10 Mistakes Interior Designers Make When Pricing Their Services
Nothing is more important in your business than how to price your services
There are so many different models and ways to think about pricing and the model that will work for one designer won't necessarily be the best model for another.
Pricing is definitely more of an art than it is a science! It takes time to figure out and you definitely need to work through different models when you're first getting started as a design professional to find out what works best for you and the way you want to run your business.
But there are also quite a few mistakes that I see designers making when it comes to pricing. So in this post I’ll share the 10 mistakes I see most often.
1: Thinking pricing is a dirty word
Many interior designers shy away from discussing pricing with clients but it's important to change your perspective and view pricing as a way to exchange money for goods or services you offer.
The practice of exchanging money for high value goods and services has been a staple of trade for centuries, so there's no need to feel intimidated or scared about pricing your services or needing to talk about this with your clients.
Instead, embrace the opportunity to provide value to your clients through your design skills and expertise and don't be afraid to charge a fair fee for your services. After all, when you're adding value to someone's life, there's no reason to feel ashamed or embarrassed about asking for fair compensation.
By viewing pricing as an opportunity to exchange value, you can position yourself as a confident and professional designer who is dedicated to providing the best possible service to your clients.
2: Undercharging
One of the most common mistakes I observe among interior designers is undercharging for their services.
This is a mistake for several reasons.
Firstly, underpriced services can affect the perceived value of your work. Many designers believe that charging lower fees will make them more appealing to clients as they are considered "cheap". However, the opposite is often true. When clients compare your fees to those of other designers and find them to be significantly lower, they may question the quality of your work and wonder what's wrong with you as a designer. As Alan Weiss discusses, "buyers tend to believe they get what they pay for... and higher fees actually convey higher quality for most buyers".
Secondly, undercharging also makes it difficult to build a sustainable business. If you're not making enough money to cover your expenses and earn a reasonable profit, you're likely to either be forced to shut down or eventually burn out from working too much for too little. By charging fair and reasonable fees, you'll be able to create a sustainable business that allows you to continue providing high-quality design services to your clients.
Looking back at the many designers I've worked with, undercharging is definitely the mistake I see most people making. The problem with undercharging is that although you think you are offering your services for a price that is enticing to clients - the way clients will see it (especially if you are significantly lower in price to others they have spoken with) is 'what is wrong with this designer?'. I know when I'm looking to work with people I don't go for the cheapest person, I go for the person who is able to help me solve my problem - and to do that I look for the BEST person, not the cheapest. In fact generally I'm put off by the cheapest person and would rather pay a little more to get the best person.
Undercharging is completely correlated with lack of confidence and when you put those two together under-confident designers tend to pick a price they feel comfortable to work at, but is probably a price that is under valuing what their time, knowledge and effort is really worth. Lots of people undercharge because they are scared that if they charge too much or raise their prices then people won't work with them and will take their business elsewhere.
3: Not being able to justify fees
If you're committed to charging the right amount for your interior design services then be prepared for clients to inquire about the value you're offering.
It's important to have a clear understanding of the transformation and value that your services will bring to the table and to be able to articulate this transformation effectively. This is because clients want to see what they're paying for and be sure that they are getting their money's worth.
It's crucial to be able to sell the transformation and value that will be achieved by working with you. This means highlighting not just the tangible results, such as a beautifully designed space that’s functional to live in, but also the intangible benefits, such as a sense of comfort or feeling of home. The more you can demonstrate the full picture of what your clients will receive the more successful you'll be in securing their business.
So, when clients ask about your pricing and value highlight the unique aspects of your services and the impact they'll have on the clients’ life. Remember, the goal is to show that your services are worth the investment.
4: Forgetting to factor in overhead costs
It's crucial to keep in mind all of your overhead expenses when pricing your interior design services.
This includes all of your business expenses such as rent, utilities, insurance, administration and marketing costs (among others). These expenses are a must have for keeping your business up and running and if not considered when pricing your services you may be undercharging and not able to sustain your business over time.
Neglecting to factor in these costs can also impact the perceived value of your services as you’ll end up pricing lower than other designers (which will make clients question why you’re so cheap!).
5: Not charging for all aspects of their work
When determining the price for your design services it's crucial to take into account all of the various elements that you offer to your clients.
Many designers forget to include everything from the initial consultation to the creation of design sketches, sourcing of materials, on-site visits and project management. These are all important pieces of your design process that should not be overlooked when setting your prices.
By carefully considering each aspect of your services and the time required to complete them you can ensure that you have a complete and accurate understanding of the total cost of your services. This will help you to avoid undercharging and ensure that you are able to provide high-quality services while still running a sustainable business.
