Almost on a daily basis, I am asked about interior design pricing strategies. In particular, “What is everybody else doing?” I don’t really like to answer this question as it’s usually followed by the designer trying to implement what others are doing, but that’s not always the right thing to do for your business.
I know that this is a very hot topic and I strongly believe that industry bodies should be tackling this problem head-on, but their approach is slower, and for good reasons too. They need to work within their guidelines and think about this issue in a much broader perspective than we do, taking into account the macro and micro environments that we trade in.
My focus and yours is squarely focused on your business and how to grow it or run it more profitably. Data is key for anyone who wants to make informed decisions in their business, I’m hoping that this general survey is just the start.
What Is the Effect On Your Business?
I don’t want to champion a specific formula. What is more important than a formula is the effect that it has on your business. Different strategies will have different results for your business, and it’s your role as a business owner to understand the effects of these strategies and ensure that you build your pricing strategy to suit your business objectives.
This is by no means a scientific study, it was anonymous, and the questions are simply designed to give us a broad overview of trends and preferences with the ability to add comments on certain questions. We did, get 100 responses which prove just how important this topic has become.
The answers and comments clearly indicate that there are major issues in design firms with regards to pricing, with 58% of respondents saying that they are not confident in their pricing strategy.
The question about Design Fees raises an immediate issue. 66% of designers base their fees on the amount of time needed to complete a project, and we both know that you are spending a lot more time on a project than you’ve quoted for.
Trade commission seems to be all over the place, with most respondents charging between 20 and 25% on the trade price. What should you be charging raises many issues and there is no clarity among the results.
Lastly, the open question raised some very important issues which need to be dealt with as an industry for design firms to be able to create profitable business models.
To further discuss these results and to help designers clarify their pricing strategies, I’m going to hold a workshop on the 12 June. I’ve partnered with Nicola Pearson, a Chartered Accountant and Partner at Haines Watts London, one of the top UK accounting firms. In this workshop, you will learn the common strategies that interior designers use to price their services and the effect that each of these strategies has on your business.