Interior Design Pricing Guide: How to Charge What You're Worth

Finding the Right Pricing Model for Your Design Studio

Episode 103

In this episode, I break down the different pricing models for interior designers and how to choose the right approach for your studio. From hourly rates to fixed fees, percentage-based pricing to hybrid models, learn how to charge appropriately for your work and make markup a sustainable, clear, and ethical income stream.

I hope you enjoy the episode

Beth xx

As an interior designer, your creative skills are just one part of running a successful business. One of the most crucial—and often most challenging—aspects is determining how to charge for your services. Should you bill hourly? Offer fixed fees? What about markup on furniture and materials?

In this comprehensive guide, we'll explore the different pricing models available to interior designers and help you determine which approach might work best for your unique studio.

If you're not charging properly, you're not running a business—you're funding a hobby. Your fees have to reflect the value you bring to the table in a project. That includes your design skills, your years of experience, your network of trades, your ability to problem solve, and your commitment to delivering results that elevate your clients' lives.

Let's dive into the main pricing models used by successful interior designers today.

Model 1: Hourly Rate

One of the most straightforward approaches to pricing is charging an hourly rate. This model is particularly common among new designers who are still establishing their processes and timelines.

Pros of Hourly Pricing:

• Simple to explain and implement

• Ensures you're compensated for all time spent

• Works well for projects with undefined scope

• Provides flexibility for consulting-style work

Cons of Hourly Pricing:

• Can penalize efficiency (the faster you work, the less you earn)

• May create anxiety for clients about "running the clock"

• Can lead to time-tracking chaos

• Might not reflect the true value you provide

An hourly rate is something that we should all have, it's a great tool to use if you are doing a short-term project or more consulting style work where maybe the scope is hard to define or there are unknowns.

Even if you primarily use other pricing models, having an established hourly rate is essential for those situations where additional work falls outside the original scope.

Model 2: Fixed Fee Per Phase

This model breaks the design process into distinct phases—concept development, design development, documentation, on-site management, decoration, styling—and assigns a fixed fee to each stage.

Pros of Fixed Fee Pricing:

• Creates predictability for both you and the client

• Encourages clarity around scope

• Allows clients to budget more effectively

• Rewards efficiency and systemization

Cons of Fixed Fee Pricing:

• Requires accurate data on how long projects take

• Can be risky if scope isn't clearly defined

• May need adjustment as your business evolves

To do a fixed fee well, you need to have data on how long it actually takes you to do a project. Even though if you are not charging hourly, you might go, well, I don't need to track my time. You really do, because for every project that you do, you should be tracking your time so that you're gaining that data.

This approach works particularly well for designers with established processes who have completed enough similar projects to accurately estimate time requirements.

Model 3: Percentage of Project Cost

Common among larger design studios and similar to the model used by architects and builders, this approach calculates your fee as a percentage of the overall project budget.

Pros of Percentage-Based Pricing:

• Scales naturally with project size and complexity

• Aligns with industry standards in related fields

• Can be lucrative for high-budget projects

• Clients often understand this model from working with architects

Cons of Percentage-Based Pricing:

• Can be risky if budgets shift dramatically

• May require detailed contracts to define what's included in the "project cost"

• Might not work well for smaller projects

This one is one that I have seen used in a lot of larger studios. It reflects the model used by most builders and architects. So in this one, you charge a percentage of the overall budget and it's really used for like a full service project.

For this model to work effectively, you need clear agreements about what constitutes the project budget and how changes to that budget will affect your fee.

Model 4: Package or Service Offerings

This approach involves creating pre-scoped, fixed-price offerings—think "designer for a day" or "kitchen layout consultation"—that clients can purchase like products.

Pros of Package Pricing:

• Easy for clients to understand and purchase

• Creates predictable cash flow

• Excellent entry point for new clients

• Simpler to market than custom services

Cons of Package Pricing:

• May not accommodate unique client needs

• Could limit revenue potential compared to custom pricing

• Requires careful scoping to remain profitable

These are perfect for clients who want a taste of your expertise without a full design service. It's great to have this offering for clients or leads who come in that aren't quite ready for a full commitment.

Package offerings can be particularly valuable for designers looking to create steady, predictable income streams alongside their custom project work.

