Design 101: How Interior Designers Charge
UPDATED | AUG. 25, 2024 by COREY KLASSENWhen it comes to professional interior design fees, there is not a standardization or calculation method between interior design companies. Not only can this confusing for future clients, it can lead to a lot of mistrust, frustration, and even greater misunderstandings.
As a professional interior designer and educator, I have taught numerous classes on the professional business practices for interior designers. Admitably, it is a very deep topic that often covers client satisfaction and management, procurement and vendor relationships, legal requirements and insurances, human resources and even financial management — but it is also a topic that many educational institutions spend the least amount of time on and it is the single biggest sore spot for interior designers and their clients. It’s no wonder that how much a professional interior designer (with all the right education, examination, and experience) charges for their design services fees is a complicated topic for any home or business owner to understand.
So, are the typical methods that an interior designer uses to charge for their services?
Key Topics in this Article
3 Types of Fee Structures for Interior Designers
There are 3 typical methods that a professional interior designer will use to charge fees for design services. Some interior design companies will use one method of charging all three methods in one project while others stick to only one way of charging. The most common billing method for interior design fees is by using an hourly design fee.
Here is a brief summary of how the three fees structures breakdown:
Hourly Design Fees - With Hourly Design Fees, all time expended on a project is tracked, reported, and billed to the client at a regular cadence (e.g., monthly or quarterly).
Flat Design Fees - Flat Design Fees are billed to the client at completion of a milestone (e.g., a phase in a project or deliverable achievement). All time on a project may be tracked but they are not reported to the client. Other types of flat fees will include, but is not limited to options such as One-Time Consultations and Blocks of Hours.
Percent of Project - When it comes to Percent of Project, typically a retainer is collected and a percentage, or a surcharge, is charged based upon a proposal for services, purchases, or overall project cost. This billing method includes Commission Off Retail.
Let’s get into the details for each method of how interior designers charge:
01 — Hourly Design Fees
Hourly design fees, or billable hours, is how most professional interior design companies charge for their time. Interior designers, architects, draftspersons, lawyers, engineers, accountants, etc., are all types of professional services using hourly billing. Hourly fees are calculated based on the operating and overhead expenses, or indirect costs, and wages, or direct costs. Indirect costs will generally vary at about 60% of the hourly rate and the remainder of the direct costs cover wages. For example, our mechanic charges us a shop rate of CAD$170 per hour to install or repair anything on our vehicle. This means that about CAD$102 will cover the shops operating costs and the rest are direct costs for wages, taxes, CPP, EI, health insurance, etc. - you get the point.
Can hourly fees be cheaper? Of course they can, but consider that reducing the scope of work for your interior designer is the best way forward instead of finding a lower-cost alternative professional service. A reputable interior design company will prepare a proposal based upon historical projects of similar sizes, scope and style for you to review. It is important to remember that it is a proposal, so if you like the design professional and feel that you can accomplish a great project with them, but you’re not necessarily happy about the cost, have an honest conversation with them about your financial objectives. Many interior design companies are willing to help you “trim the fat” from your proposal.
PROS & CONS
Pros: Every client knows how much the interior design company will charge, but many clients have misconceptions about how many hours it will take to design a home or business because there are A LOT of parts and pieces to consider. That being said, may clients understand that the clock is ticking for every point of contact with the design firm and that means less wasted time on indecision.
Cons: No two interior designers are alike and what one professional interior designer can prepare quickly, others may be challenged to complete the deliverables they promised. As mentioned above, the clock is ticking and this can lead to surprising invoices because every task counts toward your account. Understandably, this can take some of the joy out of a design project but dreading your interior designers invoice should never be a point of friction in the relationship.
Hourly fees will vary as greatly across the interior and architectural design industry as it possibly could. AIBC has a a rate sheet that you can find on their website, but a professional interior design firm will begin at about CAD$150 per hour and up.
02 — Flat Design Fees
Flat design fees are usually available from experienced interior designers who know their way around a project. This comes with a great amount of experience because over the years, the designer has honed their processes and systems to make their service work for the marketplace and end purchaser. Services with flat design fees will streamline the scope of services offered, meaning it is more likely to be pay-as-you-go; however, flat design fees aren’t “cheaper” and that’s because they will strip away some of the elements of a full-service client.
For example, flat design fees may only be offered virtually, like we do here at Articulated through our online design packages. These services do not include in-person meetings and focus communication centrally through a service delivery software, mobile app, and client portal. This means everything you need from the designer is located in one spot. Also, there may be a different level of quality offered in flat design fees, meaning a full set of permit-ready construction drawings may not be inclusive but a set of drawings that can be constructed from is included. Yes, it’s confusing, but the point is it will vary greatly and finding the best flat design fee may likely mean that the owners are also doing more of the work like selecting fixtures, finishes and equipment based upon the professional recommendation of the professional.
PROS & CONS
Pros - Clients have a solid line item of fees that they can add to their project budget. Flat fees may be based upon overall area or packaged by level of service.
Cons - Many interior design companies have to either reduce their level of quality, details, and deliverables in order to price a flat fee that is palatable to most clients, or they have to heavily pad their fees for clients who behave like flat fees are a smorgasbord of options for one price. This is not an assumption that any prospective client should make because it’s going to be a friction-causing experience for both the interior designer and the client — and that’s not enjoyable!
Can flat fees work for every project? No - it is simply not possible that flat design fees will be the best way of billing professional interior design services for a client. There is often a lot of pre-work that has to be done to understand the clients goals, objectives, and personality fit. I would love to say that every interior design can work with every personality, but we are all humans and sometimes it just doesn’t work out.
