Several years ago, at an architecture trade show in Boston, I attended a panel discussion on how to price design services. I was new in business and assumed that most of the other attendees would also be business "newbies." I was surprised, shocked even, when the audience was asked by a show of hands how long they’d been in business. While at least half the attendees were new business owners, the rest had been in business over five years and some had been around for over twenty years.
It was a real eye-opener and I realized that no matter how long one has been in business, pricing one's services is complex and always in need of evaluation. Given the complexity of the issue for professional architects and designers, it's no wonder that those seeking design services are nearly always confused about the issue. Let's face it, we don't know what we don't know and we all make assumptions based on limited knowledge.
The single most asked question made to a designer is: "What will this cost me?" And most designers will put off the answer until they know more about the entire scope of the project, the clients and what is involved. It's no wonder there is confusion and, at times, suspicion about the process.
The single most asked question made to a designer is: "What will this cost me?"
- Linda Merrill
There are some basic ways that the majority of interior designers and decorators charge for their services:
Hourly rate for each and every moment spent working on the project: This includes all meetings, telephone calls, emails, shopping, designing/drafting, buying, installations and logistics. The hourly rate itself varies by geographic region and experience/professional standing of the designer, but roughly it's between $75-$250 per hour. Larger firms will have tiered structures based on who in the firm is working on the project (assistant designers vs. the owner, for instance) and one-person shops will generally have a single established hourly rate.
Goods are sold to the clients at the designer's cost or clients pay direct to retail stores and hire their own contractors: Clients can control the total dollars spent to the extent that they are responsive to the designer's queries and quick to make decisions, and do the legwork of ordering retail products and receiving shipments themselves.
Hourly PLUS markup on goods: Includes all of the above, plus a markup on custom and trade-only merchandise, and a percentage on any retail purchases made by the designer on the client's behalf. This additional markup covers the design firm's time and expenses of managing all the ordering, logistics, trouble-shooting, delivery and installation of the merchandise. If the client wishes for a turn-key level of service where their only job is to approve and pay for the design, this is the type of plan they will be looking at.
Flat fee rate: For obvious reasons, a flat fee has both positive and negative aspects to it. For the clients, they sign the contract knowing exactly what they will be paying their designer and there should be no surprises. For the designer, they can establish a specific payment structure to cover costs and provide income at regular intervals. The downside for both client and designer is that the entire plan needs to be clearly understood at the outset. Any changes or additions to the original plan may require a renegotiation of the contract. Designer's fear that a flat rate means the client will lose respect for their time and waste it because they aren't paying by the hour. A project estimated to take 100 hours that suddenly takes nearly 200 means a big financial loss for a designer. On the other hand, clients fear the designer will pad their time in order to charge more.
Percentage of the entire budget: This means that every dollar spent on a project is tallied up at the end and the designer receives a percentage, which is usually in the 15-30 percent range. A budget is established from the start and payments are made based on the estimated total budget and then by the end of the project, the total expenditures are added up to be sure the designer has received the agreed upon percentage. For the most part, the flat fee rate (#3 above) is calculated using this same equation, but is capped, whereas the percentage system is not capped.
As you can see, "What will this cost me?" is not an easy question to answer! In fact, it's not THE question to be asking. The actual question should be "How do you bill for your services?" allowing the designer to describe their scope of services and how they bill for them. The client needs to provide specific details with regards to their budget and exactly what type of service they are looking for. Unless a designer charges a simple flat fee to provide a design plan for a space, with no added procurement services offered and little alterations to the plan, they will simply not be able to give a price without knowing the budget and scope of the project because the ranges are too varied.
A furnished living room can be $10,000 or $100,000 and more -- depending on what the client wants. The budget is always in the client’s control and ultimately the designer can either accept the job within the stated budget, or will choose not to. Contrary to popular belief, designers are not looking to simply spend as much of the client’s money as we can. We want to provide the right services for the clients needs and to be fairly compensated for our efforts and experience.
When contemplating the potential cost and value of design services, consider they way you want to work with the designer:
1) You want a designer to create a vision and design plan only: You will be doing all the legwork, hiring and managing contractors, ordering furniture and dealing with all the logistics and trouble shooting as needed. You are willing to put in the work involved so that as many of your dollars as possible go towards the actual decoration of your space.
2) In addition to a design plan, you want a full-scale, turn-key project where you only want to have to speak with the design firm and they will deal with all other parties involved: Additionally, the majority of the purchases are delivered and installed on a single installation day (aka 'the reveal") versus piece-by-piece deliveries. This level of service includes additional charges for insured warehousing, and two sets of delivery charges -- one to deliver and inspect furnishings at the warehouse and another to then re-deliver to the home.
3) Some negotiated combination of the above.
As with everything else, we pay for things with time or money and this is certainly true when it comes to interior design services.