7 Ways Interior Designers Charge for Services
There are different billing methods employed by a certified interior designer to charge clients for services rendered.
During the initial interview with a prospective client, an interior designer must give the various options available. This will help a client decide on which mode of payments will be preferable to them.
Depending on the services required, the client is made to know that the options open for choice is completely up to them, that is after he or she has listed it all out, explaining every option in great detail.
So depending on the methods chosen, both parties, the client and the interior designer, will come to an agreement as to the best billing option and whichever agreement is reached, it must definitely be acceptable to both parties involved.
One thing for sure is that a client will get a good service and the best of works from a certified interior designer who feels fairly compensated for the service to be rendered.
Interior Design Services & Types of Fees Applied
The fees/rates employed for interior design services are as follows:
- Pre-fixed rate
- Hourly rates
- Percentage over costs
- Costs per square metre or square feet
- Department store retail
- Combination rates
1. Pre-Fixed Rates
With pre-fixed rates, the client and the certified interior designer will discuss extensively - as much as is possible - the scope of the interior design works and an agreeable fee is set.
This fixed rate is generally supposed to cover all contingencies and on an agreement, a part of this fee is paid in advance before works commence.
The usual amount paid initially may range between 10% and 40%, though this payment is different from a retainer or deposit (a retainer is a certain amount of money paid to a certified interior designer to reserve his or her time to work on a project), but whatever the case may be or whichever terminology is preferred, a deposit, retainer or whichever, it will invariably be treated as a form of deposit.
And it must be spelt out in the letter of agreement that needs to be drawn up by a certified interior designer
Meanwhile, payments will be made as the work progresses and a drawn up schedule will be made so as to determine when progressive payments must be made.
The only drawback of this mode of payment for services is that the scope of work may end up being broader than expected and an interior designer may end up expending more time and energy to complete the job.
Interior designers are always aware of the fact that it is very hard to determine the scope of required works in advance of an interior design project.
Because of the many variables involved, many of these projects require more work and take longer. This ends up displeasing the designer who may then not put in as much effort as is needed. Who wants to work for an unjustified pay?
2. Hourly Rates
A popular mode of payments, the hourly rate payment method has been used over the years by many professionals such as architects, engineers, therapists, lawyers and accountants. It is well used by certified interior designers too.
The way it works is that the interior designer is supposed to keep detailed records of daily work and the number of hours spent to execute such works.
At the end of each month, the client is billed as per the number of hours expended.
This mode of payment actually is payment for time spent, not necessarily a payment for talent and skills of a certified interior designer.
Clients are a bit wary of this billing method simply because there may be instances where the designer works slower than others. What happens if the interior designer is slow or fast, highly talented or just plain competent?
It poses several problems and clients sometimes feel they may be cheated but have no way to ascertain such fears. This is expected.
For example, if the certified interior designer goes shopping on client A's behalf, spending a number of hours in the process, and whilst doing that finds something for client B, but is unsuccessful in finding client A's products, who pays for the time? Who pays for the time, client A or B?
Well, the answer is that client A still gets charged, but one may ask, "Is it fair?" Unfortunately client A still has to pay for time spent on his or her job. This leaves many clients feeling cheated.
Also, how does a client trust that the number of hours a certified interior designer claims is correct and has not been inflated?
These are the usual question asked by prospective clients. Rightly so!
3. Percentage Over Costs
This method is great for residential projects, though it may be used for commercial projects as well. Charges are the net or wholesale prices that the interior designer pays to the merchants, vendors etc.., and then a predetermined percentage markup is applied to the net cost.
The markup is on the furniture, furnishings and labour incurred whilst working on a client’s project. The actual net cost is paid to the designer plus a commission which is inclusive of design and planning, selection, delivery and installations.
The percentage charged depends on the nature of works to be executed, which can range from as low as 1% or less, if it’s a commercial contract (usually a large contract), and may go as high as 40% if it’s a small residential project. This means that the percentage charge will vary depending on the size of the project.
Some may have issues with this mode of payment, feeling the designer will intentionally choose pricey items to ensure fat commissions, but because this may make the project end up being of a high standard, and stylish in look and finish, the final result will turn out great anyway, and this probably will please the client and at the same time promote the works of the interior designer.
