Interior Design Business

Choosing a Fee Schedule for Your Interior Design Business

You have innate talent. You have interior design experience. But one of the hardest parts of running an interior design business isn’t related to your expertise at all. Instead, it’s about choosing a fee schedule that makes sense for your business.

Choose wisely because the wrong choice could result in lost clients or lost revenue.

Are you struggling to find the right fee schedule for your interior design business? This is the guide for you. Below, we’ll discuss everything you need to know to create a fee schedule that keeps you doing what you love.

Should you publish your fee schedule on your website? Find out here.

What is a Fee Schedule?

A fee schedule is simply a list of fees that you charge your clients. It contains any fees that you pass on to your clients in the course of doing business with them.

Your fee schedule will evolve because it’s directly tied to your level of experience. If you hire other designers for your business, your fee schedule will offer different prices based on who the client chooses to work with. If the client works with an associate (or beginner) designer, they’ll pay less than if they work with the head designer or owner.

Your chosen fee schedule will affect the growth of your business. The majority of prospective clients are budget-conscious, no matter their budget. From $1,000 to a million dollars, everyone wants to get the most for their money. Your selected fee schedule should be sensitive to this without restricting your ability to make a living wage.

Interior design fee schedule

Benefits of Creating a Fee Schedule

When you’re new to running your own interior design business, it can be tempting to set fees as you go. Some clients can afford more than others, and it seems fair to be flexible with your rates. After all, you want to build up your clientele as quickly as possible.

However, there’s a snag in that logic. You can burn yourself out, undercut your potential earnings, and actually damage the trust you’ve built with your clients by making individual deals.

This is where a fee schedule comes in handy. Having a standard fee schedule will benefit your growing interior design business. Here are two reasons to consider implementing a standard fee schedule for all of your clients:

Transparency

When you ask someone to hire you for their interior design project, you’re asking for their trust. Nothing sets the tone of trust better than being transparent about prices. When you freely publish and share your fee schedule with prospective clients, you begin to forge a sense of trust.

Dependability

Offering a standard fee schedule to all, irrespective of the client, sends the subtle but essential message that you’re dependable. You don’t shift your fees based on a client’s perceived budget.

How to Settle on the Right Price to Charge Your Interior Design Clients

Choosing how much you charge is just as important as choosing how you charge. We’ll talk about how to select the right fee structure in the next section, but for now, let’s discuss how to find the ideal price for your services.

Consider basing your fees on these four factors:

Experience

You can charge more based on how long you’ve worked as an interior designer. More experience translates to a greater earning potential.

Expertise

Your specialty can also weigh in on how much you charge. If you’re an expert in a particular area, you can demand higher prices for that distinction.

Location

Your geographical location will determine how much you can charge your clients. Certain regions demand higher rates than others (for example, you can likely charge more for your services in Los Angeles than you would in Kalamazoo).

Competition

While it’s never advisable to base your prices solely on what your competitor charges, it would be madness not to take a peek at what others around you charge for similar services. If you and your competitor offer the same service, your prices should be comparable (but not necessarily the same). Remember not to race to the bottom by undercutting your closest competitors. No one wins in that race. Instead, make their price part of your consideration for your own prices.

Interior design fee schedule

How to Charge Your Interior Design Clients: The “Hourly Vs. Flat” Debate

Let’s talk fee structure. How will you charge clients? By the hour, by square footage, by a fixed rate, by percentage…? The list goes on.

There are several valid fee structures for an interior design business. Let’s take a look at the most popular to determine which one may work best for your business.

By the Hour

Charging by the hour is the most common fee structure. However, coming up with an hourly rate can be daunting. If you go too low, you won’t get what you deserve. If you go too high, you’ll price yourself out of the market.

Here’s a simple formula to determine how much to charge as an hourly rate:

Add up your monthly business costs (lease, advertising, equipment, office supplies, etc.)
Divide that number by 160 (which are the hours you’ll work per 4-week month)

Your total will be your break-even rate. (Example: $5,000 divided by 160 = $31.25)

To make a profit, add a 50% to your break-even rate. (Example: $31.25 break-even rate + $15.63 profit margin = $46.88)

This final total (break-even rate plus profit margin) represents your desired hourly rate.

You can also take a cue from other designers in your area or niche by mirroring their hourly rates.

When charging by the hour, estimate how long it will take for you to complete a project. This can be challenging for new designers who don’t have experience in seeing a design project from beginning to completion.

Remember that your hourly fee should include any time you spend working with the client. This includes your initial consultation, future meetings, designing/drafting, shopping, installation, and client calls or emails.

A Flat Fee

The flat fee pricing option, also known as the fixed rate or design fee, is helpful when offering a specific service. You offer one rate for a service, without breaking it down into the hours that you’ll spend working on the project.

The benefit of this fee structure is that you’ll offer clients a stress-free experience. They’ll know exactly what to expect cost-wise upfront, with no surprise charges at the last moment. Another benefit for the client is that they won’t have to worry that you’re overcharging them based on working more hours than it would normally take.

When offering a flat fee, remember to work in a contingency for the unexpected because you never know what will pop up.

The flat fee doesn’t include furnishings. It only covers your work as a designer.

Cost Plus

The cost plus structure is also popular among interior designers. Cost plus is when you charge based on all of the costs for a project plus a fee. In this option, you get a product discount as a designer (the discount varies). Then, you ask the client to pay your cost plus an additional markup that you decide (it’s usually 30%).

Square Footage

With this structure, you charge a flat fee for each square foot. To come up with an accurate cost per square foot, tally up all of your costs, including your design fee, the hours spent on the project, the materials, labor, and an additional contingency reserve. The contingency reserve is there to protect you in case you spend longer or more than you thought you would to complete a project.

Although square footage is typically used for commercial projects, it can also apply to new construction when a designer must select the original finishes, fixtures, hardware, cabinetry, and more.

Percentage

The percentage is a fee structure found by calculating the total budget of the project and then assessing a percentage of that total. The percentage is customarily between 15 to 25%. To do this structure, you’ll need to create a budget at the onset of the project.

The percentage is similar to the flat rate structure but it isn’t as strict and can grow based on the demands of the project. For this reason, it’s best to charge installments on the projected budget instead of waiting for the client to pay at the end in one lump sum.

Here’s the thing about fee structure: You’re not locked into one choice.

Here’s the thing about fee structure: You’re not locked into one choice. Here's what we mean: Click To Tweet

Many interior designers choose to offer multiple pricing options, depending on which service is rendered.

Final Thoughts

Choosing a fee schedule for your interior design business does require some work, but it’s well worth it in the end. You’ll set your business up for success by having a standard fee schedule for all of your clients. Bookmark this guide and use it to create a fee schedule that makes sense for your business.

Should you publish your fees on your website? Don’t forget to download this resource.