There are also two variations on flat design fees broken down into one-time consultations and blocks of hours:
A) One-Time Consultations
Never to be overlooked is the value of a professional one-time consultation with a qualified interior designer. Sometimes these types of project aiming sessions will help many home and business owners develop a more accurate scope of work for the design project they are initially thinking about. They types of consultations that an interior designer may vary between some typical types:
Design Consultation: The objective of a design consultation is to understand your project in more depth and detail with the goal of providing you a detailed design proposal (sometimes call a “design brief”). These kinds of consultations are typically on-site (such as in your home or your business location) and are between (1) to (2) hours (it is atypical to be longer). While some interior design firms will not charge for these consultations, some firms will charge a consultation fee because the economic pressures are always increasing.
Colour Consultation: While we believe these are one-and-the-same, a colour consultation is a variation of a design consultations. The objective of a colour consultation is to provide you a list of colours and interior finishes for a particular area of your home, or sometimes to provide you with a unified scheme that blends your existing furnishings and finishes together into a unified design vision. These consultations are not free because they are professional services.
PROS & CONS
Pros: One-time consultations are a lower-investment alternative and an ideal way get started and build a client-designer relationship.
Cons: This is not a comprehensive service and is limited to what the design professional believes that they can provide you with for their business model. It is important to be fair and not set expectations with lofty goals like a prepared design solution within the time available.
B) Blocks of Hours
Blocks of hours are a great way to build upon a design or colour consultation for small projects like one-room decorating, help consulting on a whole-home space plan, or even a DIY kitchen design project. Blocks of hours will typically expire within a (30) to (90) day duration but these projects are typically not handled in priority of larger-sized projects with bigger fees. It is important to be aware of your interior designers schedule and deliverables that they can achieve for you with the blocks of hours you select. For example, a client who selects (5) hours in a block should be a small project, like a Designer-for-a-Day option, where there is no commitment to continue (for either the client or designer) after the block is complete.
PROS & CONS
Pro: Another lower-investment alternative ideally suited to do-it-yourself clients who want to be deeply involved (and who have the time to be involved)
Cons: Not suitable for projects with a large-scope and many moving parts.
03 — Percent of Project
Percent of project is a lesser-utilized type of fee structures within interior design firms but it is often used by decorators and kitchen and bath designers because the designers will sell merchandise as a part of their business model. Percent of Project fees will work one of two ways:
Overall Project Budget - The interior designer will provide a percentage for their design fees based upon the overall project budget. There will be a set cadence of fees due at deliverables/milestones, and when the final budget is presented the final fees will be adjusted to reflect the difference between the initial estimated budget and the final budget. This final step in percent of project fees will always be higher because 100% of interior design projects have final numbers and costs that are higher than initially anticipated. Why is this? Because there is no mathematical formula that could possibly predict every single human behaviour, finish option, design style, and project duration.
Percent of Product - In this type of billing method, the interior designer is selling merchandise to their client at a commercially-viable mark-up. This means that the interior designer will source, specify, modify, customize and coordinate every single detail of that beautiful sectional sofa for you because that is what they do as experts; so it is reasonable that the interior designer charges appropriately. This type of purchasing is not done from a retail store with a small discount because that is not how a real professional interior designer does business — there’s just no money in it so it is not a sound business decision.
PROS & CONS
It’s likely that percent of project scares off most clients from hiring an interior design company because it feels like an unknown, but nothing could be further from the truth. Let’s consider these pros and cons for percent of project:
Pros - You know the exact cost of your design fees before the final budgets are prepared because you will have been making decisions and tracking your overall budget during the course of work with the interior designer (or at least this is how it is suppose to work.)
Cons - Many clients feel that charging a fee on-top of the costs is misleading, and this may feel that way, but is it no different than how a car dealership makes their money.
Many interior design companies will use either an hourly design fee or flat design fee in combination with a percent of product because there is a high likelihood that your designer is not charging you for some of the work on an invoice in exchange for making a profit off the product they sell you.
Additionally, there is a variations on percent of product called “commission off retail”:
Commission Off Retail
Perhaps the most high-contested method of how interior designers charge charge for services and poses the single largest ethical conflict for any interior designer is commission off retail (legally speaking, this is a term called “unjust enrichment”). In this type of service method, the interior designer brings a client to a retail showroom or vendor to view furnishings, products, or even finishes and through the process the interior designer collects a commission from the vendor.
PROS & CONS
Pros: The client is involved in the purchasing process and the conflicts can often easily be mitigated if the designer shares with their client that they will be receiving commissions prior to recommending a supplier. The interior designer is invested in ensuring that the client receives the product promised from the supplier.
Cons: The undisclosed commissions will drive the cost of purchase higher for the consumer—we believe this is highly problematic and unethical. Additionally, many interior designers may not practice accountablity and ownership, leaving the client to manage the entire purchasing, delivery, and installation process on their own.
Conclusion
How does Articulated Design Studio charge for interior design services?
It’s a question on every clients mind when they begin to work with us so here’s how we charge and when:
Hourly design fees - Used for for large renovation projects, custom homes, and commercial interior design because there are many unknowns at the outset. We prepare a written proposal with estimated hours listed for you based upon the phases in our design process.
Flat design fees - We offer this as virtual-only services in our online design packages.
Percent of product - We charge appropriately for our cabinetry, counters, furnishings, window treatments and more because we are a professional interior design company with designer-only products, merchandise, and custom makers who we trust. We do the work so you don’t have to. As an added bonus, Articulated can ship ANYWHERE across Canada and the Continental U.S. using our logistics network into major urban and suburban areas (some rural areas too, but this takes a bit more time to figure out.)