Recently Designer Marketplace, shared a wonderful piece of advise on pricing interior design services which i think you all should know. Its interesting and worth reading even if you plan to hire interior designer.
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?