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Purchasing Fees vs. Retail

For years, when somebody asked us what we charge, we said we cost $150 per hour, and cost plus 35%. I did it for years, but you know what? That doesn’t work anymore.

I think you’re already aware that it’s simply not working at all. And the reason why is because when you say, “cost plus,” even if it’s 25% or 35%, it doesn’t matter what number you state. All your client is hearing is “plus.” When they hear it, that translates to them that you’re expensive.

Your client might think you’re exorbitant, and then they will start questioning what you make on product, which isn’t ever their right to ask. Yet, the way we’ve always presented that has also opened the door for that conversation. And we’d rather not go there, because it isn’t any of our clients’ business.

Presenting Purchasing Fees vs. Retail to Your Clients

Instead, you could say that you do your purchasing at retail or less. And, of course, your clients will ask, “Well, when is it less?” That’s when you respond with, “When I buy from a really good stocking dealer relationship, I’ll share some of the savings with you.” Or, you could also say, “Our purchasing is never more than retail.” End of story.

When you do that, it makes all the difference in the world because your client understands what retail is. Let’s do the math on this. If you bought a product for $100, and you were on a cost plus 35%, you’d sell it for $135. So, you’d put $35 in your pocket. While that’s not great, but it works.

However, if you’re at retail, you’re going to buy it at $100 wholesale and sell it for $200 or more. Then, you will put $100 or more in your pocket. A much better outcome, and you know what? Your clients are perfectly capable of doing the math, but they don’t want to. They will get stuck on “plus.” So, you might as well take advantage of it and sell everything at retail.

The best interior design business advice I can give you is to sell your time on a flat fee. Tell your clients what you’re going to do, how you’re going to do it, and how much it will cost. Let them know your purchasing will never be more than retail. And that’s it. Give it a try and see what it does for your business. I think you’re going to be amazed!

So, until next time, design something beautiful and get paid what you’re worth.

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