I guess my first question to you is what was this designer's role exactly?

Was he the project manager? Did he supervise workers? I can't figure out why there was so much onsite time for a decorator in a bathroom. Most of your costs would have been to the contractor/Project Mgr. etc.

I could see you working with this guy to pick colors, tile, fixtures etc. But he must have done much more?

"which covered both this project and another which we are doing on an hourly basis"

I'm confused; you mention another project, not just the bathroom.

I think you and the designer should have tabulated the hours as soon as you decided to not purchase through him. If the designer made the selections and you went elsewhere to buy it cheaper, he still has to be paid for the design selections.

"DH and I realized that we could save a SIGNIFICANT amount of money by doing research and purchasing materials on our own (with the advice of the designer on style/quality issues). We talked this over with the designer, who agreed that we should go ahead and do this, though he did make a comment about needing to "true up" at the end of the project to make sure that he would be adequately compensated given this buying approach. "

You were the ones who decided to change the terms of the original agreement after he had started to work on the project.

When things were renegotiated you should have drawn up a new contract right then and there rather than leaving it all up in the air. Hindsight is foresight of course. There is not enough information to go by, for any of us to know exactly what he did on site and behind the scenes for you nor exactly what was spelled out in the original contract. generally if you just want a design and advice you do pay hourly.

Do you think the designer spent six and one-half days working on your project? That is $8000/150.

He should be able to account for these fifty three hours.

In all honesty, I have spent an entire day looking for a piece of furniture (looking at HUNDREDS of dressers online) before I found what the client wanted, and if I charged them my hourly ($100), a $1500 dresser might cost the client $2300.

However, I don't charge my hourly when I am looking like this. Yours might. If my contractor calls me for five minutes, I get billed $6.50. If he THINKS about me for a minute I get billed a dollar and some change. However, I knew this going in.

(I prorate because I may find other things for other people, I can make phone calls, sometimes I can do it at night while I am doing laundry or have the TV on).

as a designer most places will give me wholesale or discount on products purchased through them, depending on the company. A designer has a # that they give to the company to prove they are a business, so they get items a lot cheaper than you do if you go there.

Often a designer will also give the client a reduced cost..some actually mark up above retail..depends on the designer..and then there is a design fee for the work the designer does, which could include shopping fees, etc..

They should give you an itemized list of everything that they are charging you for, cost of materials, shopping fees, designing fees..whatever..you actually should have approved of the fees in advance with a reputable designer.

I hope this turns out well for you, but frankly, the whole situation has me worried.

He should be paid for the work he already did. I am not sure what his incentive would be to negotiate for time and effort that he already spent.

Not enough information to know where to go from here. This is a classic example of what happens when one relies on verbal agreements outside of a contact. The parties nearly always disagree about the new terms. When there is a substantive change to a contract, always, always, always amend the written contract right away.

$150 per hour in Chicago does not seem unreasonable to me. Owning your own business isn't as lucrative as it might appear. For example, if he makes suggestions about structure in his business (not necessarily on your projects), his liability insurance is more than the usual errors and omissions insurance a small business carries.

While I am in a very different business, I can tell you that I would not agree to different rates for different kinds of tasks. I don't charge every customer the same rate, but the rate we agree upon is the rate. Period. I occasionally bill fewer hours than I actually worked, especially if I feel I was slow because I was learning to use a new tool. I also do some work gratis in the interest of building ongoing relationships. (The engagement is over and I've left good notes, etc., but I'll answer questions that arise later as long as the client doesn't try to take advantage of me.)

Thanks to all of you for your fast replies. Some answers to your follow-up questions:

Caroleoh the designer agreed to help us with the design and staging of the work, including overseeing the actual project, as he has existing relationships with contractors. As a result he has spent time on-site with contractors and is the primary contact in working with them.

Mitchdesi there is another project we are decorating our family room and he agreed to help with that project. That was always slated to be on an hourly basis.

For Ronbre - we didnt buy through him because even when he could get discounted prices, they were not the lowest available price. This is the case even though he agreed, even at the beginning of the project, to pass through these discounts to us with no upcharge. For example, the identical tile for the bathroom, purchased through him, would have been $2 per square foot more than I was able to find.

