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The Great Debate of Fees vs. Hours

Many designers have been asking me, “Which is better? Design fees or hourly billing?”

The answer is both, but it depends on the situation. You need to be competent and confident to do both.

However, I do know that it’s easier and cleaner to get into a job using a fee. When you stand in front of a client and say, “This is what I’m going to do, and this is what it costs,” it’s really easy for them to say “yes.”

When you stand in front of a client and say, “I cost $150 an hour and cost plus 30%,” it sounds really scary, expensive, open-ended, and it doesn’t get you hired. In order to switch over to a fee and have clients easily say “yes,” all you have to do is look at what results your client desires.

How to Calculate Your Fee

You will want to consider what they want and calculate how many client meetings you will need to complete the job. Then, you’re going to take that information, plus assess the number of hours it will take to be ready for those meetings times your internal hourly rate, and that is your fee. Your Letter of Agreement will include the number of meetings, how many selections you’re going to offer, how many revisions you will allow, and it will have a beginning and end date.

When you present as “Here’s what you asked me for,” “Here’s what it’ll cost,” or “Here’s how it works,” people easily say “yes” to your offer. They step in very quickly.

“Oh, By the Way”

Now, the hourly billing comes in after you’re in the job. This situation is when your client says, “Oh, by the way, could you take a look at the fireplace? We think we really ought to do something with that too.”

And you say, “Yeah, that’s great. I would love to do that. I have some great ideas for the fireplace. It will probably take me five hours or so to get all the drawings and specifications together. Are you good with that? I would estimate $750 or something like that?”

Package Your Hourly Billing

Notice that I asked permission. I packaged up the hours, called it out, and got permission to bill it. That’s how you use hourly charges.

And it could be something as simple as, ”The boys’ bedroom needs new bunk beds. Would you see if you could find those when you’re doing the living room furniture?” Since this is out of scope, your response would be, “Sure, I’d be glad to. I need about two hours extra to do that. Is that good with you?”

We’re using those hours to tack on the extras that people add to the original, fee-based offer since the fee is based on a particular scope of work. People like to add things on, and that’s fine because we like it when they do this. You just need to make sure you charge them for it.

Another spot where hours work well is with what I call a “dwaddle client.” That’s a person who calls you in to look at something, they get excited about it, and then you don’t hear from them for weeks, or they simply disappear. And then they call needing a couple of hours to talk about something, and then they’re gone again. And it’s okay to have clients like that.

Don’t Do “One-Offs”

But instead of doing “a one-off” hour here and there, billing for it, or forgetting to charge for it, you are far better off selling a package of five or ten hours as a minimum, which will be prepaid. That way, it’s on your books, and if they want to call you, you’re happy to get them in the schedule and come out and help them because they’re part of your client group. It’s effortless to ask for that package, and people are perfectly fine with stepping into it. Plus, you will have more income.

The Most Important Part

I want to share with you the mindset underneath these strategies.

It’s also the biggest interior design business advice I could give you. This strategy is essential, and it involves completely separating your design time, fees, and hours from PURCHASING. You need a river between the two.

When these very separate tasks get combined, people think you’re double-dipping.

Obviously, you’re not. I know that…

However, clients don’t understand because of the way you’re explaining it.

So, the explanation will be: we’re going to do the design first. We’re going to use our expertise, knowledge, and ability to draw, design, and source. We’ll do the design, get it specified

out, priced, and everything is complete. Then, your purchasing services are available if your clients desire that piece.

And you will want to offer it like it’s no big deal for you to do this or not; purchasing is just another service offered.

When you separate design from the purchasing side, you don’t get caught in the double-dipping “push back,” and clients will have a better understanding of how it is all going to work. I also want to point out that purchasing at that point is really not even a design task anymore. It’s administrative because you have already figured the whole thing out. All that needs to happen is for the items to be purchased, tracked, and delivered.

When you make the mindset shift to separate those two distinctly different tasks and be paid appropriately for your design experience and expertise, it doesn’t matter if they buy or not.

And when it doesn’t matter to you whether they buy or not, you stop being desperate and anxious about it and everything changes.

Until I see you again, design something beautiful and get paid what you’re worth.

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