Interior Design: Charging Your Clients

1. Introduction: everyone. My name is Timothy Morenz. Ian. Thanks so much for joining this class. My first class will discuss some of the challenges that designers, interior Designer specifically face when it comes to charging their clients for their services. Item, a 10 year veteran, is nature designer, and I currently owned the I D consultant, which focuses on helping designers grow their business and face challenges that they might not be able Teoh tackle themselves. Now, today's course is going to be focused on how to charge your clients for your services. Arguably, there's so many reasons Teoh charge different ways of your clients, whether that be that fits your business or on the type of project that you're taking on. However, the biggest challenge is trying to figure out a happy medium between what works best for your business and what works best for your client. Kind of figuring out of the middle ground with that. Now there's many different ways Teoh charge a client. We're gonna go through all of those ways in this class, and hopefully by the end of this class will be able Teoh provide to the knowledge that you can take and run with it in charge of clients. However you see fit, that's for your business. Now they're seven different ways. We're gonna look at all of those different ways. And then the project at the end of this class is going to be taking that information and creating your own unique way. Teoh, charge your clientele. And I love to see that plan. I love to help you tweet that payment plan for your client based on your business needs specifically. So join me on this class and hopefully through the end of it, it will be more confident with how to charge your clients for your services. Thanks so much again. 2. Flat-Rate Pricing: everyone thinks so much for joining me on less than one. We're gonna talk about flat rate pricing and the pros and cons of it and really, what it means for your business. Flat rate pricing. At least when I did, it was taking the knowledge that I know on and utilizing that determine how many hours of designed that it should take me for any kind of project. So instead of charging hourly for your project in your mind, you say OK, looking at the scope of the project for that particular client, I know roughly about how many hours it's going to take me to complete that design from beginning to end. Now, knowing that information, knowing what you know as a designer, you can comfortably say, Okay, this project will take me X amount of hours. And since I charge, let's say $100 an hour, if it's a 10 hour project, in my mind, that flat rate is going to be $1000 Now. The warnings to this is that regardless of what happens, you're only charging that flat rate for that project, which means if you have a client, that is someone who just can't make decisions very quickly, or you have a client that likes to change their mind pretty frequently or simply client that doesn't really communicate. You have to realize that all the amount of time that this client takes from you is basically making that hourly amount diminish very quickly. So how do you rectify that? Perhaps you do a combination off charges in regards to flat rate, for example, you know for sure that a living room designed may take you 10 hours. But in your contract, you may have a clause that says, But if the client decides to our forces you to go over that allocated amount of hours, then your contract at that point would convert to an hourly contract. Then, of course, we would discuss and the next lesson what hourly charging looks like and how you can utilize that to your advantage. The pros to flat rate pricing is that you can actually close out projects very, very quickly, And the reason why is because the traditional way designers charge is per hour now that can range from, let's, say, $56 an hour for a college student that just graduated interior design school to as high as $500 an hour for a Beverly Hills designer who is super famous and does celebrity homes Now , obviously, if you are someone that's new to the industry, you're not gonna charge $500 an hour. So figuring that out is a really big informational piece that your need to know. So without further deal, we now know that the flat rate is basically you. Just estimating how many hours of projects going take with understanding that the client can make those hours diminish. Should they be a little bit difficult and with flat rate Theobald City to close projects quickly? Because you know that the client has a small budget and you can accomplish that design in a very small timeframe for X amount of dollars that will not decrease or increase for that client. There are other pros and cons that may be fit your specific business, but the main pro and con is simply what I stated. So the next lesson we're gonna talk about how early and how hourly would be very, very helpful in a situation like this. In addition to that, how early can be very beneficial to you as a designer and your business. Thanks so much for listening to less than one. I'll see you in the next one. 3. Cost + Percentage: everyone, welcome back this lesson. We're gonna talk about cost plus percentage now when it when it or percentage