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Thursday, March 8, 2012

Design Retainers - How Much Is My Time Worth?

Today's post was inspired by a recent survey taken by the NKBA that asked which members charged up font design fees.

I understand an up-front design fee to mean that before pencil hits the vellum, before a single mouse is clicked on Sketchup, the designer requires payment.  In my firm, I charge a design retainer which I believe is different from an up-front design fee.  For the initial design and estimate (based on measurements provided by the client) there is no charge, but to have me visit the job site, measure, price out a remodel, select countertops, hardware, accessories ... for that I charge.  And in my case, that charge (the design retainer) comes off the purchase price of the kitchen.

Regardless of what type of fee is being charged, I often experience resistance to the idea when it's presented to some customers, especially those who simply call me up and want me to come to their homes site unseen.  I'm not about to debate who's right in this situation, because essentially there's no answer.  Different services carry different values to different people.  But I will explain my reasoning behind charging the retainer.

I offer a service, and that service takes time and knowledge to perform.  Performing that service is how I earn my living.  It's no different than any other service, be it medical, legal, architectural, etc.  And once that service is performed, there's no way to take it back if payment isn't rendered.  So I completely understand the desire to receive payment up front.

What's different in my situation is that new clients may be unable to decide if there is a fit with me (financially, aesthetically, etc.) unless I do some work for them.  I'd love for my reputation to be such that I never needed to "prove" myself  ... and with the majority of my referrals that's exactly the case (and I LOVE those people!!) ... but if I have to spend a few hours putting together some ideas to get the ball rolling, so be it.

Which brings me back to the NKBA survey.  Their findings showed only 30% of the designers who responded charge an up-front design fee.  30% seems really low to me.  What I'd love to know is what percentage of designers charge no fee at all; places like the big-box home improvement stores and the Scandinavian furniture place(s).  These outfits are doing a huge disservice to the kitchen design industry because they're giving the consumers a false sense of value.  Of course, it's their right to do it (loss leaders, etc.) but it cheapens the amount of work that really goes into a quality remodel.

But as they say, you really do get what you pay for.

10 comments:

  1. Arne, I'm not a designer but what I do is charge an upfront fee for my time and knowledge. If you decide to use my services than that fee is deducted from the project cost. If you go with someone else then at least I have a bit of compensation for my time and knowledge. Most people who are serious and not just picking your brain are fine with this method.

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  2.   I Work for a custom cabinet company in the Salt Lake City area. I don't charge any type of retainer or design fee and I usually prefer to meet on-site before I draw anything. This works pretty well because most of these projects aren't to complicated and I don't like to waste time on client produced sketches which are usually a very bad place to start. The exception to meeting on-site is new construction (rare these days) where I have a set of plans to design from... That being said, it's the big projects where I take too much risk. I  spend days or weeks designing and making it look fantastic, only to lose the project.
      I'd like to have a retainer or design fee for big jobs but I'm not sure what would be appropriate. I'm curious as to what your terms are and how you get people to accept it.

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  3. Retainers have always been interesting and because I dip my feet into both the commercial and residential markets, it makes things that much more interesting.

    Residentially speaking, I'm happy to give of an hour of my time up front as a courtesy - a way for us to both feel each other out and determine whether or not we're going to be a good fit.  Yes, I too am feeling out the client, it isn't just the client who is doing the interview.  It is a chance for me to determine whether the client will be a complete drain on my own resources and dis-allow me from working with my other clients. That sounds so cruel doesn't it? 

    Anyway, typically this first hour is spent listening to the clients needs, wants, budgets... *insert here* and of course asking the personal questions.  From that point, once I go back to my office, a contract is rendered and a retainer is sought.

    I tend to base retainers on the project though typically the percentage is 30 to 40% of the total of my services.  I don't retain on product until we're actually placing orders at which point a retainer could be as little as 50% (if that is the vendor's wishes) to a full 100% of the order for custom, specialty and art. 

    Commercially speaking, a retainer of 40% of the proposal total is required every time.  There are no ifs ands or buts.  The only exception are clients of which I have set up on-call agreements or alternative billing structures.  Even this typically only happens with clients that I have a stellar relationship or with government/public works projects.

