Design Coaching Center: Determine your design costs

Design Coaching Center: Determine your design costs

We all know many customers who enjoy existing in the confusing and tedious land of catalog decorating. Refusing to punch a train ticket to annoy the city and encourage mediocrity in the safe country of the familiar is part of what makes you a stellar designer.

Now let’s do the same for your business. Breaking the cycle of the status quo is difficult. I understand. What you think you know is not easy to question, but it is an essential aspect of developing the best business model for sustained growth and projected revenues.

Your business is a business:

Determination of costs

Where to start ? Know your “cost to be open” number.

This is a key metric as we need to determine our profit projections to be able to cover this number of ‘opening costs’. And to project profit, we need to know where our costs and product sales are going to be.

Track your projects obsessively and review religiously.

You need to create a system that has meaningful metrics for determining flat fees and this is usually based on your historical averages and a clear scope of work. I can’t stress that enough.

Development of a systematic approach to fee calculation. No guesses allowed.

We determine our fees without guesswork with a specific system that is unlike what others do. It takes emotion out of the equation. But above all, it gives you confidence in your methodology. Instituting a solid business model is about more than just “charging what you’re worth” or doing “cost plus” or “flat rate charging.”

A keen awareness of what your product is worth on the market.

Pricing for a project should be about the finished product – what is that “product” worth on the open market? It is not a question of determining what YOU are worth, but what your PRODUCT is worth. Yes, yes, I know you might be thinking, “well, I’m my product!” But that’s not really all. Being able to articulate your product attributes, or benefits, to the customer is key to conveying a package price and the value you provide.

Fixed costs vs hourly billing

Fixed fee billing forces you to be a better business owner.

The usual “head trash” with some designers is that time keeps them from losing money when clients have a scope slippage, if they go over revisions allocated in the agreement, or change their minds. . A fixed price contract can do the same thing, but it takes more planning ahead and looking to understand consumer behavior much more than throwing in a small number for hourly billing, getting the job, then managing fallout later.

Eliminate discussions about money from the start and focus on realizing a creative vision
for your client rather than facing fear every two weeks when you send out hourly rates.

You must also be able to carefully determine the deliverables and objectives that make up the scope of work and define what happens when a client wants to deviate from the LOA or contract. Success belongs to those who are willing to put in the time to prepare.

Set a minimum spend

Don’t expect or tell your customer that “all purchases go through me”. Ask what you want. This minimum spend value is a figure that we develop based on the scope of work of the particular job in order to engage in the job. We use a proprietary calculator that determines fixed fees and minimum spend based on various criteria. This value is not a budget but a minimum labor investment for materials, furnishings, lighting, window treatments and other items that can be purchased from our company.

Items included in these expenses are items the client would purchase for this project regardless – we are simply asking that the client invest these funds in our business so that we can help facilitate the project seamlessly and make it worthwhile for us to associate ourselves with the successful realization of the house.

It’s the perfect win/win for you and the customer if you do it with intent and make it a business model, not a gimmick. What does that mean? This means you need to change the way you think about your “product” and your brand. This means finding your A-game and refining it until it’s shinier than silver at Tiffany’s. It’s not just a “good idea”. I want to emphasize this strongly because part of the problem in this industry is that there are too many “good ideas” floating around that lack the necessary substantial business acumen behind them.

This type of pricing model is, without a doubt, the best option for customer experience and peace of mind. It also gives you, as a designer, the ability to project income. However, you need to understand product sourcing and how to find the best price in order to be competitive at the IMAP level.

You must know your key lines or create personalized relationships. You also need to calculate your profit margins and know where you need to fall to be profitable. It’s not a business model for those who are hobbyists or designers who can’t or won’t commit to the overall growth you need to bring to your business to keep it running smoothly. Project Management Controlling, organizing or managing circus artists is extra. Project management is important for the type of work we do. And by that I mean actually interfacing with subcontractors and contractors and helping them execute the project to our design standards on behalf of the client. There are so many moving parts in new construction and renovation projects, and most good designers don’t like the idea of ​​letting circus performers go about it without any kind of supervision, even with a contractor. .

This hourly rate is deliberately lower than the rate published by the design. I want to elevate the design in the mind of the client and this is a subtle way of doing that. It’s much more difficult to anticipate these types of costs in a project, and I find it causes too much anxiety for clients and our team to try not to.

Cheryl Kees Clendenon is Founder, Principal Designer and Detailer at In Detail Interiors. As a business coach, she shares savvy strategies for design businesses at Damn Good Designer. Learn more at damngooddesigner.com

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