over costs, rather whatever way you want to look at. It is really good for residential projects. You're basically taking your costs as a designer, so the wholesale price of products and you're adding either a flat rate or percentage cost . So, in essence, we're kind of taking care of two costs or cost structures in one lesson, if you may. Now, when it comes to flat rate, it's either a consulting fee or just a flat rate fee based on how much work it took you to get that particular product. Obviously, retail products are gonna be a lot less than something that's a little custom, so you have to charge accordingly. So hypothetically saying that you a designer, get products for a very cheap price from wholesale or from the manufacturer, that is wholesale price. You're gonna take the price that it is for that particular product, and you're gonna divide that by 0.7, which means it's 30% mark. Now there is a very big difference between margin and mark up, and we'll go over that in a different class, but in short, I'm horrible at math. Don't judge me. So I'm gonna pull up my calculator and we're gonna utilize that example to show you exactly what the cost of be and what your profit would be. So if we have a $500 product and we divide that by 0.7, which is 30% we should be charging our client $714.28. So if we take 500 away from that, we've made a profit of $214.28 for simply finding that particular product, letting our client no and having the client purchase it directly from us. At that point, you can actually work with your vendors on your manufacturers and work out a way to do drop shipping toe where they'll send the product to the client without their logo, because clients will shop you. And then you have to explain to them why you're charging 30% reality. You really don't have Teoh, but it's just one conversation you don't wanna have with plants. So $214 profit for a simple $500 product. Now, if you have a client that has $10,000 off product that they purchased, divide that by 5000.7 on and we have $4285.71 profit for $10,000 purchase. Well, that would be like, Yeah, so the actual product, your costs as designers, $10,000. You marked it up 30%. You just made $4200 or so. Now, obviously, that's a huge margin. And of course, now I have got you intrigued on the reasons why we charge on a dividing by 0.7 verses times in that number by 0.30 There are big differences, and it is a big, substantial difference as well in regards to your profit. So now you also have percentage. Obviously, we just Well, we just did 30%. But you could easily run up and make that as your flat rate at on from that particular product that you bought wholesale. If you want to do a flat rate, it could be something as simple as $500 for everything. Or it could be $500 for custom product, or it could be you know, as little as $100 just adding on something for a large amount of purchases. So that way you get compensated for your consulting service on finding those products. So this is again one thing that is beneficial to your business and specific to your business. If your business doesn't run that way, if you just charge designer fees like we discussed as an hourly rate and a flat braid, generally you can get away with a smaller percentage on the profit scale for purchases that the client makes to you as a designer. Keep in mind, of course, since I'm not a lawyer, I can't say too much, but you should not be purchasing wholesale without a resellers license on. It's really, really easy to get a recently license from the government, so make sure you do things on an ethical level. Make sure charging a cost that you both agree on. The client and yourself agree on Andi. There really won't be any issues. Get talk to your vendors, see if they could do drop shipping, and if you don't know what drop shipping is, it means the vendor themselves or the manufacturer, or sending that product to your client with an enclosed invoice or shipping, I guess Document that has your logo, your company logo on it. So it appears as though it's coming from your company, but it's actually coming from the manufacturer. So, um, as a recount, we have percentage over costs. We could be flat rate or could be a percentage percentage. Typically, the standard is 30%. You'll take a number that you're being charged by the manufacturer. Divide that by 300.7 and not so he should be. Charging your client and flat rate is really whatever you feel best for that particular product. If it's a little difficult for you to source that product, you're gonna want to charge a little bit higher than if it was pretty easy to find and source that particular product. So during lesson three way, we are going to talk. Actually, four. Excuse me. We're gonna talk about how designers charge per square foot, and that is generally for construction projects. Thanks so much for tuning into this lesson. We'll see when the next one 4. Hourly Pricing: everyone thinks getting for tune again to lessen. To listen to you. We're gonna talk about hourly rates and how they benefit you and how they don't benefit you as designer. I really arguably is probably the most tedious thing that this hand Eric in charge because you now have to track every single minute of your time with the client or