There seems to be some confusion for the general public as to how interior designers charge for their services. Possibly in part the mystery stems from the array of entertainment media; never showing an exchange of money for services rendered, how much that would be given the scale and scope of a design project. Another confusing aspect is, depending on the type of interior design service, e.g. remodel, décor, lighting, consulting etc. the fee structures vary.
The following explains how all the various pricing structures work within the interior design industry, hoping this will eliminate any confusion regarding designer fees.
The various types of fees are:
Hourly plus contingency fee
Flat fee plus contingency fee
Hourly with estimated time plus contingency fee
One item people are confused about is the “contingency fee” or “re-sale charge”. It is understandable that this fee will throw the client off a bit as it pertains exclusively to merchandise sold “to the trade only”. The general public can only purchase goods at retailers so this is usually a foreign concept.
To the trade only is a wholesaler that sells only to those who have a re-sale license. The designer makes purchases from these wholesalers at a wholesale price, generally 40%-50% less and then “re-sells” it to their clients at a mark-up, the designer is therefore the retailer. This is the “contingency fee” or “re-sale charge”. Generally designers mark-up anywhere from 20% – 50%, which doesn't include freight, shipping & handling, warehouse & installation. (Note that a retailer also buys from a wholesaler and then marks-up their pricing from 50% -150%.)
Many retailers have been quite adversely effected in terms of profit margins by online sellers and the public who choose to purchase this way. In order to keep up with the online competition many retailers are selling a “discounted” price to designers, generally 5%- 15% off the retail price. This pricing is set to entice designers to bring their customers to purchase their goods as a designer potentially will purchase many times in a year and year after year rather than once in a lifetime from a single retail customer.
The designer price at a retailer gives the designer a bit of a mark-up fee opportunity for their time and payment to manage purchases and is usually not extended to the public. A designer may choose to pass the discount to their client but it is not required, it depends on the designer and how they have developed their business model. The client can of course purchase anything they want online or in a store but they will still be paying retail prices. The advantage of having the designer make the purchase is that the designer will bare the responsibility of tracking the order, be present for the delivery, inspection of the item upon arrival and resolving any issue that may arise (arriving broken, fabric upholstered backwards, finish is terrible, not right color etc.). When the designer makes the purchase, they are the “seller” to their client and thus responsible for all aspects of that purchase, if the client buys for themselves then the designer is not repsonsible for that purchase. Any mistake or errors are solely the responsibility of the purchaser and seller.
The hourly fee is simply charging the client by the hour for her/his time. This is usually the most appropriate type of compensation for consultancy work.
The Contingency fee only is charging a mark-up or “re-sale” charge on merchandise only, no hourly fee. This is no longer a common practice and usually reserved for very exclusive high-end décor projects.
The Flat fee is a single price that may be broken up into payments for the project. A deposit at the beginning and then further payment due after certain phases of the work is completed with a final payment at the end of the project.
Hourly plus a contingency fee is charging by the hour and includes re-sale charges for merchandise purchased from “to the trade only” vendors.
Flat fee plus a contingency fee is the same as a flat fee and includes re-sale charges for merchandise purchased from “to the trade only” vendors. This is generally the best fee structure for the client for remodels.
Hourly fee with estimated time plus contingency fee is charging an hourly rate for time but there is an estimated amount of time to complete the project. The designer is not to go over that estimated amount of time and includes re-sale charges for merchandise purchased from “to the trade only” vendors. This is a good fee structure for décor projects for those who are working within a strict budget as there is a sense of how much the service fees will be for the entire project.
Consultation fee is an hourly fee to provide consultation services to the client. The designer is available to assist the client in purchasing, selecting finishes, merchandise etc. and to answer questions. This is a good fee structure for the DIY’s (Do It Yourselfers or our online E-Design clients.)
There is a variant as well to the consultation fee. There is often an initial consultation between the client and designer where the designer comes to the clients’s home to discuss the project with them. Many designers waive the initial consultation fee and because they are not being compensated for their time they will not give any design direction or relevant design information.
There is a very good reason for this; we are experts at what we do and have a lot of education, training and experience and should be (like any profession) fairly compensated. Many design professionals have had the experience of traveling to a potential client’s house to be pumped for information then not hired and then the prospective client takes all the information to home depot, kitchen company or furniture retailer and proceeds with the design recommendations – a design that was not paid for. This is truly disrespectful to the individual designer and to our profession.
If you are seeking a free consultation then do not expect to be given any design direction or drawing samples of possible design scenarios. For a designer to provide this you will then be receiving a great amount of her/his time and expertise.
You don’t work for free and neither do we. If you want design direction to take away and do yourself then expect to be charged for the initial consultation.
Lastly, when budgeting for your project, designer fees are always separate and apart from your spending budget.
Have questions? Give us a call: 443-718-0944.