time downwards. More importantly, the better we are, the less time it may take to accomplish a great result and we end up charging less and less for better work.
Hourly rate, no markup
The designer charges a high hourly rate and passes all designer discounts onto their clients.
Pros: Some clients may actually respect a high paid designer over someone more moderately priced, yet will also appreciate knowing they are getting the best pricing for their purchases.
Cons: Same issues as above with the added issue that if something goes wrong with the purchasing of goods, the designer may be paying out of pocket to remedy any errors.
Flat Fee for Project
The designer comes up with a single fee for a project and executes a contract that clearly defines the scope of the work to be done.
Pros: The client's know exactly what their payments will be and when they are due and the designer can project their cash flow accordingly. The designer has incentive to work as efficiently and quickly as possible in order to maximize revenues.
Cons: The designer must be able to accurately estimate the scope of the project, and the working relationship with the particular clients, in order to be sure they are compensated appropriately. The client's can lose appreciation and respect for the designer's time because they are not paying for it on an hourly basis. The designer has to be able to manage the project well so that they don't allow the scope of the work to expand beyond the initial program. Markups or direct to consumer sales can be a factor in this scenario as well.
Percentage of the entire budget
A starting budget is estimated and a percentage (usually between 15-30%) is assessed on the whole. The clients pay a retainer and project fees based upon a pre-determined schedule and an accounting is done at the end based on final project costs.
Pros: Larger, more upscale projects result in a better income for the designer.
Cons: Smaller, budget conscious projects will result in a smaller payday.
There are, of course, other methods of charging and most of us probably do a little mix and match along the way. I have moved to a flat fee with markup on goods I purchase for whole room/house projects. Retail items are purchased by the clients themselves and they handle delivery issues. If they want me to take charge of this, then I assess a percentage on the price of the items as a management fee. If I take a project that looks to be a little of this and that throughout a house - for instance selecting lighting for some rooms and paint colors throughout then I will charge by the hour with a one day upfront deposit followed by weekly billing as needed.
In the end, I think that the method matters less than does our willingness to make sure we're not undervaluing ourselves in the process.
How do you charge and have your billing methods evolved over time?
Linda Merrill is an award-winning residential interior decorator based in Massachusetts. Linda's design style can be described as "comfortable luxury" and she believes in working closely with clients throughout the entire design process. Her clients are mainly located between metro-Boston and Cape Cod and the Islands. Linda writes a nationally regarded design blog called ::Surroundings:: and is the host of the design podcast series The Skirted Roundtable.
