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Pricing Product

Since we have separated design services from the purchasing part of our business, and they are divided into two categories or income streams, we’re now going to talk about purchasing.

 

 

The first thing I want to mention about purchasing is that you can’t sell product for what you buy it for. You’ve got to have some kind of markup or profit. Many designers like to sell a product for what they’re paying for it, sharing their discount with their client. While this seems nice and a sweet thing to do…

it’s not a business model that’s sustainable.

To be honest, you’re setting up a charity for rich people, and you’re never going to be able to grow your business doing this. So, you need to let go of that practice.

Consider this; there’s a lot of product liability when you’re buying items for clients. I don’t want to be alarming about this, but I need to be clear about where you stand.

When you sell product to a client, they see “chair” coming from you, and then when there is a problem, you are relying on your vendor. So, if something goes wrong with that product, you’re going to go back to your vendor, and hopefully, the vendor takes care of it. In most cases, this is true, but not always.

 

How Marking Up Product Protects Your Business

 

 

Here’s an example in my business where I am still refinishing a couple of white lacquer bunching tables because the joints crack, about every two or three years. So we go back in and touch them up so that they look good.

Why do I do this? Because the client is one of my ideal clients. She referred me into a big hospitality job, so I’m going to take care of her no matter what.

I think of fixing those tables over and over again at my expense as marketing. I’m taking care of something that needs to be taken care of…my reputation.

I bought those tables from a very reputable American furniture company. They were expensive, and the vendor isn’t backing me up at all. They just took them out of their line and said they didn’t want to mess with them anymore and, well, too bad.

That’s why I charge enough on my products so that I have some savings put aside, which allows me to take care of situations like this when they come up. I can take care of it without it hurting me or my cash flow. I don’t have to lose a paycheck or anything like that. I’ve got a little savings account set aside so that a portion of the markup I’ve charged on every piece of furniture, drapery, or other product is stashed there to take care of anything that goes wrong.

And that’s crucial for us as designers.

 

 

Purchasing is Not Interior Design

 

It’s essential for you to understand that purchasing is not an interior design function.

I know that sounds weird because when you’re starting out, you’re wearing every hat. But purchasing is not a hat you really need or should be wearing, and you want to get out of it as soon as possible. You’ve already specified, found, priced, detailed, and taken care of all the design. All that needs to happen now is for the purchase order to be issued. Once that happens, it needs to be tracked, the shipping has to be set up, any freight problems have to be resolved, and the installation needs to be scheduled. There are a whole series of things that need to happen.

It is essential to know that all those tasks are actually an administrative job. It’s not a design job.

The sooner you can move those tasks off your plate and onto an admin who can do all of it for you, the better. Admins are easy to hire, and they’re generally not design assistants. They’re people who like computers and handling tasks like this. You can hire them for just a few hours, a week, or a month because you need to get all this tracking and tasks done without it eating up all your time.

And the reality is that a qualified admin costs around $30 to $40 an hour, and your hourly rate to your clients is $150; do the math.

The sooner you can get there, the better.

Until next time, design something beautiful, get paid what you’re worth.

 

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