Over the last couple of weeks, I have seen some choice comments about the cost of interior design services from which I can only conclude that some people think they are (heavily) overpriced (and comparable to the cost of a kidney or two). So it's time to get transparent and talk about how and why our pricing is the way it is.
The perception that interior design is overpriced comes down to two factors:
a lack of understanding about the time involved in the design process
a lack of transparency about how our pricing is derived
Having tackled the former - check out this blog post on the Interior Design Process - let’s move on to the latter.
Put simply: our pricing is a fair reflection of the time and costs involved in running a business
How do you quote for a job?
We quote based on our charge-out rates, and the time we estimate your project will take.
Over the last four years, I have tracked every hour (billable and non-billable) that has been spent on the business. So when we estimate how long your project will take, it is based on actual data not just a finger in the wind. And if anything, I still tend to underestimate - a project I closed last month I quoted at around 18 hours … we spent almost 50. And that’s just bad business from me.
How do you work out a charge-out rate?
A charge-out rate is *not equivalent to what we pay ourselves. It has to cover direct labour (the time spent doing the work you pay us for) plus a portion of non-billable time, too. Stuff we do to keep the business operational, that no one directly pays for.
The charge-out rate allows me to pay our employees (of which, yes, I am one too) a fair wage for all of the time I spend working on the business. Because this is a business, not a hobby, and just because I own the business, and it is small, it does not mean I don’t deserve to be compensated fairly for the time I spend working on it.
Would you be happy working for 8 hours a day to only get paid for 4 of those hours? Me neither.
I treat myself with the same respect that a large employer would if they employed me. And for transparency, I will happily tell you that when I was employed by a large corporate, my salary was three times what I paid myself last year.
What is non-billable work?
It's all the stuff we do that's essential for keeping our business running, that client's don't directly pay for. Here's some of ours:
New business – it takes anything from 3-6 hours from initial enquiry to closing a project… we chat, we visit your home, we write a proposal, we chat again, we might revise the proposal, we create a contract and Welcome Pack and THEN we start the billable work. Not everyone works like this by the way, but it’s the way I choose to do it for now.
Supplier relations – this is always going on in the background. Researching, meeting and vetting new suppliers, keeping up with new products and trends. It’s a big part of the value offering of working with a designer.
Marketing – social media, website, industry events, networking, panels. I wish I had more time for this bit, because I love it!
Operations – aka admin. Accounting, VAT, reporting, HR, licencing...
And then there’s costs
Our charge-out rates have to cover our labour - for billable and non-billable work - and then leave the business with a profit to cover all of our costs.
Licensing – we are a registered Freezone company, our license costs around AED 13k a year.
Insurance – 4k a year.
Software & equipment – SketchUp, AutoCAD, DesignFiles, PhotoShop, LightRoom, Microsoft Office, web platform, domain name - 11k last year. It will go up this year with more staff.
Photography, marketing and advertising - 10k last year.
Bank charges – not to mention the money we lost earlier this year through fraud….
The way we set our pricing is not revolutionary - this is how businesses work. It is the responsibility of our industry as a whole to get open and honest about how we work, if we want to tackle misconceptions that harm our business.
Ready to turn your dream home into a reality? Get in touch with us and find out how we can help take the overwhelm out of the renovation process.
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