How to Scale Your Design Business Fees: The Secret to Profit and Growth

A big topic of conversation amongst designers revolves around managing the sales of specified products only to have clients turn around and shop them for a better price. Designers rightfully get frustrated and some experts will argue to "charge your worth" in fees and forget about selling product. While this approach might work for smaller operations, it becomes challenging to sustain and grow your busines son fees alone if you're aiming to expand, hire a team, or already have one in place. Despite what you may have heard, relying solely on fees can make it difficult to reach your growth potential.

Is there a business model that ensures product expenditures are part of your profit strategy, project sincome for a growth-minded firm, and lets you sleep at night?

Absolutely.

But it requires a commitment to learning how to accurately project income, get your profit under contract--and understanding why it matters.

You need to be thinking more strategically--and thinking big in order to be profitable. It's why I created my facebook group "Small Business Think Big". You know- small business but THINKING big!

Flat fees force you to be a better business owner

You may have heard of this before but not the way I teach it. Flat fees make you a better business ownder but it also requires you to master a specific set of skills. The key to making a flat fee structure work is focusing on charging for the value provided not the time incurred. The value that my firm provides is not only the creative mojo we put forth but also the ability to create a clear and cogent scope of work, detailing key objectives and deliverables you will carefully extract from the client.

Charging an hourly rate simplifies the creative magic too much. While it may be acceptable when the scope is not measurable and cannot be detailed--this should be a rare occurence. For example, managing a project interfacing with contractors and subs are tasks that are not always predictable in the course of a job. These tasks fall under hourly project management or design implementation/oversight fees. Out of scope additions can be charged hourly as can smaller projects without a defined scope.

Flat fees increase productivity and help designers focus on finding ways to deliver as much value in an efficiency of time spent resulting in more revenue than if you were tracking hours. Not to mention less push back from clients analyzing every notation of time spent when they do not always understand how much time goes into a project in the first place!

Much like any product brought to market, this also means determining the deliverables of your "product" (your services), the research and development that goes into this "product", the unique selling points of the "product" and what it will take for you to deliver this product to a client. Putting all of this together along with your historical data and most importantly, the client's willingness to pay and the specific scope of work at hand will determine a final fee proposal.

Creating the win/win with product sales

Projecting income goes far beyond just fees.

I love selling the products I specify--and most designers do as well. But the challenge I often encounter when coaching is designers the focusing their marketing and messaging in ways that make them appear more like personal shoppers or selection services--just "picking" (yuck!) items for a project rather than selling a cohesive creative vision. Let's be clear: kids pick their noses, we don't "pick" your furniture. #truthbomb

When you focus only on the individual parts and pieces of a project rather than the bigger creative vision, clients will start shopping around to find a better deal. You've fialed to sell them on your true value.

Enter the minimum expenditure--why is this so important?

We have pioneered over the past 10 years a business model where each scope of work and contract we develop includes a dollar amount thhat quantifies the tangible aspect of our involvement. This amount encompasses items the client will be purchasing for the project through my firm, ranging from furnishings to custom window treatments, bedding, accessories, lighting, plumbing, etc.

We use the word "minimum" to set a baseline for their anticipated costs but also to communicate the minimum vlaue of their investment with us. It's a subtle but important distinction--we're not just picking out items; we're designing their project from top to bottom, and we've built a structure in-house that allows us to offer competitive pricing on most everything. This approach also ensures we can execute the project seamlessly.

While the structure and detail behind this concept take time and effort to implement, it all starts with understanding the logistics and clearly communicating the benefits to your clients/ Positioning this "win/win" model the right way will set you up for optimal success.

Mastering this business model will transform any design firm into a growth machine and will completely reshape how you think about and manage your business.

If you want to learn my next level sales and marketing strategies, how to implement the flat fee and minimum expenditure and fast track the changes you need to make now to set your busness apart from the competition then join us in one of our three options of The Design Paradigm starting April 16.

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Cheryl Kees Clendenon is a business strategist who works with other small businesses and interior designers to create legacy businesses built for growth. She also owns a 25 year full-service design firm and retail showroom, In Detail Interiors, based in Pensacola, Fla. cheryl@indetailinteriors.com