Pricing and Finances – FAQ

If you quoted design fees of $50k and get a deposit of $25k immediately, do you take that full amount into revenue immediately or do you have some method of matching the revenue to actual time spent on the design?

I take it into revenue immediately. It’s just simpler that way. You can spread it out internally if you & your bookkeeper prefer.

Is your “reasonable retail rate” similar to IMAP? Do you ever charge more than what they can find it online for if they were to look?

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.

Do you take payments online?

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.

A client asked if I mark up product, how should I respond?

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.

Do you track your time?

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.

Do you ever discuss or mention a design fee as a “per square foot price” to a client, both up front in the PC initial call or in the agreement? How do you handle this if in the initial call they ask because they are comparing to other designers quoting a square foot fee?

If someone asks, I let them know it’s based on both the size of the room and the level of design.

In the example for Mad Grace, you mention scaling for partial furnishings but didn’t do so in the example. Am I to understand that for a client that brings, say 80% of their own furnishings, you would scale that to be $15/square foot?

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.