THE BUSINESS OF DESIGN: HOW I SET MY FEES
Start with Part 1 to learn about the article I am breaking down in this 10 part series.
YOU'D SAVE A BUNDLE IF YOU KNEW HOW I SET MY FEES
Designers use a hodgepodge of methods to determine their fees. The traditional method of choice, called cost-plus, lets designers buy furniture, fabrics and accessories at a "trade" discount of 20% to 40%, then mark the item back up to around the retail cost, using the markup as a design fee. Another alternative is to charge clients a commission -- usually about 25% to 30% -- on items purchased. These days, however, designers increasingly bill either at an hourly rate or a flat fee; sometimes, they also charge cost-plus or a commission for items they buy for you.
The problem is, your designer's chosen method might not be the best deal for you. If all you want are curtains and carpets for your living room, an hourly rate makes sense. If you're building and decorating a house from scratch, you're better off with a flat fee. And if you just want your designer to purchase furniture, it may make the most sense to go with cost-plus -- as long as you keep an eye on how much "plus" is being tacked on. Sometimes the difference between what your designer pays and what he charges you is huge. Let's say a designer buys an Empire chest of drawers for $1,000, but it is really worth $2,500. "There is nothing wrong with marking it up to that price," maintains Jean Michel Quincey, a New York interior designer. "Why shouldn't he? Particularly if he's spent the weekend looking for it."
As a consumer, you may feel differently. In your initial interview with a prospective designer, make sure he tells you how he charges and whether he'll consider another option. When push comes to shove, most will.
As a client, your designer should be able to explain to you how they set their fees and what they are charging. If it's not clear and you think they may be doing something shady then step away.
There is no universal way that commissions or fees are set - different from architects or the 6% real estate agents get. I've done an entire article about the different structures of interior design pricing for you to read up on here.
It is true that you may be able to discuss a different pricing structure depending on your project, don't be surprised if the designer declines. Designer's are running a business like any other and have processes in place that work out best everyone when they are followed. You can read more about negotiating design fees here.
My invoices always have the price that I pay for the item when I am getting a discount. So if I purchased that Empire chest mentioned above for $1000, but I spent 10 hours shopping for it, you would see I paid $1000 for it and then be charged my hourly rate for those 10 hours. Finding a good deal takes time and may end up costing you the same amount in the end.
It comes down to educating yourself and making sure that you understand how you are being charged.
read the entire series: