Interior Designer Resources Directory :: Interior Design Article
What are you worth???
Ralph Nader once defined design as function, safety, durability and aesthetic. What that means is 3/4 of what interior designers do for their clients is invisible. Magazines only show the aesthetic of a project in a great photograph. But if we're good, the client and the public doesn't see the rest..the function, safety and durability. The ease with which a room functions, for example, isn't readily apparent unless it doesn't work. Often the client doesn't know what's wrong, but they don't feel comfortable in the space, or worse yet, don't really use the room. A client doesn't notice the durability of an element unless is begins to show wear and break down long before it should. Or that the front door to an office doesn't comply with the fire code because the size of glass insert is too large. So our success as designers is partially dependent on staying invisible. The challenge is to find ways to talk about the added value we bring to the project.
A constant challenge for the designer is the changing nature of the market place. More and more showrooms are selling directly to the public. And what about television “make over” programs. The public sees a space or entire house change before their very eyes, and probably for very little money. Of course this gives the client an unrealistic idea of the real time and money involved. Catalogues and Internet sites have created another challenge.
Recently a long time client insisted on ordering some furniture from a catalogue and asked me to facilitate the shipping. Needless to say, one of the chairs arrived damaged, and it’s taken me hours to file freight claims, order more fabric and get the chair re-upholstered. Since I’m working by the hour for the client, I’m being compensated for my time, but she knows the purchase isn’t going to be the bargain she thought it would be. Luckily I had warned her that this could happen; been there, done that.
As with the time involved in solving a client’s freight problem, designers who are inexperienced business owners, often underestimate the real time and costs of doing business. I don’t mean just how much it costs to run the office. The phone bill, rent and utilities. How about insurance, outside services and samples, not to mention travel and education. That’s overhead.
What I really mean is the actual available, billable time that you can charge to your clients. Here’s a surprise, on average, we cannot sell 1/3 of our available hours. This is the time spent working on the library, marketing services, getting a CEU, going to an ASID meeting or training a new assistant. Planning takes time from billable hours and so does having lunch with a former client.
Just as I was ready to finally go back to the one-person office, my accountant and last employee decided to moved to California. She had been paying all the bills and did a statement every month. We had plenty of time to teach me how to work the accounting program on the computer…but it was slow going…and I might add, still is. I try to spend some time almost every day entering information on projects, purchasing and paying the bills. This is in addition to doing the invoicing to the client. It’s the part of the job I hate because of the detail involved in time sheets. Regardless of whether or not I’m billing by the hour, I want to know how much time I spend on a project every day….and what exactly I did, and what I accomplished. It really helps in the design of the proposal for the next project. I also want to generate a statement every month, because, as we all know, cash flow is different than profit. Besides, when I generate a statement every month I have to clean up those little niggley details as I go along…I can’t remember the details of every transaction at the end of the year…so it keeps me on track. And its part of that 1/3 un-billable time.
A key to the success of the business is breaking down the services or products we offer clients, and structuring those services in a proposal that details what you will provide, and how you are going to charge for it.
Did you know we have 10 ways to calculate fees for our work on a project? In the more than 40 + years of practice in interior design I’ve probably used every method, and several combinations, depending on the project, the client, the scope of work and the competition. Of course, there are pros and cons for each method, but the trick is to choose the right method for the right situation. I usually know how much I should make on any given assignment, but each client is different, and wants to be billed in a way that works into their business plan.
With regard to the rates for design services, the hourly fee allows the designer to be compensated for their time either with their client at the job site, filing that freight claim or doing research. The fixed fee for design services, which may or may not include purchasing, gives the client a predetermined dollar amount and must be accompanied with a very specific scope of work.
Many designers use the square foot method, charging a dollar amount for the physical size of the structure. In the case of a residential project, this may be refined to the zoned approach using a sliding scale for kind of rooms involved from the garage to the kitchen. Charging a consultation fee for a single element of a project often works for an interior designer with a very focused time frame and scope of work. This would be useful, for example, when providing a finish schedule or a design concept.
With regard to purchasing furnishings and fixtures, there are several methods to develop fees for services. The cost plus method provides for a set mark up from the cost of the products. Additional costs like cartooning, freight, delivery and installation should be considered as well. Another method is a percentage of merchandise and product specified. This allows the designer to charge for the selection and specification of everything in the project, whether it is ordered by the designer or others. Many residential designers charge retail for home purchases and make their profit in the difference between what they pay and what their client would pay at a retail store. Designers who discount from the retail price often have an ability to purchase at wholesale prices directly from a factory, or are counting on volume to provide the necessary profit.