Regarding what all of you have rightly said about the fact that the changes in the contract were not properly and immediately documented, and that we are now in this "no mans land," you are all completely correct and I am kicking myself. But honestly I did not realize and our designer did not make it at all clear at the time that we were making a significant change to the terms and the structure of our agreement and as soon as that was evident I asked for that breakdown you refer to.

The designer did present a detailed breakdown of the hours he has spent so far on the project. It is a lot of hours even he was surprised at how many it added up to. He took pains to say that it is not an invoice, that he is negotiable on these hours, is willing to cap out his hours, and will comp certain of the hours to help us stay somewhere in the neighborhood of the budget. He has definitely provided design services and has worked hard my goal here is to pay him fairly; my questions are about helping me to find an approach that will generate some rationale that I can put behind a proposal, as opposed to trying to find a way to pay him some unreasonably low amount.

Thanks again for your thoughts.

That's a lot of money, so the sticker shock is understandable. But honestly, after the work has been done just isn't the time to be thinking about his compensation. It's also not something that a client sets or determines how or what they think would be reasonable. Clients typically don't understand what's involved in a project unless they've been in the business.

Designers are expensive. You said he worked hard, so it must have been evident he was putting a lot of time into your home (expertise which will increase its value). Markups are compensation for time (selecting, ordering, following up on, resolving any problems) -- and also for long-acquired knowledge. I'm wondering how you *thought* he would charge after the terms changed, if not hourly for his time.

How many hours did he actually spend pulling your project together and what did that involve? Does his presence show in the final result?

I do work as an interior designer (occasionally, I have another profession--long story) and I didn't mean my post to discount the sticker shock in any way.

I think one of the reasons I got my interior design degree is because I couldn't afford to utilize one. :-)

Setting fees is a very difficult thing. If I am doing a kitchen design for example, there is no way that I could bill out all the time I may spend working things out and thinking about details. I find that some aspects of my job I just chalk up to gaining experience and enjoying the design process for its own sake. However, it is not how I make my primary living.

For tgd2008 - The project is NOT complete yet. We have purchased all of the materials but are awaiting the tile so the installation of the bathroom is not done. There are potentially a lot of hours still waiting to be billed for.

Please don't make me the villian here. He is the professional. He knew the terms changed, but he did NOT make that clear to me as the client. He never documented a change in terms, never asked for an additional retainer, never presented an interim invoice.

As soon as I realized that the terms had changed I asked for an accounting. I am now stuck as I was not given the choice earlier to accept or reject the new terms and associated costs. In any case he had said that he would pass through the purchases that he made for us at cost, so I don't see how my doing the research and buying from somewhere else hurt him financially.

I do not want to cheat him. He has provided a valuable service to me and I want to pay him for that. But I do not accept the contention that paying $8000 for a bathroom budgeted at $25000 is a reasonable fee. That amount makes his fees 50% of what I paid for ALL of the materials! Even if he had taken some markup and I had bought everything through him, the fee would be quite a bit less.

What I am looking to do is see what other approaches might be used to compensate a designer for a project like this so I can triangulate what his fees would have looked like under those scenarios, which would give me some way of determining fair compensation.

Thanks again for your thoughtful responses.

Does he ever work for a straight percentage? Is this documented in any of the initial contracts as an option?

Historically, architects charge something like 10% of the total budget, but most architects are notoriously underpaid. (That would put you at $2500, which is three days work @ $100 per...not a lot)

Right now his percentage is over 30%. Although I think designers working on straight percentage is rare, perhaps you should contact the Chicago branch of the ASID and find out what a reasonable and customary is for an interior designer in Chicagoland working on a straight percentage.

The reason why many designers don't work on straight percentage is that they get accused of upselling to inflate the budget, and it isnt really germaine to some projects. If you want the Kohler Sok tub,(starting at $10K or thereabouts), vs a Kohler Archer tube (less than $1000), should s/he make $100 for the placement of one tub vs $1000 for the placement of the other?

Often when an hourly rate is used there is a "not to exceed" cap of a certain amount. This is something that you should set for the remainder of the project.

I know it's all not done yet but a lot has already been done. He needs to forward an invoice of actual billables to date so you know where you stand. Like they say, it's not the cost of materials, it's the labor. Certainly you can't expect him to do $10,000 of design & management work for $3,300. People never want to pay for those intangibles.

