We are a “small start up firm” [in Maine] with a “cheap” client base, and thus far we resource product at local shops that carry budget ” yet tasteful ” price tags. Since most designers shop exclusively at DesignCenters or showrooms and work from Net (and we do not – as of yet, at least, because of our demographics) we assess a 20% markup on procured product. So say we purchase 15 items at a whole $300 for a home to punch it up a notch. We assess 20% in addition to our shopping fee as to make some money on product since we do not work from Net. While we are honest and shopping on the “cheap” for these type of clients, they are balking at the fact. Should we, therefore, just incorporate some as a hidden cost” I think so, but my partner does not. Please advise how other Designers may work, when not working on Net terms. Thanks much.
(submitted by Susan D.)
I have been an independent designer for over 40 years and Wow, how times have changed! When I first started my business I seldom relied on a retail store as a source for my clients, but today”s market is very different.
I fully understand your problem, however. My clients through the years have mostly been budget conscious, too, but I find the new generation ” who are so used to cut-rate stores and discounts, discounts, discounts ” are much more prone to question prices, shop via the internet and often begrudge the designer”s charges.
I assume when you mention “our shopping fee” that you are charging for your time to find these items for your clients. I do hope so because even if you charge 20% on product, that isn”t enough to pay for your time and overhead, especially if you are finding great bargains.
My policy on how I charge a percentage varies according to the client. I prefer to show the fee as a separate charge on the invoice. However, if I sense the client is going to object to seeing this extra charge, I just build it into the price.
I don”t know how you handle sales tax. (I assume Maine does charge sales tax). In Texas we do not have to charge tax on a Designer”s time (at least we don”t yet), so when you show the 20% fee separately as a designer”s fee the client saves tax on that amount. If you build it into the price of the item, then they are paying tax on the higher price, which includes your profit. That could be a consideration depending on how much your sales tax is. Every state is different.
But the fact remains, you want your client to feel good about using your service and you need to feel good about getting proper compensation for your work.
May I suggest that you find additional resources of retail stores who give designers a discount so that you can make a profit on the product without the client paying more than they would if they bought the item themselves” You can register with Pier 1, Restoration Hardware, Ballard Designs, Cutting Corners, many of the major furniture stores and probably other stores or catalog sources in your area who offer a discount to the trade. Also, check with your local antique malls, resale shops and consignment stores to see which ones give you a discount as a designer. Often when you explain you will be a repeat customer, they will extend this courtesy.
I am always up front with my clients by letting them know that as a designer I receive a discount at certain places, and, although they will be paying the regular retail, the small commission that I receive helps to pay for my expenses. I still charge a time fee, but who can possibly keep track of every minute you spend on each client”
Another small compensation that I take into consideration is using, whenever possible, my business credit card which gives me air miles. If you make any sizable purchases, those miles add up in a hurry. That is not money in your pocket but it can provide you and your family with a nice vacation trip.
I hope these suggestions are useful to you. I know the client atmosphere is constantly changing and I wish you much success in finding the formula that works for you. Happy designing.