Designing a Business: How Do I Set My Pricing Structure?
Design business coach Chelsea Coryell breaks down how home pros can determine what to charge for their services
In her first advice column, interior designer and design business coach Chelsea Coryell of Washington state-based consulting and training firm Design for a Living weighed in on how home design pros can know when to hire. This time, she’s tackling how they can figure out what to charge.
Q. How do I set my pricing structure?
A. The No. 1 most common question I am asked from new interior designers is, “How do I charge for my design services?” The simple answer is, it depends.
Q. How do I set my pricing structure?
A. The No. 1 most common question I am asked from new interior designers is, “How do I charge for my design services?” The simple answer is, it depends.
Let’s be honest, time is the one thing we never seem to have enough of and you can’t ever make more, so based on the laws of supply and demand, your time is extremely valuable. How you charge for your design business time depends on a few important things, but there’s definitely a way to create a pricing structure that fits your unique business model as well as helps you reach your specific income goals without working your life away.
Do Your Research
First, do your research and find out what the going rate is for interior designers in your area. Make sure you’re really comparing apples to apples. Find out how long your competition has been in business.
What type of design do they specialize in? Do they charge hourly or by project?
Set Your Model
Secondly, what is your interior design business model?
Are you a redesigner — someone who rearranges furniture your client already has? This type of designer might create a floor plan for someone’s room, possibly suggest paint colors and even create a digital mood board and shopping list. After your client is happy with their design, you simply let them do all the legwork and collect your paycheck.
These are consultation-based interior design services, and I would recommend charging a slightly higher hourly rate or a flat fee based on the room size or square footage of the space. The best perk of this type of design is that most of your time will be spent on a computer shopping for items and gathering ideas. That means you can work in your pajamas if you want and no one will ever know.
If you’re planning to purchase new furniture for your clients and place custom orders, handle the delivery and deal with returns etc., then you are a product-driven design consultant. You should be charging an hourly fee and a percentage of the price of the products you use in the space.
This money can either be an additional design service fee that you charge the client or designer discounts offered by product suppliers that are passed on to you.
This is definitely how you make the “big bucks” as an interior designer, but be aware that you must be much more organized and have excellent attention to detail to be successful. When you make ordering mistakes or lose track of receipts, it can cost you.
First, do your research and find out what the going rate is for interior designers in your area. Make sure you’re really comparing apples to apples. Find out how long your competition has been in business.
What type of design do they specialize in? Do they charge hourly or by project?
Set Your Model
Secondly, what is your interior design business model?
Are you a redesigner — someone who rearranges furniture your client already has? This type of designer might create a floor plan for someone’s room, possibly suggest paint colors and even create a digital mood board and shopping list. After your client is happy with their design, you simply let them do all the legwork and collect your paycheck.
These are consultation-based interior design services, and I would recommend charging a slightly higher hourly rate or a flat fee based on the room size or square footage of the space. The best perk of this type of design is that most of your time will be spent on a computer shopping for items and gathering ideas. That means you can work in your pajamas if you want and no one will ever know.
If you’re planning to purchase new furniture for your clients and place custom orders, handle the delivery and deal with returns etc., then you are a product-driven design consultant. You should be charging an hourly fee and a percentage of the price of the products you use in the space.
This money can either be an additional design service fee that you charge the client or designer discounts offered by product suppliers that are passed on to you.
This is definitely how you make the “big bucks” as an interior designer, but be aware that you must be much more organized and have excellent attention to detail to be successful. When you make ordering mistakes or lose track of receipts, it can cost you.
Figure Out What Works for You
There isn’t any one right way to charge for interior design time, but these guidelines might help
you figure out what works best for you.
1. Start by writing down your business income goals.
2. Decide what type of business model you want to create.
3. Decide how much money you want to make this year.
4. Figure out how many clients you will need to sign to reach your annual goals.
5. Determine how you can add additional income streams to your business to work more efficiently.
There isn’t any one right way to charge for interior design time, but these guidelines might help
you figure out what works best for you.
1. Start by writing down your business income goals.
2. Decide what type of business model you want to create.
3. Decide how much money you want to make this year.
4. Figure out how many clients you will need to sign to reach your annual goals.
5. Determine how you can add additional income streams to your business to work more efficiently.
Adjust Your Income
There are three main ways to increase your income. You can raise your rates, you can work with more clients or you can sell more to each of your clients.
If you’ll need to work with 100 clients a year to pay your bills, that’s a sign you should reevaluate your fees and create a combination of services that will increase your profits and get you to your financial goals.
Remember, there’s a fine line between underselling yourself and your services to attract more clients and raising your rates too high and scaring off potential customers. As with anything in business, think things through strategically, establish your plan now and know that it can evolve as your business grows.
This content contains only general information and guidance and is not a substitute for legal or tax advice. For advice specific to your area or business, consult with a qualified professional.
Have a question for Chelsea? Email it to editor@houzz.com, Attention: Chelsea Coryell or post your question in the Comments. It could be featured in a future column.
More on Houzz
Designing a Business: New Advice Column for Pros Tackles Hiring
How to Communicate Your Value to Potential Clients
Build Relationships That Benefit Your Business
There are three main ways to increase your income. You can raise your rates, you can work with more clients or you can sell more to each of your clients.
If you’ll need to work with 100 clients a year to pay your bills, that’s a sign you should reevaluate your fees and create a combination of services that will increase your profits and get you to your financial goals.
Remember, there’s a fine line between underselling yourself and your services to attract more clients and raising your rates too high and scaring off potential customers. As with anything in business, think things through strategically, establish your plan now and know that it can evolve as your business grows.
This content contains only general information and guidance and is not a substitute for legal or tax advice. For advice specific to your area or business, consult with a qualified professional.
Have a question for Chelsea? Email it to editor@houzz.com, Attention: Chelsea Coryell or post your question in the Comments. It could be featured in a future column.
More on Houzz
Designing a Business: New Advice Column for Pros Tackles Hiring
How to Communicate Your Value to Potential Clients
Build Relationships That Benefit Your Business