The Things I Learned About Flat Fee Pricing from Kimberley Seldon
A Well-Designed Business® podcast is known for providing actionable tips and advice for running an interior design business successfully. We pride ourselves on providing you with proven systems, rather than offering theories and discussing what may or may not work in your business. Our dedication to practical strategies is a driving force behind our podcast and was one of my inspirations for starting A Well-Designed Business®.
One of our return quests, Kimberley Seldon, is the perfect example of a guest who combines a masterful talent for interior design with keen business acumen. Kimberley’s aptitude for expertly designing interiors, as well as her business, underpins her reputation as an interior design superstar, editor, keynote speaker and broadcast personality. In addition to founding her own design firm, Kimberley Seldon Design Group, Kimberley is Design Editor of Canada’s number one magazine, Chatelaine and Editor in Chief of Dabble Magazine, as well as the author of three books: “Business of Design Part 1 and 2” and “500 Ideas for Small Spaces.”
Kimberley is dedicated to giving back to the design community and sharing her experiences with her fellow designers. She currently runs the online learning platform, Business of Design, where she teaches professional development to designers, decorators, stagers and stylists.
I recently invited Kimberley back to the show to discuss a challenging topic for many designers — flat fee projects and how to accurately price these projects for maximum profitability. We couldn’t cover all aspects of flat fees, but don’t worry. Kimberley just launched her newest book, Win the Flat Fee Game, in January of this year. The third volume in the Business of Design Series, Win the Flat Fee Game, contains new estimation methods to ensure your flat fee contract won’t leave you flat broke.
The Challenge of Flat Fee Contracts
Kimberley believes many designers struggle with accurately pricing flat fee projects because of the fear of ‘sticker shock.’ Not the client’s sticker shock, mind you, but that of the designer. After preparing a full quote with accurately tabulated fees, many designers look at the final cost of the project and balk at the numbers thinking they are too high. The fear of losing the client can often lead to what Kimberley calls an internal negotiation. Designers begin to negotiate their fees and may start to substitute elements of the design in an attempt to decrease that final number. Unfortunately, the overall quality of the design may suffer if, for example, inferior merchandise is substituted for the high-end elements previously included.
A client could potentially have sticker shock over the cost of an entire house remodel or on a smaller item like the cost of a blind. But, designers should be reminded that sometimes clients will actually pay for those high-end options. Kimberley’s experience has taught her to push past her own sticker shock and present the designs ‘as is.’
During the interview Kimberley mentioned, “I presented a window covering a week ago to a client and one blind was $6,400 and I immediately thought there is no way they are going to pay $6,400. I now know from experience to present it. Let the client say no. And the client said they loved them, let’s do it.”
Designers should not decide for the client what is too expensive. This also applies to situations where a client may tell you they don’t want to spend a lot of money. You may not know what a lot of money is to this particular client. You may also encounter situations where the client loves your design so much that they are willing to break their budget to achieve the vision you have created.
At the same time, you want to ensure you maintain your integrity when presenting your quote. If one option for a couch looks like a $3,000 couch, but it will cost your client $15,000, is it really worth presenting to the client as a feasible option? If, on the other hand, you know the product was priced accurately and is worth the price, then be confident in your choice and present it. The more confident you are in the choices you have made, the more confident your client will be in your ability to make good choices.
Problems with Shorting Your Fees
If you’re working on a project right now and you’re suffering from sticker shock, resist the pull to cut your service fees. In the short-term it might seem like a good idea in order to land the client, but over the long haul you will likely begin to resent that decision. With a flat fee contract you will be boxed into delivering the design job for much less than it actually will take. Kimberley says, “in essence you are in the hole before you even get started.”
The stress and potential resentment created by overextending yourself can not only impact your bottom line, but it could negatively affect your creativity and kill the joy and fun of working on the project. By devaluing your work, you not only give the client a false impression of what they can get for their money, but you are injecting an extra level of stress and anxiety that isn’t warranted and is not conducive to the creative process.
Present what you are actually worth. Clients will have a hard time seeing the value in you and your work, if you do not acknowledge and respect your own value and worth. The truth is you may not get every job. But, if you get 2 jobs accurately priced you may be making the same amount and you will be doing much higher quality work with less stress and aggravation. Overall, the whole process is much better and more conducive to your overall profitability.
Having Trouble Accepting Your Value?
Some designers are easily lured to cutting their fees in flat free contracts because they have difficulty accepting the value of the services they provide. During that internal negotiation process that starts with sticker shock, it seems much easier to devalue your fees then to eliminate that perfect chaise lounge. You need to bring that same appreciation for the inherent value and craftsmanship in your favorite woven roman shades, to your own abilities as an interior designer.
If you’re struggling with accepting your value, use these 3 tips to get yourself to a higher level of professional self worth:
- Identify your unique value proposition: every designer is unique with a certain specific set of skills and aptitudes that make them desirable to potential clients. Some designers may be color experts, while others excel at project management and can balance multiple projects simultaneously and flawlessly. Take a good look at your past projects and begin to identify those areas of the design project that come naturally to you, or an aspect where you always exceed your client’s expectations. Another good indicator is client feedback. If clients always compliment you on your ability to mix prints, that’s a strength you possess that others may not. Once you articulate your unique value proposition, you can begin to market those strengths to your potential clients and differentiate yourself from other designers.
- Learn from your mistakes: the most successful people do not fear failure or avoid making mistakes. They embrace them as an essential component to success. Look – everyone makes mistakes. It is not a question of whether you will make a mistake, you eventually will. Instead, it is a question of how you choose to respond to those mistakes. Are you going to use them to devalue yourself and reinforce that nagging feeling to reduce your fees? Or are you going to use them as a tool for improvement and innovation. Many of the systems and practices of successful designers were not created in a day; they were tested, refined and tested again until they met their intended objectives.
- Invest in you and your business: while not everyone is going to be an expert in every area of an interior design business, that doesn’t mean you shouldn’t seek to expand your knowledge base. All designers should continue their education to improve not only their design skills, but to also improve their business skills. There are plenty of opportunities available including industry events, lectures and workshops. Kimberley’s Business of Design is a great place to get started with over 300 hours of training videos and access to an ever growing network of industry peers. Kimberley’s mission was to provide designers with the requisite tools to run the business they always dreamed of owning, instead of having a business that runs them.
By taking the time and resources to invest in you and your business, you’re sending the message that you are worthy of investment and are valuable. Clients will be drawn to that value and see it within you, because you now see it within yourself.
Looking for Even More Tips and Advice?
My interview with Kimberley Seldon covered a lot of aspects of flat fee contracts and how to make sure they are working with and for your bottom line. Check out her episode for all of her tips and recommendations. If you would like further details on her online learning platform, Business of Design, be sure to listen to her first episode on the podcast, where we discussed what inspired her to start the platform and what it has to offer interior designers.