Since you can't afford a designer, why not just handle the rest yourself? You have a plan and the materials selected now. That's often all people contact a designer for.

Even at a fixed rate, he must factor time and materials. What was the hourly he quoted for the second project? Some charge $250 per hour, including phone calls or correspondence. How many hours so far, so people can get a feel for the rate? What is he doing for you?

Palimpsest - this is helpful. Originally this project was supposed to be flat fee, but the specific amount was pended while we figured out the overall design (when we laid out an overall budget, he included a $3300 estimate for fees to him as part of the overall). He has said that he would be willing to cap his fees and we will definitely try to set something like that up going forward - we are meeting tomorrow evening. I like your idea of calling the Chicago ASID for ideas as well.

Here is an outline of fee structures:

tgd2008 - thank you for the fee structures info! Exactly what I needed to send me down a path.

In answer to your question about my other project, that project is on a basic hourly rate ($150/hr). He is helping to select window treatments, rugs, fabrics for pillows & seat cushions, and lights/other accessories for our open plan living/dining/family room - we did not need space planning, large furniture or paint. He initally estimated 12-16 hours for that project, and we are 8 hours in right now. If we arrange a cap on the fee for the bathroom project, I will probably also ask for a cap on the fee for that project as well.

The $3300 would be a pretty standard design fee, but wouldn't come close to a project supervisor's fee. There is a BIG difference between design work and project supervision. Project supervision is much more time consuming and hands on work than just designating materials, space planning, and color coordination. Those big name firms who engage in design and build functions and supervise those functions are costly. Typically 40%-60% of the project budget will actually end up going towards to them by the time you actually account for markups on material and other subs labor as well as the line items for actual design and supervision. 8K is a pretty reasonable ballpark for the services of a design/build firm for a project of the scope you're describing. And you essentially received design/build service.

While I agree that the professional should have suggested written modifications to the contract the moment that the suggestion was made to modify the terms, it's also incumbent upon the purchaser of services to act with due diligence and insist upon clarification of the exact terms of compensation at all stages of the project, but especially if the original contract was modified. You should have asked exactly what he meant by settling up later and had that put in writing. There's enough blame on both parties to share.

You've hinted that you don't plan on paying what he's itemized and hinted that he might give you a discount, but you haven't had a hard numbers discussion with each other at all. Put both projects on hold. You cannot proceed with any of your projects until you have an idea of the ultimate costs for them, and that includes your designer's fee. Suck it up and have the difficult conversation. But, if I were the designer on the project, I would not take kindly to hints that my fee wouldn't be paid, and I would cease any work henceforth for that client until a very clear understanding was reached and any pending fees were crossed off the books.

live wire -
I know that I am not blameless here and I am kicking myself. We are having the difficult conversation you refer to tomorrow night and the projects have essentially been on hold since last week anyway. One of my first questions will be to understand *why* he decided that the terms needed to change since materials we got through him were always supposed to be passed through without markup.

As for the hint that he might give me a discount, it is not a hint. When he provided the itemization of the hours he said that he would comp out hours and/or cap his fees - both verbally and in writing, though he didn't say what he thought would be reasonable. He made these statements before I had ever seen the itemized list of hours - and I never even suggested to him that I do not intend to pay his bill. Given that he left this opening I felt that I should look into what an alternative payment model and amount might look like.

Regarding the $8000, if that were the end of it I think I would be a lot less concerned but as you rightly point out, the project supervision constitutes a lot of hours, and the project is not done! The $8000 is not an estimate of all of the costs for the project, that is TO-DATE.

I do think that thinking about his services as both design and project supervision might present an interesting alternative approach relative to payment model. We had a GC when we did a large home addition a couple of years ago, and he marked up the subs' bills to cover the costs of project supervision, which I understand to be the standard practice. The markup in our area ranges between about 12-18%. Maybe one alternative is to divide his billings by design vs. project supervision services and then propose to pay for his project supervision services using a markup on the cost of the contractors.

