Why Value-Based Fees are the Best Choice for Your Interior Design Business
Repeat after me: I will not charge an hourly rate.
Now say it out loud. C’mon, I know you didn’t the first time.
Great, now that that’s taken care of, let’s get down to brass tax.
Charging a flat fee for your design services is far superior to an hourly rate. And there are a lot of different ways to calculate it.
A flat — or value-based — fee is the total cost for a project that can be calculated based on square footage, a percentage of the project cost or an estimate of what you’d normally charge for an hourly rate (but remember, you’re not doing that anymore) to complete the job.
Why a flat fee works
Here’s the hard and fast truth if you set an hourly rate: clients will “shop” it, meaning they’ll search for the lowest they can find. You’re competing as a commodity - and we know that design is not a commodity service.
An hourly rate also means if you’re really great at your job (which I know you are) and you work faster than others, you’re only lowering your income.
You deliver a kicka** design that it would take another designer twice as long to finish and you end up with the short straw. You get paid less, and you have to take on more projects at the same time to make up for it. In the end, you get burned out.
There are only so many hours in a week a person can work, and your revenue is ultimately limited by that time. And no one can handle working 100+ hours weeks forever.
When you give your clients a flat fee for a project, your service is valued and perceived in a far more logical way. And it removes the concern of how many invoices is this going to take to get the job done — both for you and your client.
Your client will love that they know exactly how much the project is going to cost and what they are getting in return.
How to figure out your fee
I can’t tell you what your rate should be. That’s going to be based on your clients, location, experience, software, processes, procedures and more. But you can use all that information and cross-reference it to see how many hours it took you to implement your latest design. That will then let you check your fee accordingly to see whether it matches up with your service.
I can tell you that when you set up a valued-based fee, you will harness a far better understanding of your business from top to bottom.
You will know exactly what your cash flow is going to be, and you will be getting prepaid — because I know you’re not doing work before you get that check, right? You avoid working and delivering something beautiful only to end up with a client that doesn’t ever pay you or fails to pay the full price.
I dive into this in far greater depth in my Designed for the Creative Mind™ Masterclass. There’s a lot of math, but I show you exactly how I came up with my own value-based fee and how you can create yours. My students finish the pricing module with their own pricing model ready to implement!
And talk about results — students who’ve completed the pricing module of my previous course (even without finishing the entire thing) haven’t met any resistance with new clients since they started their value-based fees. Their new projects got accepted. Contracts got signed. And they’ve all said they will continue to confidently raise their rates.