Why this designer stopped hemming and hawing over billable hours

Eschewing hourly rates or flat fees, New York designer Alvin Wayne simply charges a percentage of the total project budget for his design work. It’s a move that eliminates complications—and ensures that he’s in control of where to save and splurge.
How do you approach those conversations about what design costs?

I have the money conversation right off the bat. I ask, “What’s your budget? How much do you have to spend for this project?” When they tell me, I’m very upfront if it’s not enough—I have the experience to say, “That’s not going to work. You need to add about $20,000 to that budget and then we can do some- thing.” I can break it down and explain why: A sofa’s going to cost this, a chair is going to cost that—and then you’ve still got to pay my fee, which is 25 percent of the overall budget.

What made you want to charge a percentage?
It’s very clean and clear. People don’t get confused. They know from the beginning, “This is how much I need to pay Alvin,” and then they’re going to get a link from QuickBooks to make that payment. I ask for that retainer fee, and then two weeks later the remainder of my money is due, even if we haven’t started the project—unless it is a very large project, in which case I need a payment on the first of every month.

When it’s time to buy the product, the client is still paying a markup, but it’s a very small margin. I entice my clients with the fact that I get discounts everywhere, and I want them to know that they’re getting a discount, not paying the retail price.

Did your relationship with clients change for the better when you reworked your approach?
Absolutely, because everything is transparent and upfront. And I’ve found that a lot of my clients actually love paying me my fee in advance. If a project stretches longer, they don’t have to worry about, “Gosh, I owe Alvin money.” Now it’s just waiting on furniture to come, but they’ve already gotten paying me out the way. They’ve told me, “I feel so good. I don’t owe you anything.”

I handle the business first, then go into the creative and work on the design. And everything really starts with the budget, even when I do the design plan. Once they give me that budget, I say, “This is the design plan based off the budget you gave me.”

When you’re presenting that design plan, are you breaking down the costs of each line item, or is it more about hitting that agreed-upon budget?
I present it and say, “This fits within your budget.” I don’t break it down, but I do know the numbers. If they say, “I love that sofa. How much is that?” I tell them how much it is. But I’ve learned that if I stay within the budget, my clients don’t care how much each thing costs individually. Or they’ll ask once it’s done— they’ll ask, “How much was that?” And then I’m like, “Half of your budget.”

There’s got to be so much creative freedom in that—not adjusting the mix to someone else’s idea of what things should cost.
I once did a design presentation for a client and they said, “I like that but it feels safe.” So I said, “You know what? Let me show you the first design I did.” That was the version where I did not hold myself back—before I thought, “Oh, maybe that’s too expensive.” The second time, I showed them the version I loved. From that experience, I’ve learned not to count a client’s money. Don’t do it! They hired you because they like your vision and they love what you do, so give them the best possible thing. Now I let them pull me back and say, “Geez, can we find a less expensive version of that?”

I recently found the perfect mirror on 1stDibs—and although it’s only $2,300, it’s coming from France, so the shipping is double the price of the mirror. I showed it to the client and she loved it. But when she found out how much ship- ping was going to cost, she told me, “I cannot pay that.” We tried and tried to find other mirrors, but we finally ended up buying that mirror and sucking it up with the shipping. It fit within the budget, and she loved it.

Homepage image: A graphic wallcovering in Alvin Wayne’s New York apartment sets the stage for a layered, textured space that exudes warmth without straying from a black-and-white scheme. | Nick Glimenakis

This article originally appeared in Summer 2022 issue of Business of Home. Subscribe or become a BOH Insider for more.
MAGAZINE | AUG 11, 2022 |
August 18, 2022 — Sharon Laxon

Announcing the Launch of Our New Website!

We are pleased and excited to announce the launch of our brand new website! Our old website was looking a little outdated and we wanted it to better represent who Layers & Layers Showroom is today. We wanted to create a fully-functioning, uncluttered website that is easy for our customers to navigate.

THE WEBSITE

Our new website has been designed and developed to showcase our strengths and accurately reflect our brand positioning – presenting us as the professional and highly experienced TRADE ONLY showroom we are. It boasts a clean and consistent navigation to help you find your way around ...

Brands:  here you will find out the brands we represent for fabric, wallcoverings, furniture, drapery hardware and window coverings.

Lookbooks:  we will always put the newest lookbooks up for you so that you can keep up to date with latest drops.

Our World: why we do what we do

Finished Product:  a collection of some of our favourite products that we think you will love. We will continue to grow this area so come back often to see what's new.