Jodi, I think it's good for you to research the different pricing methods (sometimes a combination of methods are used) so you can come to the table with an understanding of things for discussion. Your designer may not take kindly to suggestions on how or how much he should bill for services rendered, though. There can also be a lot of ego involved there. Unless he's not a seasoned designer, I'm sure he already knows what's billable and how he plans to calculate charges. Maybe he can have a final invoice prepared for the meeting and then you can discuss that along with how to handle the remainder of the project?

Caps at this point don't leave him much breathing or wiggle room to get the job done within limits.

I'm wondering how he got so involved with managing the project because it sounds as if that's not something that was initially discussed.

When he mentioned the 'switch to hourly,' what'd you say (other than asking for the as-of-that-point invoice)? Did you ask why that was happening? Maybe you should still ask him? Maybe that'd shed a brighter light on his contributions and you could better gauge costs. Only thing I know for sure is that hourly costs are always higher than per-project costs.

tgd - he has standing relationships with contractors and part of the reason we went with him was because he was going to help us maange the actual project. My husband and I both work full time and we have 2 small kids so I just didn't have it in me to oversee the project the way it needed to be done.

The original idea for the project was to have it billed at flat fee, so I think my absolute first question for him is ot understand what made him think a change in terms was needed and how that translates to us. Pammyfay - I think I was so stunned that I couldn't say much of anything so I don't recall what else I said or asked.

I feel much more prepared for tomorrow's discussion between the ideas for how payment can be approached and the comments about what else I should know/ask and what SHOULD have been done some weeks ago when he felt that the initial terms were changing. Thank you all for your help!

You're right. He should have advised when any change in plans would have an impact on cost. The trades are usually pretty alert to things that are wandering out of bounds from an original estimate, because they want the customer to understand they need to pay for those things.

I hope you'll post his explanation.

Good luck with your meeting.

I briefly looked at some of the replies...I hope I am not repeating what others have said. I have to say I admire your resolve to fairly compensate your designer. The thing that stuck out for me was that this person is supposed to be the professional here. If he is a businessman he should be the one to clearly state what he is prepared to do and for how much. You mentioned that you had a fixed contract in place. You were prepared to honor that but then when things changed he wanted to 'true up' the original contract. The problem with that winner of an idea, is that you did not obviously understand what that meant. That is up to the businessman designer to convey to you. I believe a contract is a meeting of the minds between two people. Since he did not convey it's new meaning, there was no new contract in imho. Of course mine doesn't count for anything...lol. But if I were you I would not be feeling a lot of pity for someone who is running around dreaming up exhorbitant fees and expecting the unsuspecting homeowner to pony up the money. Maybe he needs to spend some of his valuable time learning how to communicate effectively with his customer and acting in a more professional manner. You have my sympathies!

I am suspecting that the terms for the flat fee changed when the designer was no longer getting the markup on items purchased through him, effectively reducing his imcome from the project. I fault him for not clarifying this.

However:
mel bc
"But if I were you I would not be feeling a lot of pity for someone who is running around dreaming up exhorbitant fees and expecting the unsuspecting homeowner to pony up the money"

This is faulty reasoning: If the designer spent one hour a day in project management that is $150 a day. Subtract his original flat fee and that five weeks of project management at an hour a day, two and a half weeks at two hours a day.

What he Wasn't doing was running around "dreaming up" fees.
He also wasn't explaining how much time he was spending.
However, since using a designer is considered a "luxury" that many people can't afford, I think they get unfairly categorized and flighty people who get paid to sit around and pull an idea out of their a** every once in a while and charge for it. Everything you touch was designed by somebody. Whether you buy it on your own or whether you pay someone to do it just for you in the only difference.

Just posting an update since we met with the designer last night.

Turns out that he would have been collecting the following types of compensation under his "flat rate" model:
- charging us a flat amount for design fees
- marking up purchases 12% from his cost
- marking up bids from contractors by some higher amount (which apparently varies by project) to cover his costs for overseeing the project, insurance, etc.

He said he made the switch to hourly given the amount of research and shopping we were doing. He also asserted that he would have earned close to the same amount for the project on the original billing rate because of the markups.

That is faulty logic and we told him so - our budget was our budget so marking up purchases would have meant we would have been buying less items and/or lower-quality items in order to stay within our budget. 12% of $17K is $2200 no matter what items you buy for it. And our labor costs are modest because the space was already roughed in, so he would have needed an ENORMOUS markup on the labor charges to get anywhere close to the amount that he was showing as payable based on his hourly rate.

