How to Charge Clients: Hourly Pricing vs. Flat Rate

During our Design Camp Sessions, we’ve had the opportunity to chat with so many talented designers and hear their concerns about running a successful business. As you might guess, there was a lot of talk about pricing—and not just how much, but also the practicalities of how. Today, we are addressing one common question: flat rate pricing or by the hour?

The short answer is that it depends on a number of factors that are specific to you and your business. If you’re just starting out, we definitely recommend charging by the hour until you have a better idea of how long each step of the project will take you. In any case, you should be tracking every task to make sure the math adds up and you’re profitable.

Interior Design: Amber Interiors | Photography: Tessa Neustadt

If you find that your projects vary a lot in time and scale, charging by the hour might be the right choice for your business. Again, we see this more commonly with designers that are just starting out and building their portfolio with many disparate jobs.

When charging by the hour, don’t forget to bill for ALL the time you spend working on a project. Remember to charge for:

• Consultations
• Time spent sourcing
• Time spent preparing presentations
• Travel fees
• Time making revisions
• Scheduled phone calls
• Install day prep work
• Final accessory invoice prep
• Ordering

That is work and you should get paid for it. Not invoicing for all the extra work you put in for your clients will leave you underpaid and burned out.

On that note, a very important recommendation we give to clients and friends who choose to charge by the hour, is to put project minimums in place. This is the number you need to make off each project to cover costs like travel, employee pay, overhead, and the time it will take you, while still turning a profit. Your minimum might be more than someone wants to pay for a project they consider to be small, but it protects your time and profitability and frees up your schedule for work that is more productive financially.

Interior Design: Minnie Peters Design | Photography: Luke White Photography

Remember to always work from the number you want to make, then add to it your costs. Don’t start with a number, subtracting your costs, then take for yourself what’s left.

Flat rate pricing can really simplify things in some ways but requires a lot in the way of organization and thoughtful process. Here are our best tips for finding your magic number:

• Find out what designers in your community are charging for similar services. This will be greatly impacted by your location.
• Find or set up a mastermind group of fellow designers that you can get feedback from.
• Outline all of your costs—overhead, travel, software, website maintenance, etc.
• Take employees into account. We recommend marking your prices up 25% for each additional person working on a project.
• Write out every detail of your process and try to estimate how long each task takes.

These steps are for you, but they’ll also help you make a polished presentation of your process so that clients know exactly what they’re getting and have a general timeline to follow. Plus, the more detailed and thorough you can be about the work you invest in your projects, the more likely your clients are to see the value in your rates. Having professional processes in place elevates your client experience and that is what generates those glowing word-of-mouth reviews.

Once you’ve chosen how you’ll set up your rates, a few significant questions remain, like how you will present those rates to potential clients. We recommend an investment guide, and we have a whole post here dedicated to what you should include in yours.

Interior Design: Katie Hodges Design | Photography: Amy Bartlam 

Another controversial question we get is concerning discounts. You’ll notice that here at IDCO, we don’t offer discounts or run sales. We believe that if you have set your prices up correctly and thoughtfully, you won’t need to. Your rates should be reasonable for your location and expertise, should make your work worth your time, and should align with the value your client will receive. Friends and family discounts are appropriate if—and only if—you have specific guidelines in place that safeguard you from getting taken advantage of. If you do want to offer a special value to potential or returning clients, consider rearranging your packages so that they have extra incentive, instead of reducing your pricing. Just as an example, instead of discount the IDCO templates for Black Friday, we offered free implementation with purchase. We didn’t diminish the value of our product and customers still received extra value. Win-win.

We hope these tips help you navigate pricing and set up rates that work for both you and your clients. Remember, above all, that you have to be the first person to value your time and work. Some projects will not be right for you, but saying “no” to those (more on that here) will lead to the right opportunities that will inspire you and build your career.

* header image Interior Design: Katie Hodges Design | Photography: Amy Bartlam 

For more tips for elevating your interior design business, check out these posts:

• Why You Should Be Charging for Design Consultations
• What to Include in Your Investment Guide
• How to Set Up a Pricing Structure
• How to Filter Inquiries + Say No to Projects That Aren’t Right For You

IDCO Studio is a full-service creative studio for interior designers and boutique lifestyle brands. Offering bespoke branding, web design and social media content creation, we help brands built around beautiful living elevate their digital presence to represent the physical spaces they design. Our recently launched limited-release website templates are the perfect way for interior designers to get a luxury website on a budget. These templates allow designers to maintain control of their content. Want to work together? Shoot us an inquiry here.