even thinking about the client now. I used to do a mixture of hourly and flat rate, as I mentioned in my previous lesson, but they were just going to focus on the hourly specifically, as stands as an hourly charge. Now, typically, designers charged anywhere between $56 per hour if your new designer upwards of $500 an hour. If your designer Beverly Hills designing for for clients that are celebrities now, personally, I will need more than open and say that I started off charging $75 per hour, and I quickly after college, increase that to 125 when I came to California. Now, even more so you can charge more just because of the area that you live in. Obviously, if you live in Orlando, Florida, you're gonna be charging less than someone who's going to be designing in Los Angeles, California myself, being in Los Angeles, California there is a ridiculous amount of competition. So understanding your hourly and how that can affect you on a competent kind of a competitive level is something that you're gonna have to really focus on and discuss with your teammates for your business partner, or even just yourself now with when it comes hourly. Typically, designers charge what's called a retainer fee. What I've learned in the past is never call it a deposit because deposit is refundable. Now a lot of designers charge a nonrefundable deposit, but that in itself is kind of an oxymoron because nonrefundable deposits can't exist in contractual world. So what you have to do is say, it's a retainer for your services or just a simple booking fate. Now, when it comes to stuff like that obviously has to be noted in words. It has to be, you know, talk to through their client to make sure they understand that now the general consensus skis the $1000 up front for services. Now, if you're charging hourly, that has Teoh fit with a set amount of hours that you're going to be requiring up front. If you're charging $100 an hour, the $1000 recovered 10 hours of design. At that point, when you reach that 10 hour threshold, then you bill your clients either weekly, biweekly or monthly, which would would be Net 30. Then they would have their time to pay their bill. Whenever you see it avoids. No, there's definitely pros about only rates. The biggest pro, at least in my eyes, is that your charge? You're charging a client rather for every little thing that you're doing for their project . Now, unlike flat rate, you may have a client's that is just a whole lot making decisions or changes their mind. Quite a lot of benefit of the hourly is your being Kate. For that amount of time that your client is dragging their feet. I think the concept this is that you're not very much trusted with your clients when it comes to hourly, because your clients have very much we're have very much different opinions on how long things should take or even charges on. You know, this lamp, how much now that's worth and we all know as designers that clients like to shop and they may spine lamp that is just way cheaper. And they wonder why you're charging them X amount for that lamp when they can go to target and buy it for X amount. So when it comes to allocate, it's really important to know that your time is valuable. As a designer you went through, hopefully years of schooling. You hold a skill, but not many people have, and that's the reason they're hiring. So we need to make sure that you're being, you know, are just on a very ethical way, and that means charging for every little thing. So I'll give you a little inside scoop on how I charged on an hourly basis. So again, I was $125 an hour and I didn't require 20 hours front as a new initial feed. That's unaffordable. The reason for the 20 hours upfront is the initial stages of the design are extremely labour intensive. There's researching development. There's conceptual design. There is a contractual design. There is literally everything happens in the beginning of a project. When it comes to your process is designed so when you're charging hourly, it's important that you need to understand how long the initial stages of designer will take. If they want to be five hours, then you should be charging 10 hours. If it's going to be 10 hours, you should be charging 15 and so on and so forth. Do you want to make sure that all of your what you're doing as a designer is documented is known And really make sure that your time is paid for as a designer and when you're on projects now, the cons of it again are when clients don't trust you. I know designer who actually takes their time on CAD work when they have a difficult client , and the reason for that is because the clients very difficult in the designer, naturally, just doesn't like that. So the way they're kind of rectifying that their mind is you know what? I'm just gonna take a little slower on my cat work. So then when I deal them, it's going to be a higher amount to accommodate, for how difficult they are. Is a client. It was very unethical way. I will never say to do that. I'm not saying not to do something like that. At the end of the day, it's your business, and he could do whatever you want. So now that you know what hourly is, you can utilise that to your advantage by the particular project that you have. If you know that the