Why you should avoid hourly interior design fees (and how to price your services instead)
HGTV is the best — and worst — thing to happen to the interior design industry.
It provides inspiration not only for our clients and potential clients, but for us designers as well, and it showcases some really amazing home transformations. But it magically glosses over the cost and time it takes to complete these projects.
Every show wraps up in an hour what actually takes weeks, if not months to complete. Sure, it highlights the inevitable hiccups along the way — a rotten ceiling beam that needs replacing, a faulty electrical system and mold, there’s always mold, so. much. mold.
The end result is always beautiful, the reveal makes the clients cry — and sometimes me too if we’re being honest — but viewers don’t get a sense of what went into coming up with and completing the design, and all it’s associated fees.
That makes it more difficult for us as designers to figure out how to price our services — flat fee? hourly? — and how to explain that pricing to clients. (And I am on team full transparency when it comes to that.)
My online-self paced course dives into the deep end of the pool on everything you need to know to come up with a pricing formula. But today, we’re going to wade into the shallower end and talk about some pricing basics — with no math involved (OK, I lied, there’s a little math)!
Why charging by the hour is a bad idea
Going with an hourly rate vs. a flat fee is a recipe for headaches — both for you and your client. You have to deal with keeping track of all the time put into the project and the client doesn’t really understand why it took so many hours to do (insert one part of renovation here) when they get the invoice.
Plus, you rarely end up charging for all the time you put into the project — it’s hard to calculate everything on an hourly scale. And your reward for completing a project more quickly is less revenue, which means you need more clients and more projects to juggle in order to make the same amount of money.
On top of it, hourly rates typically lead clients to simply shop around for the lowest one. So you end up competing on price instead of your design skills and ability to manage a home renovation with ease.
Exhausted yet? I sure am. Why this has been the most common model for billing among designers for years is a mystery to me, and it’s long past time for a change.
Why flat fees are the way to go
Flat fees solve most, if not all, the dilemmas of hourly rates. They cover the entire cost of the project and can be calculated using a mix of square footage, percentage of the project cost or estimation of hours it will take to complete the job.
You don’t have to worry about adding up each and every single hour, and you know how much you will bring in from the project, allowing you to space out jobs and take on fewer clients at a time.
Clients benefit, too — they don’t have to worry about sticker shock — they know up front exactly what the project will cost to complete, unlike hourly rates, which can vary widely and cause your client to gasp at the final bill.
As I mentioned, I believe in full transparency with clients. I’m not saying you should share all your calculations with them, but if you let them know all the fees associated with the project up front, the only surprise will be the look of astonishment when they see your beautiful design as they walk into the room for the first time.
First steps for calculating your flat fee
You don’t need to be a math whiz to calculate your flat fee, but there are a lot of variables and you’ll need to experiment to find the right rate for you.
To start off: Look at your previous invoices for completed projects and calculate: the number of hours it took to complete the project, the square footage of the project and the amount you were paid.
To calculate your hourly rate, divide total fee by number of hours it took. To calculate per square foot rate, divide total fee by square footage of the project.
Do those numbers feel right to you? Or are they too low?
That math will give you a starting point to figure out your pricing formula. There are a ton of other things to consider, including skill set needed for project (it’s easier to design a living room than a kitchen), whether the client wants all new furniture or will be using existing pieces and so much more.
You’ll need to adjust your pricing several times until you find the sweet spot for you and your business. Just remember, you are the boss!