THE BUSINESS OF DESIGN: HOW I SET MY FEES

10 things interior designers won't tell you - how I set my fees Start with Part 1 to learn about the article I am breaking down in this 10 part series.

YOU'D SAVE A BUNDLE IF YOU KNEW HOW I SET MY FEES

Designers use a hodgepodge of methods to determine their fees. The traditional method of choice, called cost-plus, lets designers buy furniture, fabrics and accessories at a "trade" discount of 20% to 40%, then mark the item back up to around the retail cost, using the markup as a design fee. Another alternative is to charge clients a commission -- usually about 25% to 30% -- on items purchased. These days, however, designers increasingly bill either at an hourly rate or a flat fee; sometimes, they also charge cost-plus or a commission for items they buy for you.

The problem is, your designer's chosen method might not be the best deal for you. If all you want are curtains and carpets for your living room, an hourly rate makes sense. If you're building and decorating a house from scratch, you're better off with a flat fee. And if you just want your designer to purchase furniture, it may make the most sense to go with cost-plus -- as long as you keep an eye on how much "plus" is being tacked on. Sometimes the difference between what your designer pays and what he charges you is huge. Let's say a designer buys an Empire chest of drawers for $1,000, but it is really worth $2,500. "There is nothing wrong with marking it up to that price," maintains Jean Michel Quincey, a New York interior designer. "Why shouldn't he? Particularly if he's spent the weekend looking for it."

As a consumer, you may feel differently. In your initial interview with a prospective designer, make sure he tells you how he charges and whether he'll consider another option. When push comes to shove, most will.

As a client, your designer should be able to explain to you how they set their fees and what they are charging.  If it's not clear and you think they may be doing something shady then step away.

There is no universal way that commissions or fees are set - different from architects or the 6% real estate agents get.  I've done an entire article about the different structures of interior design pricing for you to read up on here.

It is true that you may be able to discuss a different pricing structure depending on your project, don't be surprised if the designer declines.  Designer's are running a business like any other and have processes in place that work out best everyone when they are followed.  You can read more about negotiating design fees here.

My invoices always have the price that I pay for the item when I am getting a discount.  So if I purchased that Empire chest mentioned above for $1000, but I spent 10 hours shopping for it, you would see I paid $1000 for it and then be charged my hourly rate for those 10 hours.  Finding a good deal takes time and may end up costing you the same amount in the end.

It comes down to educating yourself and making sure that you understand how you are being charged.

read the entire series:

1. SHOP IN THE RIGHT STORE AND YOU MAY NOT EVEN NEED ME 2. MY TITLE DOESN’T MEAN VERY MUCH 3. YOU MIGHT AS WELL USE MY ESTIMATE AS WALLPAPER 4. YOU’D SAVE A BUNDLE IF YOU KNEW HOW I SET MY FEES 5. MY BILLS ARE LADEN WITH HIDDEN COSTS 6. IT’S NOT IN MY INTEREST TO HUNT FOR BARGAINS 7. YOU DON’T NEED ME TO GET BIG DISCOUNTS FROM SHOWROOMS 8. I PREFER BIG PROJECTS, BUT I’LL TAKE WHATEVER I CAN GET 9. YOU HAVE LITTLE OR NO RECOURSE IF I SCREW UP 10. MY WORK IN ARCHITECTURAL DIGEST IS A MIRAGE

THE BUSINESS OF DESIGN: ESTIMATE AS WALLPAPER

10 things interior designers won't tell you - use my estimate as wallpaper We are heading into Part 3 today of 10 Things Interior Designer's Won't Tell You.  You can learn more about this series and start with Part 1 here.

YOU MIGHT AS WELL USE MY ESTIMATE AS WALLPAPER

Once you've settled on a designer you like and feel you can afford, your first step will be to sit down and go over your budget, with an estimate of how much the job is going to cost. But the fact is, that estimate doesn't mean a whole lot. You're likely to pay 20% more -- at least.

What happens? When designers present their clients with a choice of items -- say, fabrics costing $30 a yard or $50 a yard -- they often don't bother to note that the more attractive option is considerably more expensive than what the budget called for. Some designers will also play to customers' insecurities, assuring them that the job will look unfinished without countless additions and unexpected alterations. "A lot of designers think that if a client says he'll pay $100,000, there's another $20,000 or so hidden away somewhere," notes Joel M. Ergas, a partner in Forbes-Ergas Design Associates in New York City. Caught up in the moment, with the project hurtling toward completion, you may find it difficult to put on the brakes or to switch designers.

You can do a few things to protect yourself. First, before hiring a designer, be sure to ask his references how closely he stuck to his budget. Then feel free at any time to have the designer account for how much has been spent on your job and how that amount compares with the budget. You can also tell the designer that before he spends a cent, you want to see a full proposal with pictures of everything you'll need to buy, and exact prices. Finally, don't just rely on the designer: Keep your own running total of costs. This is a business transaction, after all, not an art project.

Oy, where do I start with this one?  First, I don't do this.  I tell my clients that they must come up with a realistic budget range and always be comfortable spending the money.  More often than not I am saving clients more money than they expected and I always tell them where they can save and where they should splurge.