We also told him that had we known that we were being charged for every hour of work we would have used him differently. Until I asked, he never presented an interim summary of his hours or billings, or mentioned any concern for how we would stay within our budget given how much of his time he was spending. But he WAS aware of our budget and knew that we were going to some lengths to try to stick to it. To me this is the most important issue that makes his billed hours an unfair amount. A lot of our time in research was spent trying to find affordable alternatives for some of the ideas that he presented - we didn't want to change the design but we couldn't afford to do what he was suggesting. Logic says that he really wasn't being that mindful of the budget issues in presenting appropriate ideas in the first place. The more I think about it, the more convinced I am that this was a MAJOR disconnect on his part, which meant that a large number of his hours were billed without regard to what would be in our best interest.

He conceded that he should have been much clearer about what terms he was thinking of changing and what the impact of that change would be on us. He is going to look at his time and use a couple of alternative approaches for how he could be compensated to come up with a number that will be his flat fee for the entire project, capped. Supposed to get Monday am. Said he really wants to oversee the completion of the work and understands that we will not explicitly compensate him for that.

I am still concerned about what number he is going to propose but at least it will hopefully be in the neighborhood of a more fair amount.

There is an old saw among contractors which goes, "$30 if I do it, $40 if you watch me do it, $50 if you help.
I don't for a minute want to suggest that you have done anything bad or intentionally unfair, but I can tell you that a client who remains intimately involved in every detail, down to revisiting every decision and continuing to shop when I have already spent as much time as I had budgeted in finding or suggesting things, is adding to my billable hours and sometimes negating what I have already done.
If it is in your nature to micro-manage a person for whom time is money, you must expect to pay a higher fee. And if you choose someone established in the field, with established contacts that you would not have been able to take advantage of on your own, you are paying not just for an hour of time, but also for the 10 or 15 or 20 years of education, relationship building, and experience that make that hour productive.
Just keep that in mind when you are thinking about what is fair in this circumstance.

brownwynsmom - I agree that is true but the fact is that if we had just taken his advice and not tried to find more affordable solutions, my bathroom budget would have easily been $50K instead of $25K. He showed me $5000 tubs, we found one for $2700. We nixed the steam shower after learning it would add $5000 in cost to the project. We had to give up the floating vanity and go with one that is floor mounted to save $3000. He found shoji doors that were gorgeous but $800 each; we bought two for $370. He wasn't making his choices with our budget in mind! I loved his design and we have done whatever we could to maintain that original aesthetic, but we have spent a lot of time trying to change things to make them fit within our stated original budget. THAT did drive a lot of time but I maintain that if he had started with an idea of what we could afford to spend a lot of that extra time would have been eliminated.

He simply was not doing what you asked right from the start. If hindsight were foresight perhaps you would have not continued the relationship based upon him not meeting your budget at the outset.

The internet has opened up a lot of resources to the general public and this is a double edged sword. I have had clients cancel orders for things because they found the "identical thing" online for a few dollars less (I am thinking of a drawer pull right now) only to find that it was not the same quality, nor did it attach to the cabinetry the same way, and this meant RE ordering, and the client paying a restocking fee, AND having to pay the contractor to come back separately because the pulls werent in when he finished the project. And she was mad at Me.

I think the designer was mostly in the wrong because he was showing you things that were not in your budget. He was not listening to you. However, if I asked a dealer to find me a $2000 sofa and he came up with a $5000 one as his best shot, I would not prolong the agony of working with him on that particular project. So, in a way, you were not listening to the clues he was giving You about his capability to keep your budget in mind.

I can't really speculate upon quality issues and whether $800 doors and the $185 doors are the same at all, but I have also dealt with the champagne on a beer budget issue, even in my own home. What both parties need to have clear between them is what levels of quality one is willing to pay a premium for and what the client is willing to let go.

I just spec'd a window for my own bathroom and my first choice came in at $7000. My third choice came in at $1000.
If I Really wanted each feature of the window, my choice is to pay $7000, period. I am not choosing that window, but if I this were for a client, I would have to present this option because that happens to be what it is. To present only the $1000 option may end up with the client asking "What is this piece of $%^& you are passing off on me for $1000, not even Knowing that what they Want is $7K.

