Exhilarating class of professionals, all intent on Design Entrepreneurship - the series of six classes where we take it to the next level. I'll be at New York School of Interior Design too. NYSID Hope to see you in the design school near you.
Whether it’s learning in small groups or one-on-one, we know that there is so much value for interior designers to be able to discuss progressive aspects of their businesses in organized ways. You will hear in the voices of some of my clients, just what it means to them to learn actively:
Connie McCreight, Los Angeles, CA: This group is simply indescribable! Steve, you were SO on point on what we wanted, needed, and more than we even knew - I could have gone on for days.
Corinne Brown, Mammoth Lakes, CA: Amazing group! I am struck by the good fortune in my life to come across authentic and intelligent people that can take my mind and heart in directions I could not have imagined on my own.
Tobi Fairley, Little Rock, AK: I can honestly say that this was the best conference/group I have attended and I have been to many! A huge thank-you to Steve for being our fearless leader!
"Thank you for presenting such a wonderful keynote seminar for our members IDS National Conference. Every evaluation we received gave you and your seminar high praise. Comments ranged from 'excellent presentation' to 'he is fabulous' to 'great ideas.' We can not thank you enough and look forward to working with you again in the near future."
Sharon Gosselin McCormick, (Hartford), CT: It was so inspirational to meet such a group of progressive people! It feels like what I learned might be life changing!
Debbie Baxter, San Antonio, TX: This group leaves me gutsy, inspired and happy. We are a powerful group, drawing inspiration from others. Thanks again for being the mavericks who knew we needed more (than the typical generalities presented at most conferences)!!
Kravet Inc., (from customers):
“I just wanted to say thank you for including me on Tuesday for coaching by Stephen Nobel. It was an honor to be picked as one of five. His advice was unexpectedly helpful. He had ideas that I had not heard before, nor had they ever even occurred to me. I have already implemented one of his recommended techniques and will keep you posted on how it unfolds.”
Keith Headley, Memphis, TN and New York, NY: Thanks to you, Steve, for putting the event together and to everyone else for being such willing participants. It is an honor and a true pleasure to be in your company.
Doug Greiwe, Cincinnati, OH: Just one of the segments (like Steve's presentation on luxury marketing), or the five-person panel of business experts and the intimate business/personal dinners would have justified the added-value of this meeting. But we had all four and then some...
Mark Cutler, Los Angeles, CA I repeat all above and would like to recommend "the design think-tank" as the name for our next meeting.
Corinne Brown, ASID, Mammoth Lakes, CA, The fact that Steve was able to put together an incredibly distinguished group of people, for this program was really an amazing feat. It was also a huge success. I think that it is rare to find such educational and enlightening experiences even when we are farther down a professional path. Thank you for adding so much to ours.
Constance Davidson, Ft. Lauderdale, FL, I have already picked up four new clients since we met.
Diane Parisian, ASID, Naples, FL, Thank you for your expert input regarding new ways of doing business. It's making me consider different options for my company moving forward, I have some homework to do!
Beril Yurdakul, ASID, Ft. Lauderdale, FL, You gave us so much precious advice and guidance. In a way you have snapped us out of our usual ways, which is exactly what we needed.
Deborah Houston, Your idea to throw a party upon completion at my client's house was just fabulous. I can already envision the details vividly! I also read your article on professional fees. I have to say you cemented the feelings I have had regarding this issue. I am going to implement this approach on the next big client.
Mona Ross Berman, Philadelphia, PA, I found our session very thought-provoking. I truly appreciated all of your feedback and ideas. I’d like to hear more ... I think I am at a stage in my business where I can really benefit from some outside advice.
Kravet Inc. (from customers):
“I just want to say thanks so much again to you and the entire Kravet team for offering me the opportunity to meet with Stephen. I found the experience very useful and am so glad that I did it.”
“Thank you also for sharing your wisdom and experience with us in the Kravet seminar. I gained so much more insight into how the Industry is changing and how I need to rework my business to accommodate those changes. I need to get paid what I am worth and still have time to spend with my family!”
Melissa Palazzo, Laguna Niguel, CA, I wanted to thank you for such a thought provoking day last week. I really enjoyed your ideas and insight surrounding the design industry. I am currently implementing some of them into my business plan as we speak!
Valerie Pulido, San Diego, CA, I am one of those designers who listened to you years ago and took the progressive route to marketing and pricing so I have positioned myself for success even in this tough economy.
