To Fee or Not To Fee…..

That is the Ethical Question

Presented By:

Donna Vining, FASID IIDA RID, CAPS Regreen Trained

& Tom Schwenk CEU# 7596

Objective• How do you determine your value?

• Types of fee structures

• What key benefits do you offer?Are they evident?

Are you told you are too expensive?

Could you be pricing yourself too inexpensively?

Your Strengths (Value)

I. Experience: Track Record

Results

II. ReputationReferences

Approach

III. Education Certified

Credentials

THE BIG DIFFERENCES:Designers

Stress Competence

• Know design; Have experience and training

• Know how to order, coordinate schedule

• Stay w/in budget, save client money

Clients Value Performance

• Know my needs; Consult

• Work with me and others

• Optimize and justify my budget

THE BIG DIFFERENCES:Designers

Stress Competence

• Accreditation means: better training and standards

• Use impressive media

• Precedes hiring• Credentials

Clients Value Performance

• Accreditation means: you can justify plans better & apply updated knowledge

• Talk with me directly

• Happens in task• Service

Key Benefits

• Why should your customers hire you?

What do you offer?

What is important to your customers?

Do you know?

How can you meet these needs?

Don’t Forget…..

• To summarize the key benefits you provideHow your ideas will aide in the

accomplishment of your customers’ goals.

Customer Requirements- Do You Know Them?

Customer Satisfaction

Quality Quantity

Service

• Why do you charge what you do? Be ready with a

succinct 50 word answer.

Do you interview your potential customers?

What is the value your customers perceive you have?

• Remember each customer is different.

Meeting the Needs of your Customers

Professionalism

Time

Investment

Function

Ease

Value

Budget

Time

Harmony

Attention

Ego

Quality

Ethics and the Design Profession

• To which standard would a jury hold the design firm?

• How would the public judge the interior design firm?

• How would the professional practice standard hold the designer accountable?

• The reasonable person standard?

Josephson Institute of EthicsSix Pillars of Character

• Justice• Compassion• Trustworthiness• Respect• Responsibility• Citizenship

Public Perception

• Some professionals are more ethical than others

• Ethics are dictated by their professional code of ethics

• Making ethical decisions is like playing God.

• Follow the law and there will not be a problem

• Ethical behavior is based on a persons’ values

Who are the stakeholders?

• Designer• Client• Prospective Buyers• Design Firms• Peers• Allied professionals• Members of the Community

Rational Model of Ethical Analysis

• State the ethical dilemma in plain language.

• Identify the relevant facts, ranking them in order of significance.

• Identify relevant values/principles.• List alternative courses of action.• Rank values in preferential scale.• Adopt a proactive posture and propose

a policy to prevent this dilemma from recurring.

Simple and Best Understood Rule

• Golden RuleDo unto others, as you would have them do unto you.

How To Determine What to Charge• How much do you need? Or

want? Overhead + Profit

Overhead: cost of sales, business expenses etc

Sales= 100% of revenue generated

Profit= sales less overhead

Ways To Charge:

1. Fixed or flat fee2. Hourly fee3. Cost plus4. No fee… usually referred to as

retail5. Per square foot (usually

commercial)6. Other: retainer can be either

refundable or non-refundable

Fixed or Flat fee

• What do you have to know to make this profitable?

• What is the scope of the job?• What are your experiences?

With this type of project?With this customer?With this location?

Hourly Fee

• How good are you at keeping time sheets?

• How do you explain what your are going to charge for?

• What about no charges?

Cost Plus

• How do you determine the correct margin on merchandise?

• What is cost?• What do you show the

client?• How do you handle extras,

increases, surprises?

No Fee (usually referred to as) Retail

• How well do you know the customer?

• Where did you find the customer?• What are you going to do to

protect yourself?• Do you like being a personal

shopper?• How do you know the client is

serious?

Per square foot (usually commercial)

• Do you know the scope of the job?

• Do you know who must approve the specifications and pricing?

• What does your contract include?

• Have you worked with these people before?

• How many choices will you offer?

Other – Retainer: Refundable?

• Do you ask for a retainer?In what situations?Is it refundable?

In what circumstances?How is it applied?

Steps to Take:•Explain the Triangle:

Value

Quality

Service

Pick the two that are important, you supply the third V+S=P

S+P=V

P+V=S

Value Added Design• Do you charge for everything or do you provide no charge items? Is your hand always out?

• How do you let customers know?

You must be in charge

Include it on your invoice

What Suits One CustomerMight Not Suit the Next

Mandatory: Be Consistent

• It can be a balancing act!

•Brush up on communication skills

•Treat each customer individually; however be consistent in your business practices.

Standard Industry Pricing Methods

• In Chicago, according to the Franklin Report, hourly fees range from $75.00 to $250.00 depending on experience and reputation. $150.00 being the standard for well-established designers

• Generally products are charged at 30-35% above net including workroom charges

• Many times the up-front retainer is used to off-set the original hourly fees

Upcoming Trends• $200 + on all hourly services• No mark up on products

• Eliminates price confusion• Increases issues on hourly accountability

Interior Design Outlook

• Keen competition is expected for jobs in interior design because many talented individuals are attracted to careers as interior designers• Employment opportunity through 2014 will increase between 9 and 14%.• Individuals with little or no formal training in interior design, as well as those lacking creativity and perseverance, will find it very difficult to establish and maintain a career in this occupation • About 3 out of 10 are self-employed

Income-Firms• Median annual earnings in the industries employing the largest numbers of interior designers in May 2004 were as follows:• Architectural, engineering, & related services $44,740• Specialized design services $42,000• Furniture stores $37,750

Income - Firms

• Median annual earnings for interior designers were $40,670 in May 2004.

• The middle 50 percent earned between $30,890 and $53,790.

• The lowest 10 percent earned less than $23,440

• The highest 10 percent earned more than $71,220

Independent Designers

• The Franklin Report describes “standard hourly rates”, in the Chicago market, as $150.00 an hour.

• Under $100.00 is considered “very low”

• $100.00 is considered “low”• $125 to $150 is in the “standard

range”• $160 is “higher”• $200 + is classified as “very high”

Income• Among salaried interior designers, those in large specialized design and architectural firms tend to earn higher and more stable salaries• Interior designers working in retail stores usually earn a commission, which can be irregular

Fee Scales

TITLES ANNUAL SALARY HOURLY (MEDIAN)

Principal/Partner $125,000 $195 Project Manager $ 80,000 $131 Designer $ 60,000

$100 Other Design Staff $ 40,000

$ 78

*Interior Design Magazine Jan. 2006

Independent Designers

• Self-employed interior designers and those working in smaller firms usually earn:A per-hour consulting feePlus a percentage of the total cost of furniture,

lighting, artwork, and other design elementsFor commercial projects, they might charge a

per-hour consulting fee, charge by the square footage, or charge a flat fee for the whole project

• Designers who use specialty contractors usually earn a percentage of the contractor’s earnings on the project in return for hiring the contractor

Thoughts on Conscience

“Whoever you are to do a thing, though it can never be known but to yourself, ask yourself how you would act were all the

world looking at you, and act accordingly.”

Thomas Jefferson

• Seminars By Design created by Donna Vining, FASID and Tom Schwenk offers a full menu of CEU seminars approved and registered by IDCEC including Health Safety and Welfare topics

• Seminars By Design is a seminar producing company that can supply speakers and organize an entire program

• Seminars By Design 11418 Hylander Dr. Houston TX 77070 281-257-2162 281-257-9159 Fax info@Seminarsbydesign.net