If there’s a universal concern among design professionals worldwide, it’s fees. That’s why I was so interested in this article submitted by Swedish designer Holger Wastlund.  

I am a design professional working in Sweden and I follow the Fred Berns’ blog with great interest. Obviously there is very much in common, in the US and in Europe. One of the topics that is very much discussed everywhere is “Fees and Prices”.

Let me give you some ideas about some of the thinking in this area in Europe as I see it. I hope it can be of some interest and I would certainly look forward to any comments on my thoughts.

We are all trying to get away from the thinking of costs for the client and rather present the price as an investment in a certain value for the client. This thinking could be emphasized if we think that there are at least 10 (!) different ways of getting paid.

You certainly know about all these methods and probably some more. My point is that if you always have this 10-list in your mind when negotiating fees and prices, it opens up your flexibility and certainly helps you to reach a good agreement for you as well as for your client.

Let us look at some of these methods:

1. Fee per hour or per day. Of course all the expenses should be added. The most common method all over!

2. Fixed price. Many interior designers are afraid of this. I am not! If you are in a competing situation and you explain that you have had quite a few similar assignments before and therefore you are able to set a fixed price. BUT under the condition that you and the client can agree on some well defined stages in the project. I can, as an example, suggest that I do a first draft. After my presentation and a discussion of that I present a final draft and after that there is the final presentation. In my price is included a fixed number of meetings and I will deliver the final design in a fixed number of copies.

Many Managing Directors like this way of working. They take no risks and it is also a way of keeping an eye on his own staff so that the discussions do not go on for ever. If you are able to give a fixed price I think it gives you a very professional image and is very often followed by more assignments – which then can be based on the regular “fee per hour” system.

3. Percentage of investment cost or charging per square foot (or square meter in Europe). In Sweden these methods are looked upon as somewhat old fashioned but they are still used in the southern parts of Europe. As an example the architect may charge 4 % of the total building cost, the construction engineer 3 % and the interior designer may also charge a fixed percentage of the building cost. The drawback with this method is that it may serve as a reason to raise the total cost or the total area of the project.

4. Salary plus a percentage. In the Scandinavian countries we have earlier used a method based on the designer’s salary plus a certain percentage. This method is today also looked upon as a little out of date.

5. Fee per hour with a guaranteed maximum. This is in my opinion used too often. It is absolutely the worst method. The designer has nothing to win but there is always a risk to loose.

6. Incentive or bonus. There are many advanced methods of constructing incentives for both the client and the designer. As an example, if you end up with the project with the costs below your budget you share the difference with the client and in the same way, if you end up above your budget you share the extra costs in a way that you agree upon before you start.

7. Success fee. If your client looks upon the project as an investment for better working environment or better satisfaction among his staff try to find a way to measure the result. In this way you can charge a basic fee and on top of that a “success fee” if the target is reached. This has the obvious advantage of focusing on the investment – not the cost!

8. Purchase fee. As an interior designer you can obviously deliver the design AND the purchasing of all the material as furniture, textile, lightning AND being the Project Manager for the whole project etc. and get paid for all these services. Many designers also produce their own interior material which is delivered within the total contract.
 
9. Keeping the discount. I know some designers who offer their design and the delivery of drawings for free and after agreement of the design they will purchase all the material needed. The client will get the normal price on the material and the designer will keep the discount that he or she has negotiated.

10. Back room selling. One of the best ways of selling my consulting services has always been to act as a speaker. It is a fantastic opportunity to stand up in front of an audience and present something and by that also introduce yourself as a professional. I have got most of my new assignments this way. And as a speaker you also have the opportunity to sell books which could be written by yourself or others, other written documents, a tape recording of your speech etc.

There are of course other ways of getting paid. Today many designers have their own web sites which open up the possibilities that all web sites have with affiliates etc. And looking at the list above there are ways to combine different methods of getting paid.

The main reason making this 10-list and having it in mind is to always be open and flexible about different ways when discussing fees and prices. For me it serves as a base to find different solutions and it is certainly an effective way to come to a positive agreement for the client and yourself about how your client will invest in your services!

Holger Wastlund