    Either way, retainers are a must in this business. I once read somewhere that designers should be charging their time no differently than lawyers even going so far as to charge for those 45 minute phone calls and half hour emails simply because it's lost time. If we want to be taken seriously as a profession, we have to play ball like the big dogs.

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  4. If you are designing high end kitchens I don't think your clients are going to Home Depot and Ikea.  If you are competing directly with big box stores then you have chosen to compete on price, and I hope that you can guarantee your service will save the client money overall. 

    Software has made it easy to design your own kitchen (and do your own taxes, and record your own album, ...).  What value are you adding as a designer that results in a "quality remodel"?   What exactly do customers "get" when they pay for it?  Can you communicate these things, itemize them? Or is it just a nice axiom to scare people away from free/cheaper alternatives?  I know what I'm getting when I buy Mercedes instead of Kia.

    If you believe that 10,000 hours of practice allows mastery of a task as remarked by Gladwell then the greatest kitchen designer in the world might just work at Lowes.

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  5. I do high-end remodels, so I'm not competing with big box.  However, I still stand by my assertion.  Free design is a loss-leader to get people into the store.  Nothing wrong with that, but to suggest the same level of expertise exists in the average big-box kitchen designer as in a Certified Kitchen Designer is untrue.  I used to manage the kitchen department in two different Home Depots so I can make that claim with confidence.

    There's more to designing a kitchen than using software to place boxes on walls.  To use your car analogy, it's like saying that driving a Mercedes from Vancouver to Seattle is going to be the same experience as making the same trip in the Kia.  Both will get you there, but some people find the experience in the Mercedes worth the difference in price.  Incidentally, 10,000 hours equals less than 5 years of experience.  It takes 7 years minimum to be allowed to just write the Certified Kitchen Designer exam.

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  6.  Justin - I think a big part comes in your presentation to the potential client.  If you, yourself, are scared of the retainer on the premise that it may be appropriate, you'll have a very difficult time selling it to a client (remember, clients can smell fear).  But if you're confident and sell it as part of the process it makes things a great deal easier.

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  7. Different industries handle this very differently. Take the movie and music realms...their best work is given away for free! Radio plays only an artists top songs, and movie trailers often show all the best parts.

    A graphic designer I know also subscribes to this. He donates all the graphic design for a large charity event each year. It is at least three weeks of work for him. Yes, there is the charity component to this, but he treats it as his best client.

    However, he still believes that you can't sell yourself short, and you should not give your work or time away. A retainer is appropriate, and the clients you want to do business with will understand and pay. Those that question it are not your clients.

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  8. Details and DesignMarch 14, 2012 at 3:15 AM

    This is always a good discussion. I am set up differently as we are a full service design firm. I do not sell cabinetry but work with a custom cabinetmaker who crafts my designs. Yes I make a profit on the product but is far lower than if I were to have a manufactured/custom line in house. We also make a profit on other items we specify for the most part. Anything from faucets to furniture. We struggle with fees and how to charge for our myriad of services often.
    However it is more with clients who are purchasing large amount of furnishings rather than kit or bath design.
    We charge for our EXPERTISE not our time. But in order to have a unit of measure, we use the clock to determine how much. I have never had a question on this from a client. More now, on the furnishings end but not the kit and bath end. We do not work on jobs where we are not controlling the outcome tho. Meaning if not using my guy to craft my design then not using me or my staff. I dont do " design only" as we all know that is not profitable unless you work from home perhaps and you lose creative control and god knows what the guy next door will do with your design.

    I am sure I lose biz over this once in awhile but so be it. I will do a free 30 min "meet and greet" at my shop for people who dont know me or are not a referral. I think the proof is in the pudding. If they like my work, I get hired. It transcends most objections to fees.

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  9. Hi Justin! I do freelance work with a cabinet and flooring company in town and find myself in a similar situation of not being able to obtain a retainer for preliminary designs.  Unfortunately that is the norm for most cabinet shops in my area and most of the current clientele is very budget conscious.  I try to do a quick conceptual and budget, then go for a retainer to "fine tune" the project. 

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