Many prospective clients seem quite comfortable with this mode of billing as every item that is chosen and purchased will only be marked up by the percentage to cover for overheads and profit. And a certified interior designer feels very comfortable with the percentage-over-cost billing method as every single item, large or small, is compensated for. And this may even be continuous if the client keeps on wanting additional stuff.
The popularity of this system speaks for itself. Good to consider.
4. Cost Per Square Metre/Square Feet
A very simple way of charging that is commonly used for space planning tasks and is usually a small amount per square metre or footage. What it entails is the interior designer simply measures the client’s space to determine the square metre (or square footage) to be designed. Then multiply by a pre-determined and mutually agreed amount.
Space planning is a specialised aspect of interior design and involves the design of space allocation to a person or group of people to work in (or within), so that designated tasks and duties can be performed optimally, with added convenience, efficiency and most especially, comfort.
However, this billing method can be used in combination with other forms of billing systems in the event that additional services are requested for by the client. This is due to the fact that space allocation is the beginning point of interior design and it eventually leads to the final design.
Once it has been ascertained that additional interior design services (asides space planning) are needed, that is, the task of choosing the required elements that are needed to complete the project, then a method of billing must be introduced by the designer to provide for services related to supplies and installations.
This billing method is popular for commercial interior design projects.
A method commonly associated with residential interior design projects; this was the traditional mode of payments applied some decades ago. This was before interior design became designated as a profession before the mid 20th century. Later the interior design study started to include complex technological services (electrical, lighting, etc...) for complete interior design projects.
In this billing method, no fee is directly charged for interior design services. Rather, the stated retail price from the retailers is charged the client and the certified interior designer's payment comes in form of discounts given by the retailer (merchants).
The prices quoted by their shops is all the client has to pay. The discount given the certified interior designer by the retailers is always between the designer and the merchant and it’s never the clients business so it is never disclosed outside the two parties. This works well only for furniture and furnishings provisions to a client.
When other services are needed then a problem might arise. If for example the services of an electrician are required, say to fix a chandelier, the interior designer will have to source for one, hire and then supervise his works whilst installing. Now since there won’t be any discounts on his labour costs the certified interior designer will have to employ other billing methods to charge the client for the electrician’s time and effort.
That’s why the retail billing method doesn’t adequately cover the normal scope of today's interior design projects.
6. Department Store Retail
Many department stores that retail home furniture and furnishings also offer interior design services. These services are usually provided free as long as a stipulated minimum number of items are purchased. In some cases, a fee may be charged for services, but if the purchase exceeds a certain amount then the charged fee is refunded.
This billing method is great for residential projects but impractical for commercial projects. Some dealers in office furniture, furnishings and equipment offer this service as well.
7. Combination Rates
This billing method is advised if working on a large project and a complex one.
The initial works of space planning can be charged per square metre (or square footage), at a pre-fixed or an hourly rate by the certified interior designer.
Percentage above cost billing can be used for the ordering of furniture, furnishings and deliveries.
If an interior designer is to purchase rare antique items that are costly, the retail mode of payment will be used. The client pays the price tag cost (no discounts for the client!) and the certified interior designer makes their money from a commission given by the retailer.
The combination method of billing is the best option for such projects incorporating the best methods appropriate for each aspect of the design project.
Drawing up Agreements for Interior Design Services
With all this said and done, when charges have been ascertained and agreed upon, it is now time to have a (contract drawn up) outlining the intent of all parties involved and this will serve as a guide for the conduct of the business between both parties - the client and the certified interior designer. formal written and signed agreement
It is always better and more acceptable for the certified interior designer to draw up the agreement and then the client may decide to give it a lawyer to go through and advice.
If all seems well and both parties -the client and the certified interior designer - are pleased and satisfied, the contract can now be signed and sealed, and subsequently delivered.
Which of these charging/billing methods will you prefer to adopt?
A Book Every Interior Designer will Find Helpful
I found this book of tremendous help, and you may find it beneficial too. It is written by a veteran designer who is an expert on estimating, pricing, and budgeting systems in the design industry.
Its step-by-step instructions that include case studies and interviews with other professionals have helped designers and professional interior decorators establish prices and budgets that will not only make their clients pleased but also ensure their own businesses are run profitably.
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