A good way to start tracking all of this is by using an app like Harvest or Clockify.
6: Ignoring market trends and dynamics
The interior design industry is subject to fluctuations based on the economy and the housing market, so it's important to be aware of these shifts and adjust your prices accordingly.
Staying up to date with market trends not only ensures you remain competitive, but also that you are pricing your services at a fair and reasonable rate for both you and your clients.
Keep an eye on the industry and adjust your prices as needed to stay ahead of the curve and continue offering high quality services at a price the market will pay for.
7: Not regularly reviewing and raising prices
When I work with designers on their pricing models one of the things I notice most often is how little strategic consideration has been given to pricing. Many new designers just pluck a number out of nowhere and start using this as the basis to sell their services. And I also see more established designers who are charging certain rates just because they've always done it that way. If this sounds like you then you may need to start being a little more strategic about how you are thinking about pricing.
As you gain more experience, build a stronger portfolio and hone your skills, the value of your services will naturally increase. It's important to adjust your prices to reflect this increased value, but it's equally important to communicate these changes to your clients.
Be transparent about why the fee increase is taking place and assure them that the higher price is reflective of the improved quality and value of your services. By continuously delivering high quality results and maintaining excellent communication you'll be able to justify the increased fees and keep your clients happy.
8: Not taking the client's budget into consideration
Many designers make the mistake of not taking the client's budget into account, which can lead to misunderstandings and potentially losing the job.
To avoid this it's important to have an open and honest conversation with your client to understand their financial constraints and find a solution that works for both parties. I always asked my clients to be as honest as they could about their budget and explain that I need to know what this is (truthfully!) in order to work in partnership with them.
Once you know the budget you may find you need to compromise on the scope of the project, but it's important to be transparent and find a solution that is feasible for the client while still fairly compensating you for your time and expertise.
Also don’t be afraid to walk away from a project if you feel the client’s budget is unrealistic. It’s much better not to take the project than it is to find yourself unable to deliver what they want because they don’t have the budget to pay for it.
9: Not being transparent about the pricing structure
When pricing your services make sure to clearly outline the cost of each service you offer, along with any additional expenses that may be incurred such as materials or travel. This level of openness will help avoid any unexpected costs for the client and ensure a seamless project experience. By being upfront about your pricing structure and your policies around extra travel or expenses helps you to build a positive and collaborative relationship with your clients.
Also make sure to disclose any other secret costs or elements of your pricing. One that is often not disclosed is trade discounts. Here’s my view on that topic if you’re interested >>>
10: Not staying up to date with industry standards
Finally, it’s crucial to stay informed about the latest industry standards and market trends. That way you’ll ensure that your pricing is competitive and reflective of the value you bring to your clients. This, in turn, will help you attract new clients and retain existing ones and will give you peace of mind knowing that you are not undercharging or overcharging for the services you provide.
There are several ways to stay up to date with industry trends and pricing structures, including:
Networking: Join professional organisations, attend industry events and conferences, or use our FREE FACEBOOK GROUP to connect with other designers who can provide valuable insight into the latest industry trends and pricing structures.
Research: Conduct market research so you understand the current state of the industry and how it may impact your pricing decisions.
Stay informed: Regularly read trade publications, industry blogs and follow influencers as these can provide you with a wealth of information about the latest industry trends and best practices for pricing.
Continuing education: Take courses and workshops that focus on business and pricing strategies - for example my short course The Pricing System for Designers
If you're interested in digging deeper in to this topic - then check out this blog post about the different pricing models you may like to consider when pricing your services.
Pricing is mainly about being confident in the value you are offering your clients. And the way to think about value is to consider the cost that clients have if they DON'T work with you.
There's lots of ways to quantify what this cost is. For example if they don't work with you they:
risk making large mistakes on expensive renovation projects
can't get access to your trade discounts
could end up with something that is poorly designed or not functional
will spend lots of hours researching problems that you can solve in minutes
will be more stressed during their renovation due to not really knowing whether they are doing it correctly or not.
So think about what the cost of the problem is that clients need help with and sell solutions to those problems (rather than your time per hour).
To do this think about the very best result you've got a client in the past. What did they save in terms of time, energy, stress and money by working with you? This is the outcome and value that you are selling.
Once you understand what the cost of NOT hiring you is then you'll become much more confident in your pricing, you'll have better words to use in your marketing and you'll stop pricing simply on deliverables.
Thanks for reading and catch you in my next post! :)
Clare x
Dr Clare Le Roy
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