project for the client for meeting them is gonna be a little difficult , sure charge a little bit more for your time. If the project is going to be a little bit extensive, then you're gonna charge a little bit more because you want your clients to keep you around and you want to accompany for that time for the longer project. If it's a quick project that you know, you could turn around pretty quickly. Sure, lower your price, because then at that point you know it's a quick get in Now. Now, when it comes to early, you have to realize that time equals money and everything you do from emails, text messages, phone number or phone calls from shopping for material. Teoh even is simple, as you know, doing back and work for your clients. That doesn't really take up too much time. Every single minute, every single second counts because you have to bill your client at the end of the week or month, or however you charge your clients. Now it's important that you provide documentations your crimes because it kind of closes that that open door with the trust not necessarily close to the open door, but it actually makes it so. They trust you more because they kind of see exactly what you're charging them for and what went into that particular invoice. So, in a sense, your preventing a door from closing, if you if I may. Now, when you are charging Carly. It's also really important that when you do document that there's Associated number with that. For example, when I charge for emails, I actually do it in increments of 10 e mails. I've figured out that throw my 10 years of working as a designer, that it generally takes me on average off one minute to read an email than another two minutes to actually think about how I'm going to respond to that client related to the project. Andi. Then in addition to that, actually composing that email and sending it off, so every single email I've right is, on average three minutes long from reading to sending the every 10 e mails is 30 minutes of time. So when it comes to females, I know every 10 emails to my time metric. But I have. And from there I talked to my clients important text messages. They're a bit different. They're charged based on average again. Now my text messages are usually 30 text messages, or so her 15 minutes of my time everything, even from a phone call. It is documented accurately and charged on hourly basis in a very fair away from my clients . Now the reason for our rate is also so your clients don't take advantage of. I've had clients in the past where they've completely taken advantage of that, and they were texting me at night because I wasn't charging them for text messages. On Day 30 texts became 50 50 became 100 and sure as heck there was a whole day where I was responding to her text messages and emails. Andi, I calculated the amount of time that I've our money that I've lost by, you know, just letting that go on. It was upwards of $800 I lost for that one project. So time, of course, equals of value. And you need to make sure that whatever you charge hourly, that that's accurate on your clients. Understand that. Thanks again for listening for lesson to less than three. We're gonna talk about retail cost plus so charging clients retail for products that you're their purchasing. Rather, thanks again, we'll see in the next. 5. Price Per Square Foot: Hey, guys, welcome back. So we previously discussed how to charge Hourly had a charge. Flat rate had a charge percentage and percentage over costs. Andi even flat rate over. So this lesson we're gonna talk about how much designers charged per square foot. This is a very, very unique weight that designers charge, and I highly am against it for residential projects. But for commercial projects makes a little more sense. The reason project for commercial makes sense. The charge is kind of ways, because when you're talking about a commercial space, unless it's something ridiculously unique, like restaurant or, you know, Mom and pasta, then you kind of are cookie cutter in a way that you're buying similar furniture. Even in a restaurant, you're probably by 30 or 40 benches for your are buying, you know, 30 40 benches for those I'm sorry. 34 tables, benches on. There's a cost that so your they're all gonna be the same thing. You're not gonna buy 40 different tables, chairs, 42 benches. So when it comes this four foot, you're merely saying that you're gonna charge X amount of dollars per square foot for Tom for their space you're designing Cool space is a whole on, and it's more cost effective for your client. Actually pay you on a square footage, then pay you cost or fiery because of the fact their bikes or you're lying a lot of material. So when it comes Teoh something like square foot. A lot of designers choose to do it in a tiered way. So, for example, if you have 0 to 1000 square feet, we're gonna charge you $6 a square foot, ensuring that the designer is gonna get six grand at a Max in their pocket. Now, obviously, if you have a space that's 500 square feet, I'm gonna do math again is employable. So 500 square feet And let's say we charge $6 a square foot, really, only making like three grand for that particular project versus, you know, higher square foot space. So in the tiered way, you