A client who recently hired me for their extensive home remodeling project said to me, “one of the reasons we hired you is so we can get discounts”. It’s a little unsettling for me that my clients assume that I’m going to pass along my pricing, but this happens often and nearly every client that I’ve ever worked with, believes that interior designers receive deep discounts on furnishings, finish materials, and labor. There is a common belief that interior designers are purchasing goods at a very low price and then exorbitantly marking up the merchandise to earn huge profit margins.
Let’s set this straight right now. This notion is FALSE.
We are technically retailers, but retail businesses vary depending on format and business model. Independent designers are on a completely different pricing tier compared to a larger retailer.
A small interior design business, like mine, which is not purchasing large quantities does not receive the same pricing as a larger retailer. The latter is more than likely purchasing “multiples” or perhaps even “container loads” which is kept in inventory and/or distributed to other locations. When retailers buy in large volume, they receive “stocking dealer” pricing. Independent designers who are purchasing for their specific clients receive “designer net” pricing.
Because interior designers create custom interiors for a specific aesthetic and their client’s unique style, we aren’t necessarily sourcing from the same suppliers for each and every job. We have sources for traditional, transitional, and modern looks. I use several different sources any given project, so my weaker purchasing power is spread across these sources to achieve a one of a kind look. Which is probably the reason why you hired me in the first place; to deliver a look that is as individual as you are. I’m not “Rooms To Go”!
Diversifying our sources is actually one of the biggest challenges of being an interior designer. Some furniture manufacturers don’t really want to be bothered with small interior design firms and their limited purchases. Many suppliers require large opening orders to establish an account; as much as $10,000 to “get open”. Some also require the business to have a showroom. I don’t bother to go see these manufacturers at High Point Furniture Market; the largest furnishings industry trade show in the world. And honestly, if they are that big of a supplier, they cater to a more “pedestrian” look.
How much do I “markup” merchandise? Well, it depends. I rarely sell at retail or MSRP. If you are a difficult client, I sell at retail. It’s called a PITA fee. Just kidding (or am I?). The only time I sell at retail is when the supplier simply doesn’t offer enough discount to cover my overhead expenses.
Typically, when I purchase from a supplier, my designer pricing is 30-50% off the MSRP, and I apply the same markup. If you insist on visiting retail furniture stores to shop, my discount is usually a measly 10%. I will split this discount with my client. So, if the lamp is $100.00, I purchase it at $90.00, you pay $95.00 (now you can understand why I will discourage you from going to a retailer). You can go buy a lottery ticket with that $5 you saved.
If I’m buying multiples, for a restaurant or hotel for instance, I apply less of a markup, but my overall profit is still about the same as if I was buying “onesie/twosies”. Keep in mind also that many manufacturers impose a MAP or “Minimum Advertised Price”. Going below the MAP can result in having your account privileges taken away. After spending time comparing prices, I can usually meet or beat the discounted online retailer prices. However, for me to be competitive in a saturated market effects my bottom line greatly. After overhead expenses are paid, time spent processing orders, covering accounting costs, and other operational expenses, I’m really only gleaning about a 10-15% “profit” or just breaking even.
The business model I use is very open. Before we start a project together, I will issue a Professional Services Proposal which outlines my operating procedures, and details my markup for interior furnishings. This is based on my designer net, wholesale cost + markup. Sales tax and freight also apply. The amount of money I am making off the sale of goods will be stated in my Purchasing Proposal. Not all designers operate this way, but I do...mainly to take away the misconception that I am price gouging so that we can begin our business relationship with transparency.
The claim of “big designer discounts/big designer markup” is simply a bit skewed. We essentially operate as “concierge” retailers and our pricing is established by our suppliers and our buying power. But the designer pricing allows us to operate as a for-profit-business. We absolutely appreciate your business, but our pricing is designed for us to earn a living and not exclusively to sell to you for less (even though I can extend to you a bit of savings). We are in business to support ourselves and our families; it’s not a hobby. We are highly-trained professionals with education, experience, and certification from an examining body such as CIDQ (Council for Interior Design Qualification).
Do not enter into an agreement with your interior designer assuming that you are going to be receiving their discounts, and be sure you completely understand your designer’s operating methodology. Conversely, you must be clear about your overall project budget and, if necessary, ask for ways to reduce overall costs for your project.