Like so many designers, I charge hourly with a markup on items we purchase for clients. (I know, I know—I read your column enough to know that I need to start calling it a commission!) I feel stuck and want to get to the next level, especially when I look around at other designers with similar clientele and experience who are getting these next-level kinds of projects.
I have read about how you recommend that all luxury designers implement a significant engagement fee, sometimes as much as six figures. I struggle with this a lot. It sounds like that’s one way to help me level up, but it does not seem fair to have a client invest so much money upfront before we’ve really done anything and I don’t know how I’d justify it.
Can you talk me through it?
Dear Nervous Nelly,
Perspective is everything, and what does not appear fair to you might just be an old trope playing in your head. I’ve got two points to make here: One, the time for hustling is over. Two, you need to appreciate the power of the placebo effect and its impact on your design business.
If you are to fulfill your two promises to a client—that you will do your best work for them, and that you are willing to stake your entire reputation on their project—then you need to embrace the fact that you are the professional in the room. This much I have written about many times in this column. What that means for the designers with the talent, wisdom and experience that you have is that the hustle is over.
When you are clawing to get onto the stage, you do whatever it takes to get there. Sometimes that means working for too little or dealing with an aggressive client or the like; you are just hungry to establish your business. However, once you have made it to the stage, as you have, that same hustle no longer works. Worse, it works against you by connoting a power dynamic that no longer exists. Today, you do not owe your clients anything other than your best work. You have nothing to prove, only the willingness to share your talent, wisdom and experience with those clients that truly care about your work and how it will come to be for them. And yet! Your business model is still a reflection of your hustle. If it requires very little investment to get you started on a project, then your work is simultaneously based on effort and speculation.
What do I mean by that? You make no money without effort (your hours). Speculation comes in with the idea that unless your clients buy what you recommend, you do not make any commission. Your business sets you up to be a glorified salesperson, dependent as much (and probably more) on the ultimate sale as on the design. You are a widely known, published designer, you say? Maybe, but your business is telling another story. You value your talent, wisdom and experience at zero, and you are paid what you ask for. It’s no wonder the next level eludes you.
Your talent, wisdom and experience have intrinsic value and deserve to be recognized (and compensated). Your willingness to dedicate the time necessary to fulfill your two promises needs to be appreciated and paid for. That’s where an engagement fee comes in. It’s not a deposit or retainer; it is a fee for your talent and attention that goes against nothing and is non-refundable.
You say you worry about justifying the fee, but I urge you to appreciate the power of a placebo. We often assume that the more expensive the face cream, the better it works—no matter the ingredients or other objective comparisons to less-expensive creams. The same is true of your business. I am not talking about snake oil here, only the human condition that appreciates the larger the investment in self, the better the result. It means that if you ask a client to invest a significant sum in you to create the transformative environment they seek, the more likely they will give you what you need to make the transformation happen. As much as they are investing in you, they are investing in themselves. Once invested, you will better be able to receive the kind of information you need to create as you must—less “let me see if I like it” and much more “this is the expression of all that we have talked about”.
While a significant engagement fee might make your firm more money, that is not my ultimate aim. Instead, I want you to establish a relationship dynamic from the very start that will yield the greatest opportunity for success. It is all about respect for the purpose of the work and investment in all things so that you can find support in what it means to be an expert. That investment yields trust far more than your ability to be the shiniest penny in the room. And if you do not have the conviction to know the value of your talent, wisdom and experience going into a project, why should your client?
This column was originally published on March 8, 2022.
Homepage image: ©Aitthiphong/Adobe Stock
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.