We realize that making a website better isn’t just about making it look nice, but understanding what you as a designer needs and expects. Information should be easy to find, easier to read and answer your questions. We have now restructured the site to do just that – as well as introducing a blog section to the site, which is going to be home to blogs and articles on a range of topics that will keep you in the know with the most up to date news from the lines we represent.

What’s next?

There is SO much coming down the pipe that we can only say keep checking back to see what's new.

August 11, 2022 — Sharon Laxon

New Now: Ted Baker for S.HARRIS Fabrics

We're bringing fashion into interiors with exclusive access to our newest collection: 

TED BAKER WALLCOVERINGS

EXPLORE TED BAKER WALLCOVERINGS

 

 

 

 

 

 

 

 

 

August 11, 2022 — Sharon Laxon

10 quick money makeovers to improve your bottom line

10 quick money makeovers to improve your bottom line

We tapped designers, business coaches and industry pros for fast, easy ways to manage your firm’s money smarter.

RETHINK YOUR PRICING PROMISE.The internet has turned clients everywhere into price-hunting detectives. As a way to soothe the sleuths, some designers promise their clients that they’ll never pay more than a listed retail price for anything. That, says Jeff Stracka of bookkeeping and accounting firm ID Bookkeeper, is a mistake. “A retailer might give you trade pricing of 20 percent, but that’s not going to pay the rent. Plus, when stores have sales or tax-free weekends, you’re going to work yourself into a fit trying to figure out what you charge your client,” he says. “I think that by making that promise you actually get into the trap of having clients shopping you on the internet—it gives them something to look for.” Instead, Stracka recommends having a clear conversation with clients upfront. “Explain to the client that you don’t want to make design decisions based around the markup or how much money you’re making—of course they wouldn’t want that! Choose what’s best for the client. Maybe it is from RH and it saves them a little money, but you have to get your markup somehow. So what if it’s over retail?”

STOP GIVING AWAY YOUR TIME.If you charge hourly, be honest: Do you bill the client for every hour? Underestimating time when invoicing a client is an understandable impulse, but the experts say it’s cutting into your firm’s profitability. One way to push back against the urge to trim hours: Try looking at smaller chunks of time. Hours can be easy to round up and round down, but it’s harder to be fuzzy with minutes. Kimberly Graff, the COO of Texas-based Charbonneau Interiors, says that her firm became far more profitable when it started charging for design time in 15-minute increments. “Before, we would have fees associated with certain items—like, this many hours for a custom sofa—but we weren’t following every minute we spent on them. Now, we’re pretty strict about it,” she says. “Do we still give some time away? Yes, we give a lot. But less than we did before.”

EXAMINE YOUR ESTIMATES.For designers who charge on a flat fee basis, a lot of interior design pricing is (educated) guesswork. Much of a firm’s profitability can slip through the gap between estimated costs—the hours and dollars you think it will take—and actual costs. The only way around that, says Ruth Ann Janson of Texas-based consulting firm The Dove Agency, is to constantly examine your estimates. “Designers need to ensure they’re billing for hours worked—that means tracking time monthly by project, even if you’re charging flat fees. Detailed analysis often reveals unbilled hours,” she says. “Also, estimates used to capture shipping, receiving, storage and installation should be reviewed against the actual charges incurred. Given the supply-chain delays and inflation, it’s unlikely that estimates from even a few months ago are adequate. It’s essential that designers have a process in place to compare estimates with actuals.”

TAKE EMOTION OUT OF THE EQUATION.Settling on the “right” amount to charge can be an emotional endeavor that factors in everything from years in business to the local rate for design to the level of imposter syndrome you’re currently dealing with. But according to Bay Area–based business coach Sean Low, none of that matters. “When a designer is not making the money they wish to make on a project, the answer is almost always that they are pricing from the bottom up, or by trying to figure out how much they can make by way of fees and commissions,” he explains. “What they should be doing is pricing from the top down—calculating how much they need to do the work.” Low asks his clients to determine three key numbers: how much money they need to live the life they want, what it will cost them to get it (that’s overhead), and how much they want to work. The result, devoid of emotion, is how much each project should net. For example, imagine you want to make $150,000 a year, you have $50,000 in overhead and you want to take on two projects. In that scenario, your price is simple: $100,000 per project. If you can handle four projects, it’s $50,000, and so on. The secret is that how you charge that $50,000 or $100,000 matters far less than the amount itself—any combination of flat fees, hourly rates or margin on product sales that gets you across that threshold guarantees that your firm has met its financial needs. “Let intrinsic value win the day,” counsels Low. “Get what you need—no more, no less.”