Tanya Shively, Scottsdale, AZ, It was such a pleasure to hear your thoughts on the direction of things to come in our industry. I definitely had some good take-aways that I will be working on ASAP. Two of the things I would like to implement are the tri-fold process brochure and the touch points to reflect the brand I want to embody to resonate with my ideal target market. Thanks for all you insight into those key points.
Catherine Avery, Norwalk, CT I have been working with the project pricing approach with an hourly fee built in. So far, it seems to hold a lot more appeal for my clients than the old commission based model and it certainly makes billing much easier. Great advice--thanks!
Rebecca Robeson, San Diego, CA, Please know, you continue to motivate and inspire me.
Today’s clients are paying a worthy premium for the gratifying experience that interior design affords them. Increasingly, that means that they are paying a professional fee for this extraordinary experience while at the same time paying a nearly wholesale price (actually the most realistic price) for the furnishings specified for the decor. Typically through the years though, clients paid an hourly rate for time to design and execute an interior while at the same time paying a markup or ‘split discount’ on the price for the furnishings bought for resale to the client. That’s changing. Recently, a great deal of interest has been directed toward replacing the conventional model based on ‘time and materials’ with the more progressive model based on fees worthy of a professional. Why is this transition happening, and who is making it? Clients are; largely because any reasonable consumer would want to know how much money is on the line, or at least be assured that their apprehension about open-ended payments for time and materials can be relieved. All of the recent research into consumer preferences indicates that they prefer fixed fees because they are more predictable, calculable for budgeting and transparent to the buyer – all contributing factors in the client’s trust in the designer’s judgment. And that’s what designers want too - to increase their value (and their fees) as advisors, advocates, consultants or style-makers, and lessen their dependency on selling products.
Most consumers don't pay for anything else the same way they are used to being asked to pay for interior design. Consequently, doubt springs up and gets in the way. Yet, the same research suggests that many more of them would become clients of interior designers if there were more transparency in the relationship between price and value – designing vs. purchasing. The choice appears differently if we consider the client's perspective. These savvy consumers intelligently place value on what matters most - not stuff per se, but the experience of co-creating and living in a beautiful, personal, comfortable and well-designed residence that only a professional can deliver. They go on to say that the experience is worth more than the combined price of all the products or services, and is just as indispensable to living well in today’s complex world as investment counsel, estate planning, travel concierge, health care or even counseling.
As designers earn more from the value of design and less from trading goods, their clients are less apprehensive about prices and more trusting of the designer's judgment in so many other aspects of the project - a signature quality of most brands, and a common practice in architecture, commercial design and hospitality markets. Is it inconsistent for designers to be compensated on sales of products they specify: objectivity is called into question. Indeed, by relieving the buying process from the appearance of conflict of interest, designers can stretch their client’s spending power higher or lower without jeopardizing the designer’s income. Clients get the right design with the right product at the right price.
Coincidentally, whether designers charge ‘time and materials’ or ‘professional fees’ the total amount can often be the same, and some clients deserve the option. But for clients and designers alike, the benefits of predictable processes, transparent terms and expanded buying power favor professional fees.
So, given the mutual benefits of these fees, why not give your next client the favorable option to spend their money on confidence in your judgment rather than how long it took you to do the job, or how much of their money you spent. A designer in Newport Beach, CA said, “I sleep better at night knowing that what I design for my clients is right at any price and doesn’t affect my clients’ confidence in my judgment.” Many other leaders in the profession are voicing similarly virtuous claims.
Some designers ask, “Well then, what should my fee be, how much should I charge?” “And how would I recover what seems like lost revenue?” Not surprisingly, I prefer to respond with, “Tell me how much your brand is worth, then let’s focus on the gain not the loss.” In the limited space here, let me suggest how to calculate the new relationship between price and value. Start at the top; how much income should your business be generating from all that you have invested in your brand (e.g., knowledge, experience, time, talent, client satisfaction, etc.)? That’s your income goal. Next, how many days per week do you realistically have to generate that income? That’s your capacity to earn the income goal. Time is money.
Divide the income by capacity and start proposing fees for the time to deliver a satisfying and rewarding experience. For example, if your income goal is $1,000/day, and your estimated capacity for the project will require the equivalent of two days per week for twenty-five weeks, the fifty days would be priced at $1,000/day for a total project fee of $50,000. That total fee could be invoiced in monthly progress payments of $10,000/month for five months. As noted above, clients favor the predictability of this model for their budgeting purposes. And that’s not all they favor – the monthly invoice will include sales of products at your ‘most favorable price’ (i.e., ‘wholesale’) plus a few percentage points (5% - 9%) for the expense of administration. But the calculation really starts with your own self-assessment. The larger fee and lower markup is predicated on the confidence you have in the added value that your clients are afforded through the experience with your brand.