The doors we bought were certainly NOT the quality of the $800 door he found. He argued that there was still "play" in the budget at the time he found the higher-cost items; that we could have spent less on other things to get those doors if we wanted them. At the beginning we did not realize how out-of-line the cost was of the various things he presented. But once we put together the total cost of the various things he found for us it was substantially above what we could afford to pay, though by then we were already pretty invested in the concept that he had designed. Looking back, though, you are correct that I probably should have taken the hint.

Your experience is why interior designers get a bad name. On behalf of the industry, in that regard, I apologize.

A designer is supposed to keep the budget and the project on track, not derail it. While $1600 vs $350 for doors may be a choice, he should not have been showing you a $5K tub and a $5K steam shower on a $20-25K project.

I adored the ID I had do a WT in our last house, years ago.

Our styles were the same as was our sense of humor. We got along great...and I had to let her go.

I told her from the start that we could not afford pieces from the 'Mart' or anything very extravagent and that I would pay her hourly for advice about color, furniture and accessory placement, etc.
My husband would even give me presents of her time.

She told me that so many people were using her for her talents and not buying product that she had to raise her hourly fee. I said that was great, as I wouldn't have to feel guilty about picking her brain. My next present was four hours. She stopped by for a few minutes and told me to come by her business in a day or two and she'd share her ideas.

When I got there, she had a drop dead gorgeous spread of fabric (to replace the two panels she had already done at $1,000+ a year ago) $200 a roll wallpaper, fabrics to go on custom furniture, and on and on...

I just looked at all of it and said "it is gorgeous" and "what do I owe you?", wrote the check (four hours worth) and as I walked out the door, she was really perplexed.

I never explained. I was just hurt and confused because I couldn't have made myself any clearer about what my expectations were for her time.

Ah. Now that you explain exactly what happened, I think Palimpsest is, as usual, right on the money.
This wasn't the right person for your job, for whatever reason, and I am sorry you are having a bad experience. It is bad for all of us when a designer, who may be wonderfully talented, can't manage a budget. That's part of the experience you should be getting for your money.
But it sounds like you are going about resolution in the right spirit.

Typically, clients who set a budget for a project will easily go 50% above that budget if the perceived value of the additional $$ spent is there. This is a well researched phenomenon, and is presented in many of the kitchen and bath mags that cater to the trade. It sounds as though this designer read that statistic, but failed on the communication of the added value for $$ spent, and definately failed on Client Communication 102. You may be the one client in 20 that really actually means a bottom line figure with no going above it for any reason. So, your financial styles didn't mesh.

And, to add to the confusion, you engaged them basically on a design/build paradigm, which as I've stated, is the most expensive method to utilize the services of any design firm. The designer's expectations were for a typical client who would go at least 50% above the stated budget, and that by acting as project supervisor, that he would receive standard compensation in the form of material and labor markups to act in that capacity. When you cut out his typical form of compensation, he had to recoup that $$ somewhere, and thus switched to hourly. This isn't unheard of at all. And, as I've stated, the design/build paradigm usually has built in fees for that "one stop shopping and service" of 40-60%, but you may only "see" the 20% "supervision charge". You typically don't see the 20% labor markup on the plumber's 3K bid, nor the 20% markup on the 3K tub or the 2K worth of tile. Someone looking for design/build one stop shopping isn't usually looking to account for the nickels and dimes on the job. They're usually looking for the convenience factor of having everything selected for them and the time management aspect that will free them to just write a check and make a few decisions. This obviously wasn't what you were looking for from this relationship, but somehow, there wasn't a meeting of the minds as to the differing roles played by a designer and design/build project supervisor. Now, resolving the different expectations is going to get messy, with both parties having hurt feelings over feeling being taken advantage of. I think it's obvious that you feel that way, but I think the designer also feels that way.

Hopefully, this can be a learning experience for all who would read this, and a lesson in communication clarity for the designer.

Pretty unrealistic to expect a client to understand all that BS. It's the designer's job to always be managing the budget. Not many people give carte blanche to others with their money and that obviously wasn't the case here.