Money talk: How Interior Designers charge

Breaking down and demystifying design fees.

I have already touched on budgets a couple of times in Should I hire an Interior Designer? and 4 factors to consider when selecting an Interior Designer. But there is more to say.

These are the most common (and intimidating) questions when it comes to hiring a designer. Even affluent clients are sometimes shy about discussing costs, simply because there is so little transparency when it comes to pricing. And no one wants to ask foolish questions. And ‘regular’ people have no idea if they can afford it or not. So let’s shed some light, shall we?

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Understand your fees. This may seem obvious, but it is remarkably common for there to be confusion. You must fully understand fees before you start receiving invoices, or there are going to be uncomfortable or sometimes heated questions, which is awful for both the client and the designer. Understanding fees can be challenging because there is no uniform way that interior designers charge.

We will break down the most common models here, with pros and cons of each.

Flat Fee

Flat fee billing is quite self-explanatory; your job is quoted for a set fee for a specific scope of work.

There are advantages and disadvantages to this model; think of the difference between paying for drop-in workout classes vs. signing up for a monthly membership.

Pros:

- Know upfront what the design costs will be, allowing for accurate budget planning and no stress about monthly invoices.

- Allows you to ask questions or chat without fretting about racking up fees, making for better rapport with your designer.

- No questions about how time is being spent (if it takes your designer 3 hours to select cabinet hardware, that’s up to them; it won’t affect your bill).

Cons:

- Initial sticker shock right at the project outset, when you want to be excited about getting started. Seeing all the fees in one go can be intimidating.

- Add-ons have added paperwork, requiring additional hourly fees or a re-negotiated fixed fee. The scope agreement works both ways: your designer should not reveal hidden fees later on, and no extra work beyond what was agreed is to be added.

- There may be limits to communication/feedback that is included in your scope.

When working with a flat-fee designer, ask how they calculate this fee. It may be calculated by square foot, as a percentage of the project budget, by estimating the hours required, or simply based on their previous experience with similar projects. As a general rule, the quoted fee should be somewhere between 10-20% of your budget. This depends on geography, the complexity and scope of the project, the prestige of the firm, and the level of service provided, among other things.

Hourly

This is probably the most common fee model. Again, it is fairly self-explanatory: you are charged by the hour for the work done.

Pros:

- Less intimidating upfront, as you pay as you go (typically month by month).

- Allows for easy add-ons, as you will simply be billed for the added time.

- May mean you can send as many questions or comments as you want (just remember that you will pay for this time). But, this may not be true! Hourly designers also set limits around their personal time.

Cons:

- Hard to predict what your monthly bills will be; this can make for unpleasant surprises when your invoices arrive,

- Difficult to estimate the overall cost of your project and stick to a budget.

- Can lead to uncomfortable questions on how your design team uses the time, and what time is billable. Thus this method requires a lot of trust in your designer, or a lot of oversight.

Note that these cons are especially true for less experienced designers; veterans may be very good at estimating. Hourly rates vary widely by region, experience, and prestige of the firm you are dealing with. Some students may work for as little at $50/hour, though you may be hard-pressed to find this in the San Francisco bay area (where everything trends higher). Prestigious firms may charge as much as $300+ /hour for Principle design time, with lower rates for time spent by Intermediate or Junior designers, or for start-up firms (more like $150-200/hour).

Mark Up

In addition the design fees, most design firms will have a mark-up on product, services, and/or trades.

In general, designers receive discounts on products they purchase on your behalf. They can then either pass along that discount to you, or mark it up and make a profit on it (much like stores do).

Mark-up is actually a way to keep design fees reasonable, while still covering their own costs and making a fair profit. By marking up discounted product, designers are able to make money at no added charge to you.

Mark up policies vary. Here are a few:

- Pass along some set portion of their discount (say 50% of the discount), and keep the other portion. So if they get a 20% discount, you get 10% off and they keep 10%.

- Mark up to a maximum percentage (say, 20%) and pass along any additional discount (so if they get a 30% discount, you would get 10% off and they would retain 20%).

- Mark up is equal to their discount, so you pay only slightly below retail. (They get 20% off, and then mark the discounted price up 20%).

- Flat mark-up (say, 20%) applied to all items regardless of discount. Since they may get 0% discount on some items and 40% discount on others, this means you are sometimes paying more, and sometimes less than retail.

- Flat mark-up on items they don’t get discount on (say, 10% above retail) and one of the above models for items they do get discounts on.

Understanding mark-up is important to understanding the price of your project. Your designer should be transparent and reasonable with how they purchase and mark-up product. Conversely, don’t expect that all discounts are passed along to you - those discounts are provided to designers so that they can make a profit on selling these products. Also note that some designers do pass discounts along, but make that money up with higher design fees.

Summary

Hiring a professional interior designer is a luxury, and the expectation is not that it is affordable for everyone. Even (or especially) so, you should see value for your money, transparency in charges, and that your money is being treated respectfully. The ‘best’ pricing model is personal preference.

For my two cents: I prefer charging flat fee, as I like my clients to know costs upfront. It establishes a greater trust. I also hate feeling ‘on the clock’ when I am having a conversation with my clients. The relationship becomes transactional. Personal connections are one of the best parts of the job.

Which model do you prefer? Comment below!