How Should Designers Charge?

Designing Your Business

Andrew Mitchell, The Design Coach2023-06-02

Andrew Mitchell, The Design Coach2023-06-02

From Contributing Editor, Andrew Mitchell, director of MR. MITCHELL, Interior designer and founder of The Design Coach.

The Design Coach Andrew Mitchell

“When we don’t have a clear pricing structure it can leave clients feeling vulnerable and some will start to question your fees and, even worse, shop around for comparisons.”
ANDREW MITCHELLThe Design Coach

Do you often wonder how your charging methods stack up against other designers? Do you randomly guess a price for the work your clients request from you? Are you constantly looking over your shoulder wondering if your clients will discover the margins you are putting on your products? Do you stay up late at night working on endless revisions that you haven’t even factored into your fee proposal (working for your clients for free)?

With no clear industry standards, knowing how much to charge clients is a constant source of confusion and stress for architects and designers. Often, we’re undercharging for our time due to a variety of reasons that usually stem from a lack of confidence and/or knowledge. As designers, we work in the service industry, which means that time is our commodity. Understanding the value of that commodity is imperative to the success of our business. Talking money with clients doesn’t need to be awkward or uncomfortable and should begin at the very first meeting.

When we’re confident in the value we are adding to a client’s project and are secure in the knowledge that our fees and margins are in place for good reason, it becomes easy to have conversations that are clear, transparent and empowering for both parties. Communicating fees and margins and setting clear expectations around all project finances will create a solid foundation for the ongoing trust and satisfaction of your client. When we don’t have a clear pricing structure, it can leave clients feeling vulnerable, and some will start to question your fees and, even worse, shop around for comparisons.

Methods for Calculating Fees

The methods for calculating fees changes from practice to practice, but there are 3 main schools of thought that form the basis for most designer’s fee systems:

1. Hourly rate

Designers charge the client based on the actual number of hours completed.

2. Fixed fee

Designers calculate a fixed fee based on the proposed scope of the project.

3. Percentage

Designers charge the client a percentage of the project cost.

Which Method Will Work For Your Studio?

Each system has its pros and cons and understanding how to best operate within the chosen system is important to avoid undercharging or overcharging your client. Some designers choose to incorporate a mix of the different fee systems in their projects. For example, setting a fixed fee for the concept through to construction documentation, then operating at an hourly rate for the design management during the construction phase. When procuring products for a client, there are also a range of different methods used by designers when calculating and communicating margins.

Firstly, it’s important to be clear about the pricing structure offered by your suppliers before communicating costs to the clients. Some suppliers will offer a discount off retail pricing while other suppliers sell only direct to design professionals who have an account with them. In today’s world of DIY design, clients are savvy to the discounts offered to designers, and in some cases will seek to access these discounts direct from suppliers. More than ever, it’s important to be open and transparent with clients on how you structure your margins, in order to avoid possible confusion or dispute.

Some designers choose to pass on discounts to clients as a part of their design package. This discount varies greatly from firm to firm, with some designers choosing to pass on full trade discount to their clients, while other designers choose to charge full retail to their clients. Both methods are acceptable in principle, as long as the parameters are clearly communicated to the clients, and these conditions are clearly set out in a detailed set of Terms and Conditions.

A Designers Responsibility

It’s important to remember that there’s a degree of responsibility that comes when we, the designers, are placing the order on behalf of the clients. Any faults or discrepancies with the order become our responsibility, as we’re the signatory on the order. When considering this responsibility, it becomes even more important to ensure that the procurement of stock becomes a profitable part of your business.

To create a business structure that suits your specific design practice, it’s advisable for designers to do as much research as possible to find out what works best for them. It’s also important that, regardless of your fee structure, you ensure you’re tracking and recording your hours to compare estimated to actual (more on that in our next article).

Analysing your figures on a regular basis allows you the opportunity to reassess and improve your methods of charging.

For more information on design fees and product margins, and to access our free Fees and Margins Health Check, download a free Fees and Margins E-Book via this link.

To find out more about Andrew and The Design Coach:

Website www.thedesigncoach.com.au

Instagram @thedesigncoach_au

Email hello@thedesigncoach.com.au

Book a Discovery Call here .

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Are you uncertain about how to effectively price your interior design services? Do you find yourself grappling with various charging methods and struggling to communicate fees and margins to your clients? At Programa, in partnership with The Design Coach, we understand the challenges that architects and designers face when it comes to establishing fair and transparent pricing structures. Join us as we explore industry standards, best practices, and strategies for navigating the complexities of interior design charging.

Understanding the Dilemma:

In the world of interior design, the absence of a clear pricing structure can leave both designers and clients feeling vulnerable. Without established industry standards, determining how much to charge for your services becomes a daunting task. Many designers find themselves undercharging due to a lack of confidence or understanding of their own value. At Programa, we recognize the importance of valuing your time as a designer and empowering you to have transparent conversations about fees and margins with your clients from the very beginning.

Exploring Charging Methods:

There are various methods for calculating fees in the interior design industry, each with its own advantages and drawbacks. From hourly rates to fixed fees and percentage-based pricing, it's crucial to choose a method that aligns with your studio's unique needs and preferences. Programa and The Design Coach offer insights into the pros and cons of each approach, helping you avoid the pitfalls of undercharging or overcharging your clients.

Navigating Supplier Relationships:

Effective pricing in interior design also involves navigating supplier relationships and communicating product margins to clients. Programa emphasizes the importance of transparency when discussing pricing structures with suppliers and clients alike. Whether you choose to pass on discounts to your clients or charge full retail prices, clear communication and detailed Terms and Conditions are essential to avoiding confusion and disputes.

Embracing Responsibility:

As designers, we carry a degree of responsibility when procuring products on behalf of our clients. Understanding this responsibility underscores the importance of creating a profitable business structure that prioritizes both client satisfaction and financial viability. Programa and The Design Coach offer guidance on how to analyze your pricing strategies regularly, ensuring that you remain competitive and profitable in the ever-evolving landscape of interior design.

Conclusion:

At Programa, we believe in equipping interior designers with the knowledge and tools they need to succeed in a competitive industry. Through our partnership with The Design Coach, we provide valuable insights into interior design charging methods, supplier relationships, and business sustainability. Download our free Fees and Margins E-Book and access our Fees and Margins Health Check to take the first step toward pricing transparency and financial success in your design practice.

How Should Designers Charge?

Methods for Calculating Fees

Which Method Will Work For Your Studio?

A Designers Responsibility

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Try Programa for free with a 7 day trial

How Should Designers Charge?

Methods for Calculating Fees

Which Method Will Work For Your Studio?

A Designers Responsibility