could do on six or $7 a square foot. If it's from even doing minimum, let's say 500 square feet to 15 feet on, and then from 15 1 5000 square feet, you could charge lower per square foot. Let's say you charge 1200 place 12 of $14,400 for design for 12 now. Obviously, that's a lot of or put it out there for the record that this is an example number. It's not by any means I charge on commercial way, but what I'm saying is you should have a tiered way that way. It's just more of an adventure for you as a design. Wanna charge accurately for your work So you don't wanna be charging $6 a square foot for, you know, 1200 square feet and actually just realize that made a mistake earlier. You gonna want to charge less in the hired square footage? So instead of using $12 because that was actually double the $6 example I gave will use $3 for the 1200 square foot space of three times. 200 Should be 36. Yeah, so $3600. Sorry, not 14,000. So I apologize for that. But you have more than thousands for feet. You should be charging a little bit last, even if it's a dollar less than if it was the benefits of doing something like this is that it's your starting per square foot space. So obviously you're gonna run Teoh words similar to flat rate charges. Where you have a client, you changed your mind a lot or some might happen. That's where change was going to play. Your service client wants change smooth. Certainly your project that I want to order. So when it comes, Teoh great for projects would never do more than welcome to. There are very few designs. Presidential has died words just simply because similar flat rate since money. So listen five we're talking about. Let's see. Talk about another way. Thanks again for tuning into chapter or less than four. We're gonna go ahead and talk about combination. Thanks again. 6. Your Project: everyone thanks so much again for viewing my class. This is my first class, and I was really nervous, but I'm really excited to share my knowledge with everyone, especially sharing my knowledge, even during my normal business hours as a design consultant. Now, your projects is very simple. You're gonna create your own unique way to charge clients. It could be a flat rate with a contingency. It could be a combination rate, But specifically, I want you guys to be unique with it, come up with a combination re. Now, the challenge is coming up with a combination rates specifically to a 1000 square foot project. So it could be a house. It could be a commercial project, but specifically 1000 square feet project or a square foot project. This particular project will be four combination rape. So you're gonna tell your plan, You know, I'm gonna turn this way and this way, be open with it, and with this project, you're gonna put it in such a package that makes it abundant on how you're charging. So the way you're going to structure the project is creating your own unique way to charge someone The structure of it, though, is going to be and where PT or work or pdf document. And it's gonna look like a standardized contract clause, so cause a payment compensation and outlining a neither bullet point or in numbers exactly what you're charging your clients on. You know how that's gonna look throughout the project specifically for any 1000 square foot residential commercial apartment? Um, you can see an example of my project that I did that gives the combination of something different that I'm not normally or would not normally do. Just make a little unique. I'm looking very much looking forward to seeing all of your unique ways to charge clients. I'm really hoping that if you have any questions, you can reach out where you can visit my site. Www dot the i d consulted dot com on and feel free to reach out if you have any questions and I'll be more than happy to help in any way I can thanks so much again for joining me on my class for how to charge clients properly for your design business, and I look forward to see you guys on the next class. Take care 7. Combination Pricing: everyone, welcome back. This is less than five, the second to last lesson. Before we talk about a project for this course, this lesson is all about combination. It's now combination raises obvious. It's combining all of the rates that we've talked about, not necessarily all it could be, two of them working, even be three of based on a contingency basis. But I'll give you an example for me, at least when I was designing or activities. So one way I did it waas flat rate andi with flat rate waas X amount of dollars to achieve up to 20 hours of design. Now. At that point, if the client decides that they're a little indecisive where they want to change things, if I go over those act those those amount of hours allocated for that contract by fault of the client in the contract actually converts into an hourly contract. At that point, moving forward with the ability for the designer or even the client, you kind of back out of that contract without continuing hunt of the hour. There's many reasons I do that the first reason is because you want the ability for your client to back out of something if they don't feel comfortable doing, you never want a corner them into a situation where they're forced to do something just