Dear Sean,

You talk about transparency versus clarity a lot. I think I follow your line of thinking, but I always get lost in the distinction you make between selling an item and marking it up. Aren’t they the same thing?

Also, I know there are no hard-and-fast rules when it comes to how much luxury designers should be making, but are there at least some ranges you can share? It would help to have more context.

Persistently Puzzled

Dear Puzzled,

I firmly believe the current generation working in interior design is the first one experiencing a wholly different industry from what it was in the past—much like photography after the transition from film to digital. Why and how a designer is paid today is fundamentally different from even 15 years ago. Your question touches on one aspect of this system, product sales, but my answer will address the system as a whole. Technological shifts certainly have been a main driver of this evolution, but so has the acceptance of interior designers as being actual experts, and the power that comes with that acceptance.

It used to be that designers had to hide their value by saying that the commission they made on product sales was on top of a discounted price so that clients would not be paying much more than retail for their services. In other words, most designers would emphasize the relatively low cost of their services, rather than the high value provided.

Thank goodness that ship has sailed away for good. In its place, though, has to be a recognition that experts have to act like experts. You have to know what it takes for your firm to do what it does and how much it will take to produce your vision. Transparency involves lifting the veil in an ill-advised attempt to justify your value to clients, bestowing upon them the market power you should control. Ugh. In an age of perfect information offered by all things internet and AI, this cat-and-mouse game ends very badly for the mouse (that’s your firm). In its place has to be clarity.

Clarity involves providing the what, when, how and why of a client’s investment—without apology or justification as to what the actual investment is. If I could rid one question from designers’ vernacular, it would be, “What is your budget?” The question implies that the client should know what you need to produce your design. Only you know that number, and it is a mistake to have them guess. You simply have to know what that expense is, as it will be specific to your work—other designers might need more or less, but that is who they are, so it will not help you if I provide income ranges for other businesses.

Perhaps more important than clearly communicating what your vision will cost to execute is the ability and willingness to go one step further and provide your clients with a clear picture of their place in your business. Clients deserve to know how important they are to you: Are they one of five—or even one in 10, or 30 clients per year? Knowing that goes hand in hand with knowing a number almost no designer shares: projected revenue. Every business I can think of is almost required to share projected revenue to begin any analysis for just about any purpose. If you intend to make $10 and there are only five clients, it is very easy for a client to understand why they are paying your firm $2. That is clarity.

While I do think the price of design will become more and more disassociated from a client’s production budget as the industry evolves—make no mistake, it is the future—we are not there yet. One alternative metric I think is appropriate: gross margins relative to decor spend. That can be as low as 30 percent for quick decor-only projects, or as high as 50 percent for longer construction and decor projects. Remember, the denominator can only be decor, as that is the one number an interior designer can control. How a designer splits their fee between design and production also varies, but as a starting point it should be at least 35 percent for design and 65 percent for production. The smaller the project, the higher the design percentage, and vice versa.

The aim is to make sure that interior designers are increasingly seen as forthright advisors first and foremost. You get paid to spend your clients’ money far better than they ever could. Knowing that this has nothing to do with value-engineering is the answer to your confusion. Good luck.

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Sean Low is the go-to business coach for interior designers. His clients have included Nate Berkus, Sawyer Berson, Vicente Wolf, Barry Dixon, Kevin Isbell and McGrath II. Low earned his law degree from the University of Pennsylvania, and as founder-president of The Business of Being Creative, he has long consulted for design businesses. In his Business Advice column for BOH, he answers designers’ most pressing questions. Have a dilemma? Send us an email—and don’t worry, we can keep your details anonymous.