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[Video] Better Profits for Interior Designers

Last week I had a conversation with one of my students about making her interior design business more profitable.

We, as interior designers, tend to think that the way it’s going to happen is with one big client, with one great big job, and that’s going to change everything. While that can happen, and it’s really fun, there’s an underlying piece that needs to get solved first – your money leaks.

Otherwise, when that big client comes, the money leaks get bigger and bigger and you won’t take full advantage of the opportunities this job could actually bring you. So, let’s take a look at this.

The first thing is to separate design from purchasing.

It’s not all mushed together. You’re not a salesperson, right? Your job is not to sell furniture.

Your job is to design, so you need to separate your design so that you are paid for everything you do in design, whether they purchase or not.

The idea of, “I’ll make this a little less because maybe they’ll buy something and it’ll work out all right in the end,” is not the way to run a business.
That’s making a wish… not a business plan.

So, design needs to stand on its own… you with me?

The second piece is that purchasing stands on its own as customer service for your clients.

A couple of things in purchasing you need to know…

Stop saying, “I work on cost plus.” All people are hearing is plus, which to them means it costs more. Thus, they’re reacting to ‘cost more’ and that’s why it’s so hard to sell things. Clients don’t understand that it’s a really a good deal because they get stuck on the word plus.

A much better to phrase it that you “have a purchasing fee of 25% (35% or more).” That’s a much better explanation of what it is you’re doing. You can spell out all the things that you do, and it’s a big long list if you want to think about it.

HINT: You cannot do all that for less than 25%

There’s too much time involved, there’s liability involved, there are problems in the future you’ll have to solve. There’re all kinds of things involved in there.

So, if you must purchase for your client, you’ve got to charge at least 25%. Otherwise, don’t do it. Let the client purchase it, if they need to do that, and just stay out of it in order to have a more profitable interior design business.

Next, your design fee needs to be a fee base and not hourly.

We know that when you bill hourly, you’re only billing about a third of what you’re doing, and it’s a major problem in our industry.

HINT: When you have a design fee, you only have to sell it to the client once!

When you’re doing hourly (which means you’re sending a bill every month), you’ve got to:

  • A) Take the time to do it, which you can’t bill for (ugh)
  • B) Explain what you’re doing and writing it all down

Then you get to the end and look at it and go, “Oh my gosh! That’s $11,000, they’re not going to pay me that,” and you cut it way down.

Having a fee is the key to creating a profitable interior design business!

The other thing that happens when you have a fee is that design jobs get done.

Another problem with charging hourly is there usually no agreement on budget.

Thus the job stops halfway through because you hit some kind of invisible budget that you didn’t know was there. Then they start taking you out of the job, excluding you from meetings, buying stuff themselves, generally ruining your design. They’re telling people you did it, you’re not happy, you can’t photograph it – ugh!

When you’ve got a design fee, the design gets done and you get to enjoy getting the job finished.

The last piece I want to share with you is about boundaries.

Boundaries are really important in your design fees because you want to tell your client exactly what they’re getting by working with you.

Now, the boundaries for fees are really important, no matter what you’re doing, but especially in for controlling the time you’re going to spend, the number of selections you’re going to do, and knowing the stop date.

When you start working with fees:

  1. Clients are happier because they know what to expect
  2. The whole process moves faster and you create more profit in your interior design business

To recap on how to create a profitable interior design business:

  • You want to make sure you’re using design fees
  • You’ve separated design from purchasing totally
  • You totally finished the design before you do the purchasing
  • Your purchasing offer is clear right at the beginning so it’s easy to step into it
  • You’ve got great boundaries, so everybody knows what to expect.

With all of that in mind, you could make your interior design business more profitable. So go out, design something beautiful and get paid what you’re worth.

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