One of the lines an interior designer…or, in fact, anyone offering a paid service, has almost certainly heard numerous times in their career.
The trouble is – is most cases, both sides are right.
There are some clients who will always try to intimidate their interior designers to charge them less and there are a few unscrupulous designers who charge unreasonable amounts – there’s always a few rotten apples.
However in the majority of cases, a properly designed pricing structure can become a win-win situation for both sides – the client will feel what they’re paying is justified and the interior designer will feel he or she has been adequately compensated for their labour.
And that’s what we will discuss in this post.
The Basic Logic Behind a Fair Pricing Model
From the POV of a client, they should know
- How your services are priced – by the hour, by per unit area or however else, it should be made clear to them from the very start
- What they are paying for. Of course you can’t issue them a 10 page long bill detailing every day’s work but it is good to prepare a good itemized bill explaining each aspect that has been charged for.
From the POV of the interior designer,
- While remaining true to your pricing model, don’t hesitate to charge for every piece of work that you are entitled to. Don’t under-price yourself to kickstart your business or get out of a bad patch – you may find yourself stuck to that pricing model forever.
- Keep an eye on the accounting requirement that would be required to keep track of the billing. Especially if you handle the billing yourself, you may find it difficult to keep track of a complicated pricing model.
Model #1 – Flat rate
A lumpsum payment may seem to be a win-win situation for both the designer and the client.
The client would like it because they know upfront what they will be billed.
The designer would like it because it simplifies the accounts-keeping enormously.
The way this works is that the designer finds out how much is likely to be a fair remuneration for the project and bills the client that amount, without going into the rationale behind the billing amount.
Are there any pitfalls to the flat rate?
If the client changes their mind midway or if they require extensive handholding, the designer might be forced to work longer on the same project. And they would not receive any compensation for their extra work.
Usually, a flat rate is not truly ‘flat’ but has some relationship with the particular piece of work, for example, charging the client per room is an example of a flat rate. Charging a lumpsum amount per month is also considered a flat rate.
Model #2 – Billing by per sq ft
The advantage of this pricing model is that it leaves the client in no doubt that they are being billed correctly since total area being designed is something that depends on the project and the designer can’t arbitrarily inflate it.
On the other hand, some designers are more complex and time-consuming than others so you may feel you’re not getting full remuneration for all the effort you put in.
Model #3 – Percentage of the project cost
Add up everything that is required to be purchased in the project – contractors, furnishings everything – and add a 20% to 40% markup as your fee.
If you want to keep your sourcing – which contractors you use, from where you get furnishings etc – a secret, you can do that.
However for maximum transparency you should just include all the bills and then your own bill with the markup which is your fees.
Needless to say, if you’re only consulting, you may not be able to use this method.
Each of these methods has their advantages and disadvantages – for both sides, the client and the designer.
Usually, the best approach would be to go for a combination of models. For example, you charge by sq ft and include a lumpsum ‘top up’ to take care of any aspect of the design you feel will require extra effort and will not be adequately compensated by the per sq ft billing.
If you need to be present at the project site regularly, you may consider extra site visit charges.
If you’re procuring furniture and you’re not using the percentage of project cost method, you can add a procurement fee equal to a percentage markup on the purchase price.
If the client changes their mind too many times while the design process is ongoing, you can charge them for the effort involved in re-orienting the design process. Such charges are called iteration charges.
The bottom line is that the pricing model you use must be fair to both the client and to you, the designer.
As far as possible, you should ensure transparency in your billing.
There is no need to stick to any one particular model. Use a combination of models; your aim is to ensure a fair compensation for services rendered.
Add-on services – site visit, procurement and iteration – can be billed separately from the main design bill.
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