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business advice
My client is undercutting me—and the showroom is helping her!
Jun 19, 2018
Sean Low

Dear Sean:

My client is trying to undercut me—she went behind my back, posed as a designer to the showroom, and received net pricing (aka the designer’s rate) as a result. How would you handle this?

Dear Undercut:

Let’s acknowledge both the awfulness of a client pretending to be someone she’s not just to receive a discount, as well as the fact that the showroom is not doing its due diligence. I can only imagine how upsetting this situation must be for you.

However, we need to unpack it a little further. From the sound of it, you’re marking up the showroom items and selling them at retail cost to your client. If you instead added a commission to your net price, we wouldn’t even be having this conversation, since your client would have agreed to your price in advance. (This is my recommended charging strategy, and you can read more about it in my last column.) You can prevent this from happening again by rethinking your billing structure.

Of course, that doesn’t answer your question about how to handle this devious client. Even if your client does not know your exact markup, does she have a sense of your operating margins? We all know that your discounts depend on the items and volumes you are purchasing, but what, on average, is your rate for the project in question goal? This rate needs to be shared with your client if you are going to continue with a retail model for your purchases.

The issue with not sharing this target amount that you want to earn on your purchases (20 percent, 30 percent, etc.) is that it inevitably sets a tone of distrust, almost inviting her to investigate your margins—and question them. Any client that begrudges your rate is not an ideal client. It is not a client’s responsibility to determine your margins—only you can do that. They can decide to pay you the margin or not, before they hire you. Not after.

The biggest issue here is not the deception on the behalf of your client, but rather your own self-worth. You see a world your client cannot see, or else you would not be her designer. Your job is to translate her vision for how she chooses to live, profoundly better than she could do herself. This work has a transformational quality to it. Her life will be markedly better because of the environment you create for her. Your ability to make this magic happen comes at a price that you set. How you go about manifesting that price, whether by a retail markup, hourly or flat fees, or some combination of these, is also entirely up to you. So, own what you charge and do not hide from it by trying to make other players complicit in hiding how much you make. Yes, this kind of coverup is exactly what the showroom had been doing for you. Sure, they could have been more careful, but you should never need them to be.

Lastly, I also spy an issue with your presentation skills: All designers design according to a budget and have particular ranges in which they excel. When your client understands your range, why would it be better if she got it for less? You are not in the get-it-for-less business; you are in the blow-you-away-for-the-budget-we-set business. Here’s why: Your client can always get it for less … just not from you. A Hyundai speeding down the highway may resemble, at a passing glance, a Mercedes, but a Mercedes it is not. You and your design business, however, are a Mercedes and should act accordingly. When you design to a specific budget, the value has to be in how you captured your client’s vision, not whether the price of the sofa is fair. It’s time to rethink your presentation—this incident might be a call to you to do just that.

____________

SEAN LOW is the 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 monthly Business Advice column for EAL, he answers designers’ most pressing business questions. Have a dilemma? Shoot us an EMAIL—and don’t worry, we will keep your details anonymous.

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