How to Price a Design Project (The Way I Actually Do It)

Pricing a design project is one of the things most designers aren't even maximizing or confident about, and one of the main questions I get asked in the comments by designers & potential future designers.

So let me walk you through the rules or process I developed with my firm:

What I consider before pricing an interior design project

Before you even think about a number, there are a few things you need to assess. First, is this a potential repeat client? A commercial investor who owns ten properties is worth pricing differently than a residential client who is renovating the home they plan to live in for the next twenty years. If there is a real likelihood of repeat business, pricing slightly lower to secure the relationship is a smart long-term move. You make it up on the next project, and the one after that.

Second, how involved is this client going to be? This one sounds like a personality preference, but it is actually a financial factor. The more a client wants to be involved, the more of your time they consume, which means the fewer projects you can take on, which means your profitability takes a hit. A high-maintenance client costs more to serve. Price accordingly.

Third, and this one is non-negotiable: trust your gut. I have a project in my past that ended in a settlement because I ignored this. I will get into that story in another post, but the short version is that I didn't listen to what I already knew going in. Your instincts about a client or a project are your northern star.

I had other factors I used as well, for example a low budget means harder work on our end to get the result we need at the right price, and whether it was a niche in design I was trying to break into etc. You may come up with your own factors - I'd give mine a set percentage up or down for each fact - you can use my Project Pricing Estimator to see how I did it & customize it for you if you think that would be helpful.

How I build the project fee

That was how I established what "level" a project would be built at, but how did I actually build a number?

I start by breaking down every area in the scope of work and assigning an estimated price per space based on the complexity of that space. A hallway has fewer design decisions than a clubhouse with multiple zones. A simple bedroom is different from a combined living and office space, which I would treat as two distinct end-user experiences and price accordingly. (Mind you, this came with years of experience knowing how many hours it took me or how many members of my team would be required start to finish)

Once I have that breakdown, I look at the factors we just talked about, repeat client potential, level of involvement, how busy my team is, how long the project will realistically take, and I adjust from there. Sometimes I look at the final number and think it is too low. Sometimes I think no reasonable person would agree to it, and I come down. You develop a feel for this over time.

Purchasing profits and procurement

A HUGE avenue for revenue is purchasing profits & most designers are afraid of it. If your contract includes handling all purchasing for a project, and you are buying flooring, tiles, wallpaper, furniture, and FF&E, you are not passing on the trade discount. You mark up on top of that. And on a large commercial project, that markup can exceed your entire design fee. I have had projects where I charged $120,000 for design and made $150,000 on purchasing on top of that. Many designers do all this & don't charge enough for it! Remember that there are entire businesses for "procurement" which is exactly what you're doing here. Those businesses charge accordingly because there are hours & hours of work involved with purchasing, customer service, dealing with vendors, delays, out of stock, lost cargo, delivery logistics etc.

Hourly fees and other pricing methods

Obviously, the methods I described above are for project pricing. Keep in mind that A- I recommend hourly until you have a solid idea of how much time different aspects & projects take. B- there are other methods such as pricing per SF, by % of project, even at times a monthly retainer or monthly flat fee. We talk a bit more about this in the Course but I always encourage you to do more research - specifically on the topics I don't have personal experience with. I charged by hourly, retainers, & project fees with purchasing separate, not the other methods so I have little to say on those.

At the beginning of your career, you will price things wrong. Everyone does. That is part of how you figure out how long things actually take you and what your time is worth. But the sooner you start thinking about pricing strategically rather than just picking a number and hoping for the best, the faster you build something that is actually profitable.

Contracts and accounting

With all methods - you MUST be sure they are clearly stated in your contract & that you have a fantastic accountant that understands the specific needs & structures for design - especially with purchasing. I give you a contract-starter template in the Course as a starting point to use. And I'm happy to pass along the contact info for my accountant. I went through five before settling on him!

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Shira