The Standard is a culmination of how we do things at House of Funk. Since we use a flat fee structure, the only agreement that I can provide is a flat fee agreement.
Yes, this gives me a chance to explain that the Exhibit A investment is based on historical data and that Exhibit B will be their actual investment amount based on their custom design.
Go through the exercise of figuring mileage, local hotel, per diem for meals, random expenses like childcare, pet boarding that come with travel if any, then roll that (with markup – it’s a business) into the flat fee. Take the “trip charge” x number of trips included in the flat fee and let them know – if additional trips needed, they will be billed ahead and paid in full at the “trip charge” rate. You could do travel as reimbursable – but you know I HATE having anyone owe me money. A little research and some good boundaries, and they’ll know exactly what they are in for if they start asking you to be on site more often.
If their budget still meets your minimum then you need to start talking about where you’re going to cut scope. My preference is always to do complete rooms. To sprinkle a little bit of design across the whole house is never as effective. If they can hit my minimum budget and I can do three rooms, I can get them to understand how Design impacts their life.
I thank them and refer them to online design. If the budget does not align, then we just aren’t a fit. And, I’m thrilled we figured that out BEFORE signing them, rather than 6 months in.
We have had a client shop an alternative (cheaper) nightstand and email us the option. Tough love is the only answer. In person, via a call or – worst case – an email if you just can’t get them. In this case, I had to send an email.
This was our reply:
“I wanted to circle back on your questions below regarding the mix of high-low furniture selections and the budget in general.
Although right now you’re in the depths of moving, construction, and having your house turned upside down, I promise if you have faith and stick with us through this, the results will far exceed your expectations. I can totally understand where you are coming from. It seems obvious in hindsight to swap out a few items for less expensive retail options. I hate to have to say no to a client (my stupid heart is racing as I write this), but this isn’t how full service works.
Our agreement is that we set a budget together, then furnishings are purchased through House of Funk. I’m attaching the budget vs. actuals for your review. We are on track with the budget upon which we agreed.
We have completed our one round of revisions for Detail Design on the Master Bedroom. We would need to assess additional design fees to make another round of edits.
This is my business model and I have to stick to it to make flat fees functional. We need to keep our process intact. If you want to revise the budget and do another round of revisions, please let me know and I’ll price that additional design fee for you.”
There is not a separate agreement. When the scope includes a renovation, I make sure to point out the line on page 11, “This Investment Estimate does NOT include contract labor for renovations.” We present ballpark quotes from our Trades at the Conceptual Design Meeting. After the CDM, we have the client sign off on the investment agreement with our trades estimates. We then present the final proposals, along with everything else, at the Detailed Design Meeting.
I take it into revenue immediately. It’s just simpler that way. You can spread it out internally if you & your bookkeeper prefer.
I’m really a stickler for to the trade only products. As more of them are creeping online, it’s so important to set the tone that you are providing a fully encompassed service. Telling your clients about second hand sellers that take in damaged products and sell them on the market. Some of that education is helpful. Making sure you stay in the to the trade land is imperative and I don’t obsess over whether or not I can find the item less expensive online. Reasonable retail would be the MSRP, or the list price.
Yes, many moons ago I built in my credit card fee into my markup, and made sure there is wiggle room in the design fee as well. I have found that adding the credit card option, moves the process along much faster. The clients spend more freely when they use a credit card instead of having to write all of those numbers on a check.
I smile confidently and politely say:
“Yes, that’s the part that makes this thing called interior design a business. I purchase at a trade price, and I sell to you at reasonable retail. You are in complete control of what you want to invest in this project the entire time that we work together.”
If they want to know the percentage:”The percentage varies, as I have trade accounts with all types of trades and vendors. The part that stays consistent is that you’ll never pay more than if you were purchasing it for yourself.”
Or, use an example to illustrate simple fair market economics:”It’s just like when you are purchasing anything else; If you see a sweater that you love, you are in the market for a sweater, it fits, the price feels like an appropriate exchange of value, then you buy it. If any of those factors are off, you don’t buy it. Apply the same principles to our work together. (At no point do you tie the purchasing decision to the wholesale cost of the sweater to the retailer.)”
** Telling a client a markup percentage alone is a completely irrelevant number, as it in no way takes into account any related expenses. Don’t ever cave and discuss your mark up. Once you have the script that you feel most comfortable with to handle these questions, anyone who presses further is pushing too far in my opinion. That’s a big red flag that they are always going to be looking to wheel and deal.
Yes, the entire design team tracks their time so that we can use it in our financial analysis to ensure that we’re still charging the right amount per square foot.
If someone asks, I let them know it’s based on both the size of the room and the level of design.
I would only scale the furnishings estimate, usually not the design fee. Though, if I’m just adding window treatments or a chandelier, I’ll scale down accordingly. Usually, designing a partially furnished room and having it come out great is harder than starting empty, so I don’t discount my fees.