There is a lot of confusion for the general public as to how interior designers charge for their services. I believe in part the mystery stems from the plethora of cable design shows and “reality” TV; never showing an exchange of money for services rendered, how much that would be given the scale and scope of a design project. Another confusing aspect is that depending on the type of interior design service, e.g. remodel, décor, lighting, consulting etc. the fee structures vary.
I have decided to explain how the various pricing structures work for the interior design industry.
The various types of fees are:
One item I know people are very confused about is the “contingency fee” or “re-sale charge”. It is quite understandable that this fee will throw the client off a bit as it pertains exclusively to merchandise sold “to the trade only”. The general public can only purchase goods from retailers so this is usually a foreign concept.
To the trade only is a wholesaler that sells only to those who have a re-sale license. Designers make purchases from these wholesalers at their discounted price, generally 40%-50% less and then “re-sells” it to their clients at a mark-up. This is the “contingency fee” or “re-sale charge”. Generally designers mark-up anywhere from 20% – 35%. (Note that retailers also buy from a wholesaler and then mark up their pricing from 50% -100%.) This charge should never be applied to merchandise purchased from a retailer. If your designer is doing this then I recommend you find another designer as this is considered quite an unethical and unacceptable practice.
The hourly fee is simply charging the client by the hour for her/his time. This is usually the most appropriate type of compensation for consultancy work.
The Contingency fee only is charging a mark-up or “re-sale” charge on merchandise only, no hourly fee. This is no longer a common practice and usually reserved for very exclusive high-end décor projects.