5 Tips to Consider When Pricing Your Design Services
If you plan to move from being a hobbyist designer to being the creative CEO of a design business, then you definitely need to understand how to price those services appropriately. Charging for interior design services is one of the most challenging hurdles for designers. Did you know that 77% of businesses fail because they are not pricing properly or because they fail to include all the necessary items when setting prices?
Let’s look at 5 tips for charging appropriately, so you can avoid these pitfalls.
First is one of the most important – mindset! Own your worth. Know that you create results for your clients, and know that those results are valuable. What stops some designers from charging appropriately? Usually it’s a function of mindset – a lack of self-confidence and self-worth. When you do not consider yourself a peer of the client and you fail to establish a relationship of equals, then you tend to get caught up in less personal representations of your worth. You get questions such as “how much do you charge?” If the client just sees you as offering design services, they focus on simply finding the cheapest price among competitors. Then things get reduced to just what is paid rather than the results provided. As stated by Warren Buffett: “Price is what you pay, value is what you get.” You want to focus on the unique value and results you provide, beyond a low price. Treat every new client this way and transition every existing ideal client by providing more perceived value. If you are truly effective in interviewing the client, then use that information to paint the picture emotionally and visually of the desired vision they have shared with you for their project.
2. Get Comfortable with Your Financials
Second, get comfortable with your financials. Rather than fearing financials, focus on how understanding them can help you reach financial security and freedom. A key question involving those numbers is: What will it take for your company to cover the cost of running your business and your personal living costs as well as funding a budget for your retirement and your dreams? If you don’t know the answer to this question, then how can you decide how to price your services? And how can you confidently charge for your services if you don’t understand the full picture?
3. Remember that Every Business is Different
Next, remember that every business is different. How and what other designers charge won’t necessarily work for your business. So often designers just look at what others are charging and use that as a guideline and then wonder later why they are so frustrated. Not only have you made yourself a commodity but the figure you picked most likely won’t relate to what it costs to run your business. You need to establish what you charge by what your business needs to make for a net profit to cover your cost of living, the cost to run your business, and also enough net profit to contribute to your retirement as well as funding your dreams.
4. Know the Time it Will Take
Another very important part of what you charge is knowing the time it will take your firm to complete the job. Whether you charge hourly or use flat rates, you need to know how many hours you and your team will spend on each job before you create your proposal. Even if you’re not paid hourly, you are losing money if your projects take too long. That is the only way you can come up with a realistic fee for your services. Then your team needs to be diligent in sticking to the time you estimated in order to meet your profit goals.
5. View the Project from Your Client’s Perspective
Finally, view the project from your client’s perspective. Ask yourself why they want to hire an interior designer. What is the problem they want to be solved? Then the key question becomes, for a client looking for a solution to their design problem with your “results-oriented” proposal, what is it worth to them to have this problem solved? Put a price on it. This method should help you to view your services as value-based and results-oriented. Stretch yourself and ask yourself how you might change what your firm does and how you do it to ensure phenomenal results for your clients. Encourage your team to constantly think of ways you can serve your clients with even better results than originally planned. You then have an opportunity to create a niche for your business that is unique and will have clients switching from asking “how much do you charge?” to instead focusing on what you offer – that which makes your firm sought after.
Whenever doubts creep in about what you charge, remember these two pieces of advice. From Grant Cardone, author of The 10X Rule: “Never lower your price, add value.” Then remind yourself that people don’t buy design, they buy solutions.