There are two types of market for interior design: residential and commercial. Residential interior design focuses on the planning and/or specifying of interior materials and products used in private residences. In terms of scope and contract amount, residential jobs are often smaller, but offer a higher profit margin particularly if you are marketing the products to be used in designing the rooms.
Commercial jobs, on the other hand, are often much bigger in scope but the bidding that often accompanies the contract can push down your profit margin. Commercial design covers a wide variety of specialties, such as entertainment (e.g. movies, theater, videos, theme parks, clubs, dramatic and musical theater); facilities management (e.g. office moves or expansions); government/institutional (e.g. government offices, embassies, museums), health care (e.g. hospitals, nursing homes, long term care facilities); retail or store planning (e.g. boutiques, department stores, malls, food retailing centers); hospitality/restaurant (e.g. country clubs, hotels, cruise ships); and offices.
Start-Up Costs
An interior design business requires basic office supplies and equipment such as computers, telephones, and fax. In addition to the standard word processing and spreadsheet software, invest in AutoCAD software to present more professional looking design solutions to clients with three-dimensional realism. AutoCAD software can cost from $600 to $1,400.
You also need to buy books of samples, which are the lifeblood of a design business. Manufacturers of wallpapers, paint and carpets produce samples costing about $250 each representing various products in all sorts of design and colors. Try negotiating with sales representatives, as they can give some of these sample books for free, particularly if they see the potential that you can sell their product.
When looking for samples, be careful of companies that will require you to purchase preselected samples on a monthly basis - even if you don't need it. The assumption is that you run a showroom to keep all the unused samples. Wallpaper and large fabric companies are particularly notorious for this practice.
Pricing Structure
Fee structures vary widely, depending on the designer, complexity of the project, geographical location and a host of other factors. Some of the ways interior designer’s charges for their services include:
- Fixed fee (or flat fee) -- The designer identifies a specific sum to cover costs, exclusive of reimbursement for expenses. One total fee applies to the complete range of services, from conceptual development through layouts, specifications and final installation.
- Hourly fee - Some designers charge based on the actual time spent on a project or specific service, with fees ranging from $35 to $125 per hour.
- Percentage fee -- Compensation is computed as a percentage of construction/project costs.
- Cost plus -- A designer purchases materials, furnishings and services (e.g., carpentry, drapery workrooms, picture framing, etc.) at cost and sells to the client at the designer's cost plus a specified percentage agreed to by the client. The service charge is often put at 20 percent.
- Retail - Others charge their clients the retail price of furnishings, furniture and all other goods they get wholesale, keeping the difference as designer's fee and services. Retail establishments offering design services commonly use this method. With this method, clients get the designers services at a price no greater than he or she would have paid for the products at retail.
- Per square foot - Often used for large commercial properties, the charge is based on the area of the project.
Some other designers require a retainer fee before the start of a design project. A retainer is an amount of money paid by the client to the designer and applied to the balance due at the termination of the project.
Designers that offer free cost estimates charge for the measurements made, if customers do not intend to use the designer plan and request for the measurements.
Income Potential
What is unique about the interior design business is that you never do the same job twice. It will be hard to place a specific price on individual projects. What you will earn from a job that requires redecoration of an entire room from the carpet, wallpaper to upholstery will be different from a job that requires you to put up drapes to ten windows.
A home-based interior designer earn an average of $734 per job. If you are working at four jobs per month, you can expect monthly sales of $3,670 per month. First year designers can expect to earn about $44,040. As you are able to do more jobs in a month (maybe by hiring an assistant in your second or third year of business), you can increase your sales potential. |
