It’s no secret that the past few years have been a roller coaster for the interior design industry, with the initial standstill in business during the pandemic followed by a boom that has come with its own set of challenges. The climate is so complex that it has enticed Gail Doby and Erin Weir, co-founders of Denver-based design-business coaching and consulting firm Pearl Collective, to return to their once-annual task of surveying and reporting on industry practices. Teaming up with Ken Roberts of Orlando, Florida–based recruitment firm Interior Talent, this summer they surveyed more than 900 interior design firm owners across the country on current business strategies and challenges, collecting data on everything from cost structures and staff sizes to the outlook on the year ahead. The findings provide a current snapshot of design businesses and are compiled in the 2022 Interior Designers Survey on Fees, Salaries and Competing for Talent, which debuts its executive summary today ahead of next month’s full report.
In some regards, the report projects a relatively rosy picture of the industry: 47 percent of respondents said that business is better now than pre-pandemic, with more than half expecting 2022 sales to beat 2021’s. But according to Doby, the surveyors were also keen to capture the struggles that come with that growth.
“I think the biggest thing that has created such havoc for so many companies is the hiring piece,” says Doby. The survey found that roughly a third of firms increased staff size in the past year, with slightly more planning to do so in the coming year. Meanwhile, nearly half of all firms attempted to hire staff during the past year, even if they weren’t successful—more on that in a minute—with design assistants and interior designers as the most in-demand new roles. But as the industry has undergone its own transformation, so has the hiring market.
Candidates today have higher expectations of new positions—with priorities that include health benefits, flexibility, engaging leadership and much higher compensation. In some cases, the survey found entry-level candidates with one to three years of experience requesting salaries in the mid- or higher-level range, up to $50,000 rather than the former entry-level standard of $30,000. In turn, designers seeking new hires reported a lack of candidates that were available: qualified, affordable and a good cultural fit for the firm. That job market is magnified by another recent trend reported by Roberts, who has seen an uptick in design and architecture grads taking a gap year amid economic uncertainty—which, coupled with many designers leaving established firms to start their own businesses during the pandemic, puts the onus on firm leaders to adjust their own practices to attract and retain new talent.
For smaller firm leaders that don’t yet have the means to offer bigger benefits and compensation packages, Roberts says, that adjustment could mean placing a greater focus on a company’s culture and values. “Applicants are drawn to a firm being honest and vulnerable,” says Roberts. “For example, ‘We are a work-hard, play-hard environment, and that means we work 50 hours, but we always have ‘Wind Down Wednesdays’ or a picnic on Fridays’—that honesty is incredibly powerful.”
Those shifting internal factors are having an impact on external practices too, says Doby. As firms increase compensation, squeezing a business’s net profit and margins, they’ve also been forced to raise their rates—a decision that’s being met with some client pushback. To offer a sense of stability amid climbing fees and long timelines in the wake of supply chain issues and material shortages, more designers are now exploring set fees. While the report reveals that 80 percent of designers still charge hourly fees or hourly plus markup, Doby says firms are beginning to trend toward fixed fees, which are used solely or in addition to hourly rates by 40 percent of respondents.
There, designers often run into another problem: setting flat rates too low. “My clients are undercharging their fixed fees, typically by about 50 percent,” says Doby. “They think they’re doing the right thing by cementing a relationship with clients, but it ends up biting them because they are so likely to continue doing all the extra things that the client asked for, without asking for more compensation.”
As hourly fees still dominate the market, the report also offers a more concrete look at what exactly that means for most designers: Nearly two-thirds of all firms charge $200 or less, with most charging $150 or less. Meanwhile, the majority of smaller, newer firms (those with no employees and ones that have been in business five years or less) charge less than $150 per hour.
Across the board, changing billing practices was one of the top strategies to address current business challenges, in addition to maintaining contact with current and former clients; increasing networking with local building and real estate professionals, contractors and service providers; and improving social media presence. Along with a detailed look at information like average gross sales, salaries and benefits, the report also includes observation and insights about this period of new industry highs and lows.
By sharing the findings in upcoming panels at next week’s High Point Market and in a workshop that Doby, Weir and Roberts will host in November, Doby says the trio’s hope is that the report translates into actionable expertise for designers navigating a unique moment in design history.
“We are going to see quite a few changes in the upcoming years, and I think that the kind of perspective that we bring is a little bit more prescriptive,” says Doby. “We can help designers navigate these changes and be ahead of the curve, instead of reacting afterward and not knowing what to expect—it’s all about being prepared and seeing the fundamentals of what's happening so they can make better business decisions.”
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