DON’T EAT CREDIT CARD FEES.In a business where the relationship with the client is everything, it’s understandable that designers will sometimes “eat”—in other words, pay—the fees on credit card or ACH transactions. Better to swallow that cost, the thinking goes, than be perceived as a nickel-and-dimer. But Christine Froelich of accounting firm The Designers Bookkeeper says that it’s a dangerous habit. “I understand that clients may attempt to push back on those fees, but they add up, and fast— especially with large transactions,” she says.

PUT YOURSELF IN A CLIENT’S SHOES.For Virginia-based interior decorator and business coach Monique Nicole Holmes, being profitable is about targeting the right client with specific services. In her Employee to Designer coaching program, she challenges her students to answer three questions to unlock profitability: What solution do you offer? Who do you offer your solution to? How do you offer your solutions? The goal is to articulate what’s unique about your firm— and then charge a premium for that specialty by connecting with clients who value it. One designer going through the program segmented her ideal client into three categories, then created a custom offering for each: e-design for busy professionals, full-service moving and interior design for new home-owners, and a budget-minded materials selection package for real estate investors who need professional help with their flips. “People don’t buy services; they buy solutions,” says Holmes. “Ask yourself, ‘Who needs my gift the most and what are they willing to pay for it?’ Answering this question will help design professionals discover who their ideal client is and develop a clear and marketable design solution that client is willing to pay for.”

SLIM DOWN YOUR VENDOR LIST.Shopping from dozens of vendors is one way to ensure variety in your work, but it can also keep you from realizing your full earning potential. By shopping from a concentrated pool of brands, designers can tap into bigger discounts and capture more revenue from every sale. For Omaha, Nebraska–based designer and coach Nikki Klugh, stream-lining sources has another upside: It leads to a more defined style, resulting in clients who seek you out for a certain look and jobs that have a much shorter sales cycle. “When a client searches you out for a specific style, you close the deal a lot faster than if you are a generalist,” she says. “Plus, those projects provide you with a bigger profit margin.”

GET EFFICIENT.Truth: Every client is unique, and every project is special. Another truth: The design process for all of them should be the same. “Most of the designers I meet who are struggling to make money also struggle with standardized processes in their business,” says Dallas-based designer and coach Michelle Lynne. She encourages firms to develop a system for everything, from vetting clients to defining the scope of work for a project to calculating a profitable flat fee. “Having these systems in place reduces scope creep and eliminates the need to bill ‘indefinitely’ by the hour, and thus, the client has already agreed to the overall investment,” she says. “The elegant simplicity of the processes are easy to follow and have empowered designers to charge what their services are worth.”

ELIMINATE LOSS LEADERS.Grocery chains often offer steep discounts to attract new customers and encourage shoppers to spend more once they’re in the door. It’s a marketing strategy aimed at stimulating sales for items with better margins—but it’s not a winning solution for your design business. “Every service model a designer offers has to be profitable,” says business coach and body language trainer Nancy Ganzekaufer. It might seem like a good idea to lure in new clients with lengthy free consultation sessions or low-priced “designer for a day” services, but Ganzekaufer says you’ll end up regretting them. Other bad behaviors to nix: shaving hours off your invoice for full-service work because you’re afraid to upset clients with a big bill, or letting your margin on furnishings cover your time for ordering, tracking, handling delays and damages and installation instead of keeping the margin as profit and charging a project management fee. “Whenever you feel resentful—a nagging sense of, ‘They are taking advantage of me,—it could be an indication that you are undervaluing yourself.”

DON’T SHARE YOUR DISCOUNT.When she was first starting out, Nashville, Tennessee–based designer Sandra Funk mustered the courage to ask fellow design professionals how they were profitable. “Girl, we triple shit,” was the reply she got. (It was a cocktail party, and everyone was a few drinks in.) But today’s climate—where savvy shoppers can scour the internet for deals—has made how designers charge for product a potential minefield. Funk now leads a six-session course to share how she created a financially successful firm in this new landscape, with a focus on transparency, clarity and standing up for yourself. One of the most crucial moves, she says, is to stop sharing your discount with clients. “Increasing profit on product can be the simplest, most effective way to increase profit in a design firm,” says Funk. “Any trade discount you are given is exactly that—a discount meant for you, the trade. Keep what is meant to be yours.”

Homepage image: In addition to boosting revenue, shopping from a smaller pool of brands helped Nikki Klugh hone a specific look—which, in turn, attracts clients who are an aesthetic match. | Jim Brady Architectural Photography

This article originally appeared in Summer 2022 issue of Business of Home. Subscribe or become a BOH Insider for more.
August 10, 2022 — Sharon Laxon