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Transparent Billing #3

November 9, 2009

I keep hearing about this topic when I meet with and talk with interior designers, and also potential design clients.  It is now glaringly obvious that the next generation of design clients wants to see the invoices, know the actual prices, and then pay a % fee on top of real costs for the merchandise management services that a designer provides.  I mentioned in an earlier post that today’s designer should consider charging an initial design fee (to cover concept and initial drawings plus a cushion), a % of total purchases to manage them, and an hourly fee, or some other version of a structure like this.  The days of having mark-up on merchandise provide the primary source of income are apparently over.  As one client told me, “I am hiring a designer, not a furniture store”.

One of the side benefits of this formula is that it now does not matter if the specified products are expensive.  Before, when a designer marked everything up 50%, or 100% (or more?), it made expensive to-the-trade furnishings quickly too costly, and in effect relegated that designer to specifying lower-priced goods.  This in turn reflected in their design work.  Transparent-to-the-client selling allows for a much wider variety of pricepoint (high and low), and gives the designer a chance to use really fine things as well as inexpensive things when budgeting a project, all with the client’s blessing!  This increases the designer’s range, and also allows for the designer to reach for the best with the client’s full support.

Wherever I go, this is a hot topic, and one that deserves attention.  The clients seem to be driving this one, and I can’t say I blame them.  Many designers already pass their invoices through at cost after negotiatiing a fee structure as explained above, and they seem to have a higher level of trust with their clients.

This is worth considering, and thinking about, even if you disagree.  As they say in advertising, this idea “has legs”, and it is running.

9 Comments leave one →
  1. January 19, 2010 11:49 pm

    I recently came across this blog and want to say right off the bat that I’m not an interior designer. And, I must say, the fact that designers bill based on the cost of items purchased rather than providing a design service shocks me!

    If, as some of the commenters say, you are more than just a highly paid personal shopper, then you shouldn’t base your billing on being one. I don’t believe the suggestion is to bill less but rather to reconfigure your billings to base your fees on the expertise you offer.

  2. December 15, 2009 3:31 pm

    I am a design professional and feel that no one should inform me on how to bill for my services. I work on square footage pricing for fees and a percentage for materials.

    Our clients hire us for professional services and not just to take them shopping in a furniture store. We work from drawings and renderings, they are looking for expertise not bargain basement.

    • crans permalink
      December 15, 2009 6:00 pm

      I absolutely agree. Your business practices are entirely up to you. However you need to know that all of these issues are being discussed at the moment. Thanks for commenting.

  3. Jo Stanford Bryan permalink
    December 15, 2009 11:40 am

    The existing system is set up to sell wholesale to businesses.
    I think if a company wants to sell to the retail public then fine but go do it in a retail store not in the design district.

  4. Timothy permalink
    December 11, 2009 3:05 pm

    I am a talented designer and have worked in this business for thirty years in both contract and residential design. I am fortunate to have primarily high wage earners as clients who can afford to hire a designer and know their limits as far as design goes. No designer in my mind who actually knows what work he/she does need compromise on billing a client full blown retail for goods and services rendered. Nor should anyone with self esteem and respect feel any shame, guilt for doing so. A good designer provides a multitude of services that no furniture store can offer, start with “shrink” and go from there. Anyone who can afford to hire me certainly doesn’t want me showing up in their driveway in anything less than what they would want to spend the day driving around in next to me. Furthermore I do not feel guilty about charging double a net price for something when I am working with demanding people who sometimes wear shoes and a handbag that would buy a good quality sofa. This is a strange business, I actually had a client when I was younger 26 at the time who insisted that I drive a Mercedes if I worked for him. I bought one and parked it in front of the Four Seasons Boston back when it was being built to meet with another client who happened to buy about half of the seventh floor and the roof rights. She read me the riot act telling me I was too young and didn’t deserve a car like that. Well I earned it and who has the right to decide what any of us deserves? People will pay for talent and skill. If they don’t want to then they probably aren’t worth working for. All of my work is by referal and I often end up doing multiple homes for people. We as individual designers have every right to decide how we bill based on our own talents and services we provide, not what vendors suggest. For anyone to compare a designer to a furniture store would best serve the professional design community and him/herself by shopping at one.

    • crans permalink
      December 15, 2009 9:46 am

      Reply to the comment submitted by Timothy- This is a great opportunity to start a discussion here, and I invite designers to do so! As a supplier I have no interest and no business dictating to any designer how and what they charge. Equally, I have the right and duty to do what is in the best interest of our companies. If that means labelling everything with cost prices in every showroom, clearly marked, or a retail price with a built-in designer discount, so be it. If this means selling to the public, then so be it. None of those things are a reality, but during this downturn there are hundreds of discussions going on RIGHT NOW!
      Transparent billing is a “hot” topic right now. Selling direct to the public with a designer discount is a hot topic. Having Saturdays open for retail in design centers is a hot topic. What do you think?

      These are some of the topics under discussion all over the industry. Suppliers are meeting to discuss these things. Design centers are discussing them. Designers are discussing them. Clients seem to be actively pushing back against designers acting as retailers. There is a lot going on. Timothy from Boston is a voice that should be heard. What about your voice?

      • December 15, 2009 10:11 pm

        Clients need to have an invoice that shows they’ve purchased and paid for goods. I may be long gone when the lamp explodes or the table opens too easily and without the showroom PO, the client has no recourse. But once a client sees net price, the designer’s mark up becomes visible. And to further complicate the problem, every showroom has a different net structure.

        I don’t have a solution but I know that clients are surfing the net and they are price savvy …. in this new climate clients want and demand proof of purchase. It needs to be addressed.

  5. marky permalink
    December 2, 2009 3:30 pm

    “I am hiring a designer, not a furniture store”, that’s true of course but yo uare also hiring a project manager and a purchaser and you should pay for those services. If a service has value it should be charged for…if the client sees no value in the service then by definition they would like to do it themselves!!

  6. November 19, 2009 10:54 am

    I couldn’t agree with you more. We are a world of information and access and the current business model is not sustainable.

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