The Interior Designer’s Guide to Pricing, Estimating and Budgeting
Theo Stephan Williams
I find this book very interesting to read especially for budding designers trying to start up their own office. It provides practical tips on rate computation and how to handle difficulties within the office and client-related misunderstandings like an experienced professional. Although the book proves helpful, I don’t think this fully applies for interior designers here in the Philippines. We have different standard rates and local mentality when it comes to designing is not as receptive compared to other countries.
Thinking about the local design industry, I’m sharing the following pointers and my two cents’ worth which I think can prove useful.
3 Reasons Your Business Can Fail
- You don’t have enough sales - This is true for all firms. An office or a business can fail miserably when it fails to generate enough sales and income. Although this may not prove as much for freelance designers who don’t maintain an office.
- You are not charging enough for your services - I think most designers are guilty about this one. Let’s face it, most of us really don’t charge enough for our services because:
- We are afraid of not getting enough projects and we’d rather have a project with minimal profit than no profit at all.
- Most clients are either friends, relatives or some friend of a friend or some friend of a relative or some distant relative, you get the point. When clients talk about connections and who knows who, they become very upfront asking for a big slash in the buck and you can’t do anything about it but nod in agreement without actually thinking how much work you’re supposed to do.
- You are mismanaging budgets - One project or business fails when one does not know how to handle money very well.
Rates and Fees
Interior designers follow standard rates which are provided by the governing organization. Although rates are standardized, most designers don’t follow it but rather use it as a guideline to compute which bracket they think their project belongs to and work their rate from there. Most of the time, the extent of work to be done for the project, how much time it will take you to deliver and how much the project is actually worth (objectively) determines how much you can price your rate so it is always best to think of all the aspects of a project first before actually dropping the bomb on the client.
Some strong points to consider:
- No one formula is perfect for every project
- Pricing for a project is determined by your flexibility and knowledge of different approaches to pricing
- Don’t make the mistake of starting out too cheap to get the work
- Never tell clients they are your first customer but a slightly lower ‘introductory rate’ may be implemented until you have achieved a few successes
- Always ask for the budget and determine whether or not you can make it work
- If the budget is not shared, make sure not to sell yourself short
- In the long run, clients will respect you more if your rates are objective and if you feel good enough about them to quote as being your own.
- Make sure that you are not too hasty to lower your rates
- Never apologize for your increase in rates, simply justify them factually
- Charging different rates for different clients is not unethical
- Think about what’s in it for your firm when establishing rates for different clients
- Work now get paid later – NOT
More importantly, show them that you’re worth it and try to reinvent yourself everytime you get the opportunity. Keep things fresh and unique.
It is imperative for us to ask if the client has a budget in mind because it will aid in the consideration of design and materials we will deliver for a project. But if you think the budget is too small:
- Learn how to say ‘no thank you’. If you want to show that you are serious about your rates and services and that you place high value for the quality of work to be delivered
- Another option is to say yes because the project offers you a great potential to show your versatility as a designer.
- If you say yes to a budget you think is not high enough, set parameters with your client upfront. Discuss with the client the extent of your services and how the budget may affect the design or else that you may look for alternatives.
Other things to include on meetings: Set-up a payment plan with your client that you feel comfortable with.
An estimate acts as blueprint for a successful project so you have to make sure to provide your client with a detailed and itemized estimate. It has to be as simple and easy to understand as possible and always try to sit down with your client and review each item on the list. This way, they will know where their budget is going. They will definitely ask questions and may try to eliminate items on the list so be sure that you are ready to justify the given prices and why it is necessary in the design. Explaining everything usually wins a client’s trust because they will feel that you have nothing to hide from them and have the best intentions.
- A signed estimate actually doubles as a legal contract and requires you client to pay for your services and/or products outlined within.
- Find a format that caters to your own organizational style and always cover all the relevant details.
- Always discuss the project process with your clients. They should know how you work and give them a schedule when they are due to expect a call, update or meeting. Make them feel more involved in the project other than just signing approval sheets.
There are additional variables usually overlooked by designers when it comes to pricing and estimates:
- Time needed for researching about the project
- Postage, freight and delivery costs – Delivery cost for each vendor/supplier varies so make sure you know the standard cost of delivery fee from their warehouse to the project site.
- Client meeting time – Always keep in mind that meetings with clients should be computed as billable hours so make sure that you think ahead how often you should meet with the client and how long a meeting could last.
- Mobile phone charges – We live in a time where we are reachable 24/7 anywhere we are and since text messaging or calling are adamant in the profession, make sure you include this when considering your estimates.
- Travel expenses – We cannot help but go travelling in our line of work whether going to the project site or sourcing for materials on stores wherever. Travel expenses is a must so make sure to take in mind to include this when preparing your estimate.
- Design Revision Allowances – If you are notorious for changing your mind and coming up with new ideas after the estimate has been approved, include this in your estimate and explain to your client the creative process behind this. Since I think most clients will raise a brow on this additional allowance, I suggest you can peg this one as a refundable fee when unused.
As designers, we are also given an opportunity to control the budget allocation of a project. We are responsible in managing the cash flow of the entire project. We have to be responsible in handling budgets and always keep in mind that we have to take double care because we are spending money that is not ours, this is money entrusted to us so spend it wisely.
- Be cost-conscious – Always tabulate and account for all expenditures of a project everytime you spend it. This way, you always have an update of the latest expenses and be able to submit an expense report to a client if there will be a need.
- Never use a budget given for ProjectX to ProjectY – A lot of designers repeateadly do this very big mistake. Using a budget for a project for another is a big taboo. If you ran out of spending budget for a project, be honest and discuss with your client the situation. Never assume that you can continue working on a project using money from another with the thought that ClientX will pay you in X days. Never assume.
Other Things I Consider Important
- Forms are important – Have a template form for everything. All transactions should be detailed on print. This way, it will be easier to trace errors and have a signed proof that these transactions were approved. Putting everything on paper shows your client, vendors and contractors that you mean business and that make sure everything is recorded and done according to agreement.
- Always review you proposals/letters/estimates/forms before sending them out.
- Develop a system that works for you – Try to develop a system of how you go about a project, from proposals to actual implementation, and stick to it.
- Never design a job without a schedule or deadline – You willl not be able to accomplish anything when you don’t set deadlines for yourself.
- Get help when you need to – Do what you know best and ask people who specialize in tasks that you do not know.
- Don’t forget you contractors, suppliers and vendors – Pay your bills within the terms noted on invoices, send them a letter of appreciation for exceptional services, refer them to other clients and treat them with respect. This way, you become their important client and you can somehow make sure that they will always give you their best services. It is important that you also build partnerships with them.
- Be good to yourself and your staff – Give them incentives for great project outputs, delivering quality tasks before a deadline and other small things you see they do great in. It makes them more motivated to better their work and keep it up.
Why we charge what we do
We charge what we do as interior designers because we are the experts. Being experts requires us to look at ourselves as much more than artists of visual communication.
We look at the big picture. We don’t just design for the sake of aesthetic appeal, we design in careful consideration with the client’s needs, wants and budget with proper knowledge of how to build it and why it is what it is.