The question of how much to charge for your interior design services is one of the most important ones you’ll ever have to answer for your business.
Pricing plays a foundational role in your business finances, but it does more than that. It also makes a clear statement about the kind of designer you want to be.
Anyone who has had to create a pricing structure knows that it’s not an easy task. Behind each project quote or hourly rate are hours of deliberations about what exactly will be included and when it will be delivered.
Although pricing can be more of an art than a science, some methods are almost always superior. And designers of every experience level can benefit from taking a hard look at whether they can improve the way they charge for their work.
Here’s what I recommend.
First, Address Your Mindset
Let’s start with an uncomfortable truth particularly relevant to the interior design industry, which is made up mostly of women.
The fact is that many women are still not getting paid what they’re worth, at least compared to men. The pay gap is a complicated subject, and many factors influence it, but it’s particularly telling that the phenomenon of women getting paid less than men may be even more pronounced when we set our own rates.
That’s why I think that the first step in any interior design pricing strategy may be to begin internalizing a different mindset about money: one that embraces it as the lifeblood of your business.
Stepping into the CEO role means viewing money impersonally. Although you may be the only employee in your business, your clients are NOT doing you a personal favor by paying you. They’re paying a company for a service, just like they would if they were walking into a store to pay for a product.
I’ve noticed that people in artistic professions tend to feel particularly conflicted about asking people to pay them well for what they do. These are people who love their work and feel privileged to make a living doing it. Especially if they’re new to the industry or are solopreneurs, they’re willing to do whatever it takes to get clients. In many cases, they assume that means discounting their rates or charging as little as possible. They’re serious when they say that they would rather scrape by doing what they love than work in a job where they don’t get to create something beautiful every day.
This is a dangerous mentality. Treating money like an afterthought or a necessary evil will usually result in your not being able to make a living creating art at all. Remember, if you can’t get profitable, you’ll have to go back to your “day job” and give up on your dream. You must take profitability seriously.
A Reminder About Project-Based Billing
I wrote an entire post on the topic of hourly billing and why it’s a bad choice for most designers. I encourage you to read the whole article here. The bottom line is that tying the value of your finished product closely to the time it takes to create that product is a big mistake.
Generally, the clients you want to land are the ones looking for a luxury experience. They want a beautiful space that reflects their personal story/lifestyle, and they want the whole design process done for them.
When you charge by the hour, you make things more complicated for yourself AND for the client, who will then have to wonder how long the project will actually take. They’ll also feel like they should analyze how long you spent on various tasks – and you’ll find they’ll hold back on sharing thoughts for fear of time being billed. Charging by project is simpler and more efficient. Perhaps more importantly, it sends the message that you’re more focused on the end result than the labor.
[content_upgrade cu_id=”16692″]If you’re ready to calculate the cost of your next project, download this. Worksheet: Calculating Your Project Rates[content_upgrade_button]Click Here[/content_upgrade_button][/content_upgrade]
Finding a Total Project Cost
So, now you know that you should focus on profitability and charge per project. But how much should you charge for your services, specifically? The amount will vary, but should always be based services you provide and on the total estimated budget for a project, including the cost of all the materials (furniture, art, fixtures, etc.) plus installation costs.
Basing your fees on the total cost of the project is a good choice for a few reasons. First, the total budget often naturally reflects the amount of work that you’ll have to do on any given project. Lower-budget spaces are usually smaller and simpler (although that’s not always the case). But also, using a percentage of the total cost makes sure that the price for your services effects the talent, effort and deliverables it takes to yield the end result.
[content_upgrade cu_id=”16692″]Creating a budget isn’t as simple as adding a fee on top of the project cost. You need to calculate for profit margin, which we explain how to do in this bonus worksheet: Calculating Your Project Rates.[content_upgrade_button]Click Here[/content_upgrade_button][/content_upgrade]
When you realize 35 percent or more profitability for any project, which is what I recommend, you’ll have some peace of mind knowing that you can still be profitable and pay yourself even in the face of unexpected project changes or hiccups. You’ll also have more flexibility to speed up or slow down the project as necessary without a lot of paperwork.
Of course, for this model to work, your project estimates need to be as accurate as possible. Any seasoned designer will tell you that estimating the total cost for any given project is something that you’ll get better at over time. With each project you embark on, you can use a similar, past product as a benchmark, or even as a template.
As you gain experience, you’ll also start to notice when a client’s ideal budget constraints seem problematic or inconsistent with what they expect to get out of the work. You’ll also get better at heading off the problems that can make a project run off schedule, causing it to take longer and reducing your profits.
Resist the Urge to Discount
Using this project-based, profitability-focused formula can yield much bigger invoices than designers may be used to. That can cause a little bit of panic, especially for newer designers, and that panic is followed by the urge to cut the price down in some way.
But I’ll urge you again: Don’t worry about which rate you “deserve.” Forget what other people around you might be earning, in this industry or in others. Forget about the salary at your last office job, or the amount you think will enable you to pay your bills. Remember, this isn’t personal. This is a business — and a luxury business, at that.
[bctt tweet=”Remember, pricing isn’t personal. This is a business — and a luxury business, at that.” username=”idmasterclass”]
Continue to focus on how much your clients think their new living space is worth, and how much you can improve on what your competitors are offering. (For more on assessing your competitors, click here to read my full article on the topic.)
Finally, note that the question of how much to charge is one you’ll have to continually re-ask yourself over time as your skills and experience change.
If you want more personal guidance from me on how to structure your pricing, along with templates for formulas and proposals, we’d love to see you in the Master Class Pricing for Profit Margin. We’ll explain how to adapt to things like changes in the project after it’s started, and how to present your pricing to the client in a way that avoids any chance of sticker shock.
Interior Design by Sarah St.Amand Interior Design #IDMCDesigners