Model 5: Hybrid Approach

The reality for most successful design studios is that they use a combination of pricing models, adapting their approach based on the project type, client needs, and phase of work.

It's combining a fixed fee for design with hourly rates for project management or construction oversight. Generally you will blend the package depending on the client and what is needed.

A hybrid approach might look like:

• Initial consultation at a flat package rate

• Design concept and development as a fixed fee

• Procurement and project management as a percentage of purchases

• Additional services (like site visits beyond a set number) at an hourly rate

Different pricing models can be used for different stages of the same project. You just need to be clear about where one finishes and the next one starts.

Making Markup Work for Your Design Business

Beyond service fees, product markup is a significant potential revenue stream for interior designers. Yet many designers feel uncomfortable about charging markup or aren't sure how to communicate it to clients.

Markup is not a dirty word. You're not just picking out a rug or a tap. You're leveraging your sourcing skills, your trade accounts, your relationships, and your time to get things done faster and better than the average person ever could.

When implementing markup, consider these approaches:

1. Transparent Markup

Clearly communicate to clients that you receive trade pricing and charge a specific percentage markup on purchases. This approach builds trust through transparency.

2. Flat Fee for Procurement

Instead of percentage-based markup, charge a flat fee for handling all procurement. This can work well for clients who prefer budget certainty.

3. Retail Pricing

Present clients with retail pricing (similar to what they would pay if purchasing directly) while you benefit from the difference between trade and retail prices.

4. Combined Service and Sourcing Fee

Roll your design and procurement services into a single fee that covers both your creative work and the logistics of sourcing and managing purchases.

Whichever approach you choose, the key is clear communication from the beginning of the relationship.

I always encourage designers to include a short statement in their proposals about the value of procurement and how markup contributes to a smoother, higher quality outcome.

Communicating Your Pricing Effectively

No matter which pricing model you choose, how you communicate it to clients is crucial for setting expectations and building trust.

Clarity builds trust. Vague language or hidden fees create doubt and resentment and are going to cause you a whole heap of trouble down the track.

Effective pricing communication includes:

1. Transparent Documentation

Clearly outline your pricing structure in your proposals and contracts, including what's included and what's not.

2. Value-Based Language

Focus on the value clients receive rather than just the cost. Explain what each aspect of your fee covers and why it's important.

3. Consistent Messaging

Ensure your pricing communication is consistent across all touchpoints, from your website to your initial consultation to your formal proposals.

4. Confidence in Delivery

Present your pricing with confidence. If you seem uncertain about your rates, clients will question whether you're worth it.

Choosing the Right Pricing Model for Your Studio

Your pricing approach should align with your overall business strategy and brand positioning. The way you charge is as much a part of your brand as your visual style.

Consider these factors when determining your pricing approach:

1. Your Target Client

High-end clients may expect more customized pricing models, while clients seeking accessibility might prefer clear package offerings.

2. Your Business Structure

Solo practitioners may benefit from the simplicity of hourly or package rates, while larger studios might need the scalability of percentage-based models.

3. Your Personal Comfort

Choose a pricing model you can explain confidently and that feels aligned with your values.

4. Your Growth Goals

Consider which pricing model will best support your long-term business objectives and desired lifestyle.

Remember that your pricing model can evolve as your business grows. You get to decide and you get to evolve. If you start down one path and then you feel it's not working for you or it's not working for the business or it's not financially viable, stop doing it and change.

The Bottom Line: Value-Based Pricing

Regardless of which specific model you choose, the foundation of successful interior design pricing is understanding and communicating your value. Your fees should reflect not just the time you spend, but the expertise, connections, problem-solving abilities, and transformation you provide.

Your fees have to reflect the value you bring to the table in a project. That includes your design skills, your years of experience, your network of trades, your ability to problem solve, and your commitment to delivering results that elevate your clients' lives.

By choosing a pricing model that accurately reflects your value and communicating it clearly to clients, you'll build a more sustainable, profitable design business—one that allows you to focus on creating beautiful spaces rather than worrying about whether you're charging enough.

Ready to refine your pricing approach? Start by evaluating which model best aligns with your business goals and client needs, then develop clear language to communicate your value confidently. Your future self—and your bank account—will thank you.