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Interior Design Fees

Filed under Business Goals, Clients, Education, Office

Interior Design Fees

Tam StoneI remember when I first started designing, I was so embarrassed to give my fee structure to potential clients. I just couldn’t OWN it! I would beat around the bushes until I HAD to give my fee. UGH!

Not only did I hate talking about my fees, but I also didn’t understand how much money I needed to break even in my business! So, the fee may have seemed high to me, but it still didn’t cover all of my expenses. I know. I have an MBA and, still, I couldn’t get my arms around expenses!!

Yes, it takes a while to figure this out, but you MUST remember that you are running a BUSINESS! You can’t be embarrassed! Well, at least, you have to act as if you own it! Haha.

So how do you explain your fee structure to your potential clients? Well, how do you charge your clients? Don’t forget that you need a 20-30% markup on selling products just to break even on office overhead expenses.

This is what your mark up covers:

  • Client invoicing
  • Financial reporting (sales tax, other taxes)
  • Purchase order preparation
  • Purchase order tracking
  • Vendor correspondence regarding purchasing of product
  • Purchase order bill payment and filing
  • Overhead required to manage purchasing process
    • Employees, staff, outsourcing
    • Insurance- general liability, etc.
    • Supplies

And guess what? Clients often shop the items, so they may not even buy them from you, if they are readily found. So how do you make money?

What every designer brings to their projects is their design!! So, thank goodness I had Tobi Fairley remind me of this. (I so, so, so recommend Tobi’s events!) You MUST charge a design fee. You bring the vision to the project. This is your expertise, so charge for it!

How much should you charge? Brother, I have played with this over and over. I often work by price per square footage, but I have also tried to charge 10-20% of the total budget. In the end, it is a hybrid.

There are so many factors in determining your design fee…

  • Is this a quick job? (Remember NO job is even as quick as it should be! There is too much out of your control)
  • Is this a repeat client? Do you know their style?
  • Is the project a new construction job? Those take a LONG time, so remember that!

Bottom line, you just have to ask for a design fee high enough so that you feel slightly queasy when saying it out loud! Sounds weird, but as soon as you have the job, it ALWAYS takes longer than you thought it would- and it always takes a LOT more work than you thought it would.

The combination of your design fees and your markup should result in job profit margins in the range of 35-40%. Remember, you are running a business! If you treat it any other way, your business is a hobby. If you don’t treat your business seriously, your clients won’t either!

So, raise your prices and up your game! It is TIME!!

xoxo,

Kathleen

PS. If you need to get communication with your clients and trades organized, download the Return on Interiors sampler and see how much time it will save you!!

Beth Lindsey

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