To Fee or Not To Fee….. That is the Ethical Question Presented By: Donna Vining, FASID IIDA RID,...
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Transcript of To Fee or Not To Fee….. That is the Ethical Question Presented By: Donna Vining, FASID IIDA RID,...
To Fee or Not To Fee…..
That is the Ethical Question
Presented By:
Donna Vining, FASID IIDA RID, CAPS Regreen Trained
& Tom Schwenk CEU# 7596
Objective• How do you determine your value?
• Types of fee structures
• What key benefits do you offer?Are they evident?
Are you told you are too expensive?
Could you be pricing yourself too inexpensively?
Your Strengths (Value)
I. Experience: Track Record
Results
II. ReputationReferences
Approach
III. Education Certified
Credentials
THE BIG DIFFERENCES:Designers
Stress Competence
• Know design; Have experience and training
• Know how to order, coordinate schedule
• Stay w/in budget, save client money
Clients Value Performance
• Know my needs; Consult
• Work with me and others
• Optimize and justify my budget
THE BIG DIFFERENCES:Designers
Stress Competence
• Accreditation means: better training and standards
• Use impressive media
• Precedes hiring• Credentials
Clients Value Performance
• Accreditation means: you can justify plans better & apply updated knowledge
• Talk with me directly
• Happens in task• Service
Key Benefits
• Why should your customers hire you?
What do you offer?
What is important to your customers?
Do you know?
How can you meet these needs?
Don’t Forget…..
• To summarize the key benefits you provideHow your ideas will aide in the
accomplishment of your customers’ goals.
Customer Requirements- Do You Know Them?
Customer Satisfaction
Quality Quantity
Service
• Why do you charge what you do? Be ready with a
succinct 50 word answer.
Do you interview your potential customers?
What is the value your customers perceive you have?
• Remember each customer is different.
Meeting the Needs of your Customers
Professionalism
Time
Investment
Function
Ease
Value
Budget
Time
Harmony
Attention
Ego
Quality
Ethics and the Design Profession
• To which standard would a jury hold the design firm?
• How would the public judge the interior design firm?
• How would the professional practice standard hold the designer accountable?
• The reasonable person standard?
Josephson Institute of EthicsSix Pillars of Character
• Justice• Compassion• Trustworthiness• Respect• Responsibility• Citizenship
Public Perception
• Some professionals are more ethical than others
• Ethics are dictated by their professional code of ethics
• Making ethical decisions is like playing God.
• Follow the law and there will not be a problem
• Ethical behavior is based on a persons’ values
Who are the stakeholders?
• Designer• Client• Prospective Buyers• Design Firms• Peers• Allied professionals• Members of the Community
Rational Model of Ethical Analysis
• State the ethical dilemma in plain language.
• Identify the relevant facts, ranking them in order of significance.
• Identify relevant values/principles.• List alternative courses of action.• Rank values in preferential scale.• Adopt a proactive posture and propose
a policy to prevent this dilemma from recurring.
How To Determine What to Charge• How much do you need? Or
want? Overhead + Profit
Overhead: cost of sales, business expenses etc
Sales= 100% of revenue generated
Profit= sales less overhead
Ways To Charge:
1. Fixed or flat fee2. Hourly fee3. Cost plus4. No fee… usually referred to as
retail5. Per square foot (usually
commercial)6. Other: retainer can be either
refundable or non-refundable
Fixed or Flat fee
• What do you have to know to make this profitable?
• What is the scope of the job?• What are your experiences?
With this type of project?With this customer?With this location?
Hourly Fee
• How good are you at keeping time sheets?
• How do you explain what your are going to charge for?
• What about no charges?
Cost Plus
• How do you determine the correct margin on merchandise?
• What is cost?• What do you show the
client?• How do you handle extras,
increases, surprises?
No Fee (usually referred to as) Retail
• How well do you know the customer?
• Where did you find the customer?• What are you going to do to
protect yourself?• Do you like being a personal
shopper?• How do you know the client is
serious?
Per square foot (usually commercial)
• Do you know the scope of the job?
• Do you know who must approve the specifications and pricing?
• What does your contract include?
• Have you worked with these people before?
• How many choices will you offer?
Other – Retainer: Refundable?
• Do you ask for a retainer?In what situations?Is it refundable?
In what circumstances?How is it applied?
Steps to Take:•Explain the Triangle:
Value
Quality
Service
Pick the two that are important, you supply the third V+S=P
S+P=V
P+V=S
Value Added Design• Do you charge for everything or do you provide no charge items? Is your hand always out?
• How do you let customers know?
You must be in charge
Include it on your invoice
Mandatory: Be Consistent
• It can be a balancing act!
•Brush up on communication skills
•Treat each customer individually; however be consistent in your business practices.
Standard Industry Pricing Methods
• In Chicago, according to the Franklin Report, hourly fees range from $75.00 to $250.00 depending on experience and reputation. $150.00 being the standard for well-established designers
• Generally products are charged at 30-35% above net including workroom charges
• Many times the up-front retainer is used to off-set the original hourly fees
Upcoming Trends• $200 + on all hourly services• No mark up on products
• Eliminates price confusion• Increases issues on hourly accountability
Interior Design Outlook
• Keen competition is expected for jobs in interior design because many talented individuals are attracted to careers as interior designers• Employment opportunity through 2014 will increase between 9 and 14%.• Individuals with little or no formal training in interior design, as well as those lacking creativity and perseverance, will find it very difficult to establish and maintain a career in this occupation • About 3 out of 10 are self-employed
Income-Firms• Median annual earnings in the industries employing the largest numbers of interior designers in May 2004 were as follows:• Architectural, engineering, & related services $44,740• Specialized design services $42,000• Furniture stores $37,750
Income - Firms
• Median annual earnings for interior designers were $40,670 in May 2004.
• The middle 50 percent earned between $30,890 and $53,790.
• The lowest 10 percent earned less than $23,440
• The highest 10 percent earned more than $71,220
Independent Designers
• The Franklin Report describes “standard hourly rates”, in the Chicago market, as $150.00 an hour.
• Under $100.00 is considered “very low”
• $100.00 is considered “low”• $125 to $150 is in the “standard
range”• $160 is “higher”• $200 + is classified as “very high”
Income• Among salaried interior designers, those in large specialized design and architectural firms tend to earn higher and more stable salaries• Interior designers working in retail stores usually earn a commission, which can be irregular
Fee Scales
TITLES ANNUAL SALARY HOURLY (MEDIAN)
Principal/Partner $125,000 $195 Project Manager $ 80,000 $131 Designer $ 60,000
$100 Other Design Staff $ 40,000
$ 78
*Interior Design Magazine Jan. 2006
Independent Designers
• Self-employed interior designers and those working in smaller firms usually earn:A per-hour consulting feePlus a percentage of the total cost of furniture,
lighting, artwork, and other design elementsFor commercial projects, they might charge a
per-hour consulting fee, charge by the square footage, or charge a flat fee for the whole project
• Designers who use specialty contractors usually earn a percentage of the contractor’s earnings on the project in return for hiring the contractor
Thoughts on Conscience
“Whoever you are to do a thing, though it can never be known but to yourself, ask yourself how you would act were all the
world looking at you, and act accordingly.”
Thomas Jefferson
• Seminars By Design created by Donna Vining, FASID and Tom Schwenk offers a full menu of CEU seminars approved and registered by IDCEC including Health Safety and Welfare topics
• Seminars By Design is a seminar producing company that can supply speakers and organize an entire program
• Seminars By Design 11418 Hylander Dr. Houston TX 77070 281-257-2162 281-257-9159 Fax [email protected]