In many of these methods listed above, there is the danger of positioning your firm as the low cost provider. This is where the client focuses on the price only and not the services they might need to complete the project. If the client can move the from low cost provider mind set to value added, we’ve got a match. The value - oriented project calculates cost on value and quality of services, and not the cost of doing business.
An example of this is an artist or a real estate investor. These people are creating a product to sell and base their selling price on the market place. They have added value because of their ideas, talent, and a good eye. All designers want to do a wonderful job for their clients and should be compensated for it. However, the designer must show how he or she differs from others, and therefore is more valuable in the customer’s eyes.
Once I was interviewed for a model home project, got through the first round of interviews and made the short list. I was called back for the next interview and spent the weekend thinking about what the model home design should do for the developer. Because I presented an innovative design concept to help him sell his apartments my firm got the assignment. And it was one of the most enjoyable and creative projects I’ve ever done.
Finally, and my favorite system of compensation, is the combination of methods. There is a generic proposal on my computer and when I go to the first interview I take the scope of work and scope of services pages with me, and that’s the beginning of how we discuss the clien’s project. The NCIDQ definition of interior design is what I use for the core of this part of a proposal. You can find it on their website.
For a project that includes new construction through furniture purchasing the three-part fee structure often works best for me. The fixed fee is used for the design development stage and specification of construction elements. This will give the client a specific number of preliminary design concepts and preliminary finish packages. I’ll explain that the preliminary presentation of this part of the contract can be as formal or informal as the project requires. Sometimes pictures from books and magazines can help the client focus on a look. For a preliminary getting to know you meeting I have laid out a table full of finish samples; ceramic tile, marble and granite, wood floorings and paint colors in several color palettes. The client will always move toward the finishes and colors they prefer. Since the elements are loose pieces, the client can move things around to new groupings, or eliminate pieces entirely. At the end of the meeting we have a few pictures and finish samples as our beginning. It helps them focus on what they really want, and gives them choices, so they feel its their project, not mine.
If it is to be a more formal process for a client who is out of town I have often used the PowerPoint program to put together room looks with pictures of furniture and fabrics or finish samples and installation details like tile patterns or cabinet doors. We are very specific about how many design concepts and how many meetings are involved in this phase. The design development begins as soon as we have set a direction and a work plan spells out the time and meeting schedule for our work.
The purchasing phase of the project can be a stand - alone piece and can be priced at the retail less a percentage discount for our purchasing services. If the purchasing part of the project is large enough, and the client wants to see the manufacturers invoices, we agree on a set purchasing fee and develop a very specific payment process. This piece of the contract can encompass everything from floors plans to existing inventory to budgets and installation.
The final part of the contract is an hourly charge for project management. This gives us an opportunity to meet with the tile installer or other sub-contractor as they are installing our design and make any on-site adjustments that may be required. Sometimes the specifications for fixtures or finishes have been done a year or so previously, and some items may be discontinued. So I like to be a part of the re-selection process, and the hourly charge allows the project to maintain the design integrity.
Using the NCIDQ definition of interior design and a simple proposal spelling out what you intend to do for the client to makes for a successful project and helps to detail the value added of services as a designer. Spelling out a standard of performance gives everyone a baseline from which to operate. It gives the client assurances that they will be satisfied, and the designer the list of what they are to accomplish.
President and owner of Howard Design Group, Liz Howard is a member of the American Society of Interior Designers. As past National President of that 31,000 member organization, she is the only designer in the state of Hawaii to be elected to the ASID College of Fellows. Howard has been practicing interior design in Hawaii for over 40 years. The firm has won many design awards for both residential and commercial work, and Howard’s articles have been published in numerous magazines across the country. She is a graduate of Punahou School in Hawaii and holds a degree from Briarcliff College in New York. She received her design training at the Parsons School of Design in both New York and Paris. Although Howard Design Group is located in Honolulu, the firm has worked extensively throughout the United States, in Paris and in Taiwan. HOWARD DESIGN GROUP P.O. Box 26377 Honolulu, Hawaii 96825-6377 Phone: 808-732-4915 Fax: 808-738-8858 Email: howarddesign@hawaii.rr.com