because of the fact that they're having a little hard time getting out of their comfort zone and making decisions on stuff that they normally wouldn't be easily making decisions. So when it comes Teoh combination rates, you want to make sure that works for both you and the client want to make sure it's an ethical combination. You don't want to make it seem like you're just trying to get the maximum cost. There is another thing that I used to do, and that was hourly. Plus commission in the commission was a percentage on everything that the client purchased through me. So the actual design was considered a consulting fee on and then as a designer. Since I have resell license, I can virtually by anything at wholesale, resell it to that client for whatever priced agree on or really whatever price I want. And if they reached that price, they can purchase it. If they don't agree that don't purchase it. So when I did it was 125 an hour and then everything that I purchased on behalf of a plan, I would send them in any voice for the cost of the product. That was my cost, and I would add 30% margin onto that. So it be taking that number, like in our previous lesson, and dividing that by 0.7. And that's what I would build my client makes. Some people may think that that's double dipping, in a sense that I've done compensation for choosing that product and sourcing yet. But this is a little different. It's not double dipping because when you think about it, the amount of time that it took me, Teoh source. That product presented by my client on cell. It's my client. That's obviously time A time equals money. Now when they actually purchase it from me, There's even more work that you're gonna have to do to actually get that product to the customer. In my process, it is taking time to purchase and call the vendor to purchase that product. Then it's paying for all the shipping to get that product to my warehouse. Once a party gets to my warehouse, then I have to inspect it to make sure it's not broken in transit because they have to return it. And if that does happen, that's even more time returning that product we need for a new product to be delivered from the vendor on Ben after I inspect the product. Then I released it to the client, and at that point, now we need to figure out how to get that product two minute client's house. And then usually what I do is I just read to you home or rent a pickup truck, and I deliver it myself for a small feet. So when it comes to marking up product, it's merely just because of the amount of more work that you have to do is a designer to source it and to purchase it and Teoh court delivery on Teoh, inspect it when it's in your warehouse and ABC X y Z. There's many reasons, so combination rates basically just means you are combining different ways to charge a client that best fit your business and make sure that you're getting charged, or that you're charging accordingly based on the project and even more so that you're actually getting competency for your job with that project. So as I mentioned, I used to do a flat rate, and that would give the client certain hours of my time if the fault or if it is the fault of the plant that go over those allocated hours that we've agreed on, then at that point we convert to an hourly contract. And then I just have to go the traditional way of making sure document everything from emails and text messages to my time in my car. Teoh, my time on the project site and so on and so forth. How many's rates are really great for those designers who don't particularly favor one way or the other? It's for those designers who actually do a lot more work for their client and wind up losing money most of the time because they are three designers like myself, where I do a lot for my clients and I want to make sure that my clients are happy first and foremost so the provost of combination rates is obviously you're getting compensated for sure for your time and your commitment to the project. The cons of combination rates is some clients may seem that or may have an opinion that it's kind of double dipping in that you should only be compensated for your time as a designer, not necessarily marking up 30%. You know, we're even a flat rate to purchase those materials. Men. Um, you know that retail store that you can get that particular furniture from there just marking up purely because they're making a profit off of it. But it's a way bigger than that. A lot of clients don't understand that. So that's that lessons very quick, very easy. I would definitely make sure that whatever you charge for combination rates, it works, of course, for your business first and foremost. But it's also ethical, and it's very much so in favor of both of you 100 client on its not favoring you or it's not favoring your client. Make sure it's a very fair way to charge. Our next lesson will give. Project will discuss what I would like to see and what practiced Thanks so much for turning into Lesson five and for listening in for this whole class and such a pleasure meeting. I look forward to seeing all of your projects and seeing what you guys come up with? Maybe if that's something that I've never seen before. I don't even use for my own stuff. Thanks again.