Even if you are used to earning lower hourly rates but higher revenue from sales, you can calculate what your fees would be for comparable projects by adding the income earned from sales to the income earned from hourly rates. The fee would be the sum of the two income sources.
How to sell higher fees? As an isolated amount, some clients may resist. But compared to the other expenditures they are making in a new residence, for example, the cost of the property, construction, architectural fees, furnishings, landscaping and other worthy investments, the fee for interior design will likely be comparatively low. Yet, we are mindful that one profession – interior design - is likely to yield the greatest return on the homeowner’s investment, and make the biggest difference to their overall satisfaction with the result.
There is a lot more to making this transition profitable for you, like crafting an agreement that clearly defines the scope of work and carefully estimates time to fulfill it. With clear expectations for outcome, time, money, even provisions for additional work and mutual responsibilities for success, your clients will know exactly what to expect and how the experience will unfold.
What this means is that the modern trend toward professional fees is influencing the entire business model 'to the trade' and helping to convert a rich client pool for designers. As interior design becomes more transparent, design brands earn more trust which gets redeemed each time clients pay a price that is worth the benefits they expect to gain from the brand experience. Respectability increases in a profession that deserves respect. Everyone wins: it's how the best businesses work today, and is how our market is evolving.
During this transformative period, it isn’t easy adjusting to the new normal. Every designer is trying his or her best to be demonstrably superior and pleasingly different from the rest. But too many struggle on their own without reliable sources for good ideas and familiar feedback. Last week, I was in Kravet showrooms leading a series of workshops with some real pros – experienced veterans, up-and-coming talents and others among the vanguard who are reshaping the way they do business. They are working on marketing, pricing and getting the next client project.
For these designers, marketing efforts are more selectively aimed at the most affluent prospects, connected by one or two degrees of separation to their current or former clients, or the very best realtors and contractors with brands equal to theirs. They’ve found that there may be as many as eight prospects for every one client. Just any project for any client that comes along won’t do, exasperation and fatal-client-fatigue is just too risky for their brands (and can lead to burn-out after two years of recession).
Pricing models are being rehabilitated to lessen dependency on sales while restoring the rewards from design. Today, many are finding that money is being made from style not stuff – concierge not common – custom not commodity. Project fees and higher hourly rates are driving income up while stretching the dollars for what and how much is being purchased. That’s good for clients, and good for designers.
For some, this new look at old ways will result in a fresh approach to the next client, especially if the proposal hinges on the value of design rather than sales. Actually, what many designers and clients have found is that even with a much larger fee or hourly rate, when compared to the prices for all of the other investments that a client typically makes in a new or remodeled residence (property, architect fees, contracting costs, landscaping, furnishings, etc), design is an extraordinary value, and really fair. When a designer acts as the trusted advocate for the client and orchestrates the entire project, the professional fee for professional value is demonstrably superior and pleasingly different from the old cost-plus method.
My mission is to link people and ideas so together we create more consumers of design and prosperous design businesses. Too often, we have to go back to basics: so, why a designer?
Research shows that among affluent households that can afford an interior designer, only 15% actually use one. But the good news is that many of us are taking aim at the other 85% who could be or should be using professional design services like yours.
Some of my links are with industry leaders who have come together as the Decorative Furnishings Association. DFA just unveiled the concept for its new advertising campaign: "Why a Designer," which addresses the concerns affluent consumers have about using an interior designer.
The ads feature a practicing interior designer successfully interacting with a client in a well-designed living room where people actually live. The image is all about the happy, satisfying and rewarding relationship between designer and client. Below the image, statements of 'myth' vs. 'reality' are listed:
Myth: "It's too expensive" — Reality: "We met our budget"
Worry: “I’d lose control” – Wrong: “We worked as a team”
“It’s not practical” – “We love the results”
“It’s out of my budget” – “We nailed the budget”
“It’s not my style” -- “It’s so us!”
It's the first campaign of its kind to be presented in the industry and is expected to launch in House Beautiful, Architectural Digest, Veranda, Luxe Interiors + Design, Elle Décor in January issues. Editoratlarge.com gave it an initial thumbs up.
I have had a role in this, so am naturally quite excited about the creative theme that centers on the delightful relationship between client and designer. Let me hear from you; how do you answer the question, why a designer?