Are You Leaving Money On The Table?
The one thing that’s standard among interior design professionals is that pricing their services isn’t. Whether you charge hourly, by the square foot, with markup or without, or as a percentage of the overall budget, every job and every client is unique and coming to consensus can be tricky. You’ve probably heard a lot of buzz about Value-based Fees, a fee structure popularized in the consulting world, as being the solution to your problems. In some cases it can be, that is, if your business has celebrity.
Is your business famous?
A Value-based fee is basically a flat fee for service. There are many ways to break it down but determining your estimated number of hours and return on mark-up based on the overall budget, then multiplying it by 25% (to allow for project creep) will give you a starting point.
Although the fee remains the same regardless of the number of purchases the client makes and it definitely makes billing easier, it’s probably the most expensive way for a client to pay for services. As for you, remember, that fee includes designing, shopping, contractor time, everything. So if your client is slow to make decisions; if you haven’t established deadlines for each project phase; or if you’re purchasing way more than you originally anticipated, you’ve left money on the table.
Not to mention the fact that when it comes to high-end clients, you probably won’t be able to justify value-based fees if your business doesn’t have “celebrity”. What does that mean? It means a clearly defined design brand with a perceived value in the marketplace.
Who wants a bargain Bentley?
I’m not suggesting you have to be Candace Olson but what I am suggesting is that your value as an interior designer increases only in as much as the perception of your value does. Think about it, the higher a person’s income, the more he is being paid for who he is, than for what he does or sells.
When it’s Michael Kors, Brioni or Bentley, buyers aren’t haggling for price, they want the brand not just for practical reasons, but also for ego and most importantly, emotional reasons. What’s more emotional than designing the home where someone is live and create their ideal life?
If you want to uplevel your fees, establish a brand worth buying. And if you have aspirations to extend your business outside of a traditional design practice into publishing, licensing, or television, you have to start making your business famous.
Name one thing you can do to start making your business famous now.