This isn't one-sided, clients also need to be diligent of their budget because it is their money.  Designers should keep an eye on the budget and select items that can fit in the provided budget, but ultimately it is up to the client to manage their money.  As a client, if you are uncomfortable with an amount or feel things are not going to be in budget, talk honestly with your designer.

If you'd like your designer to not spend a penny more than $200,000 all-inclusive (shipping, taxes, fees, etc) tell her.  Ask her to create a budget showing where the money will be allocated.  If you spend more on a coffee table than what is in budgeted, ask her where you are going to make up the difference.  I find that clients are typically more comfortable providing a budget range for example $60-75K.

Is there a cushion in the budget for the unexpected?  Maybe an electrical panel will need to be moved.  Maybe there are structural problems undiscovered until the walls are opened.  Perhaps the carpet has been glued down and takes a week to remove instead of a day.  These are all things that are unexpected and unforseen and are hard to budget for.  No project ever gets by without some issue or snag.

Interior designers are masters at project management.  They manage a several hundred moving parts for each project, thousands of details.  Something is bound to not go as planned or to be missed.  Obviously some designers are better at this than others, while this is a creative job, at least 80-90% is management of details.  All these things have an impact on the budget.  Perhaps a fabric is backordered and you must reselect, the new fabric is more expensive which effects the budget.  Or maybe you decide that you hate the tile you selected after it comes in and you must pay for the restocking fee.  Shipping is often not calculated until after the piece ships, making it impossible to provide a whole-cost view of that item prior to purchase.

Of my clients in the past few years, none has given me a firm number to work with.  If people are unsure what they need to spend, I have them fill out my budget worksheets.  Usually I get an idea of what someone is comfortable spending and we talk about if their vision for the space matches their budget.  I never want my clients to think that I am pushing them into spending more than necessary or that they are comfortable with.

As the designer, it is my job to look out for your best interest and to be on your team.

For more information about the costs & fees of interior design, visit my resource page.

read the entire series:

1. SHOP IN THE RIGHT STORE AND YOU MAY NOT EVEN NEED ME 2. MY TITLE DOESN’T MEAN VERY MUCH 3. YOU MIGHT AS WELL USE MY ESTIMATE AS WALLPAPER 4. YOU’D SAVE A BUNDLE IF YOU KNEW HOW I SET MY FEES 5. MY BILLS ARE LADEN WITH HIDDEN COSTS 6. IT’S NOT IN MY INTEREST TO HUNT FOR BARGAINS 7. YOU DON’T NEED ME TO GET BIG DISCOUNTS FROM SHOWROOMS 8. I PREFER BIG PROJECTS, BUT I’LL TAKE WHATEVER I CAN GET 9. YOU HAVE LITTLE OR NO RECOURSE IF I SCREW UP 10. MY WORK IN ARCHITECTURAL DIGEST IS A MIRAGE

 

THE HIDDEN COSTS OF INTERIOR DESIGN

Hidden Costs of Interior Design by Capella Kincheloe In my business, I send a proposal for an item, the client pays and then I place the order with the vendor.  I do my best to give my clients a full cost outlook for each item, but additional costs such as storage, shipping, insurance, and unexpected labor do occasionally happen.  Here are some costs that you should expect to run into.  Plus, I am telling the world, so they are not really hidden.

Shipping: Shipping is largely calculated by weight & distance.  If the vendor is unsure of how much the package will weigh until its packed up and ready to ship to you, shipping will usually be billed later.

Storage: To get that "blown-away-I-can't-believe-how-awesome-my-house-looks-and-you've-even-lit-candles" moment, the install should happen all at once, preferably while you're away so clients can enjoy the impact of what the space looks like finished.  To get the "oh-my-god-I-never-expected-my-home-to-look-this-good-ever" moment, your stuff has to spend some time in storage.  Tucked away until everything is in and ready to be installed for the big "ta-da".  Trust me, it's so worth it.

Insurance: It's important to have insurance and to check with your insurance company and interior designer as to who is responsible at what time for that $25,000 Coromandel screen you're having shipped from the Far East.  Just sayin'.

Unexpected labor:  Sometimes we as interior designers, can't possibly forsee everything (why is it so hard for me to admit that?).  Perhaps something was hidden behind a large family portrait on the walk-thru, or covered up by wallpaper, maybe that Coromandel screen needs a little repair work but it's not clear how much.  Things come up and you've got to be flexible (anyone who has ever remodeled knows this all too well, right?).

Expected labor: Vendors don't know how much time and effort it'll take until they see what they have to do.  Is that vague?  Maybe restoration work does need to be done on an antique, maybe the silk fabric needs knit-backing, perhaps a lantern needs powder-coating, or rewired.  Many of these things we can get estimates for, but until the work is completed it may not be possible to get an exact cost.

Minimum Fees: Sure you can order a yard of fabric, but it'll cost you extra with many vendors because of their minimum yardage requirements.  It may seem unfair, but it is time-consuming and not as lucrative to cut one yard as opposed to twenty.  You'll also see mimimum fees if purchasing from a wholesaler and not reaching their minimum order requirements.  And unfortunately, I often see vendors providing quotes without this minimum fee, only to have it show up on the invoice when you are ready to purchase.

Rush fees: If you want to be at the front of the line, you'll have to pony up.  Disney and the airlines do it so this one isn't too surprising.