Before we jump into talking about money, first a quick reminder that there’s only one more week left to take advantage of the 30% off sale of “Designing the Design Process: The Foundation of an Exceptional Client Experience!“
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Pay What You Can for That Ham Sandwich
Now, onto talking about money. So right now you’re probably thinking about how to get things rolling again, whether with projects that were put on hold, or with projects that are newly starting. And although it may seem like a funny time to talk about money, it’s not. As well, new projects means talking about money, budgets, and the like, all of which are very uncomfortable for most people. And now is not the time for uncomfortable. Now is definitely the time for comfortable.
So let’s start with a story. Here in St. Louis, in the “fancy” part of the city, there was a Panera. But not any old Panera as they’re now literally everywhere, but a unique, pay what you can Panera. The concept was, here’s the food, here’s the “suggested donation price” and then you decide.
Now the original intent was to rely on people to pay more than was stated if they could, and to pay less than stated if they couldn’t. And they would even each other out. However what it actually felt like, was a game. And the only way to win was to actually pay more, but you didn’t know how much more. You didn’t want to seem cheap and greedy, but you also didn’t want to way overpay. It was a weird experience.
And so, people didn’t go. It closed because the concept made people uncomfortable. It put them in a weird position to decide how much they can pay. It made them sort through and deal with all sorts of self-reflection like how much do I care for humanity, how much money do I really need, am I truly willing to give, is this actually enough, maybe I’m greedier than I thought? All for a ham sandwich. It was just too much. And so it closed. All of these Panera pay what you can models closed. But you know what didn’t close? The Paneras where people were told exactly what they needed to pay for a ham sandwich, and then people decided if they were willing to pay that or not.
Clients Don’t Know How Much Design Costs
Now how does this random ham sandwich story relate to interior design? Well, let me tell you. So when you’re talking with a client during the screening call, during the initial consultation, etc. you’re naturally going to wonder, and at some point ask them, what their budget is. And that’s ok. That is necessary, but there is also an inherent issue in that question – people don’t know how much it’s going to cost, to get them what they want.
So you’ve probably heard it said before that negotiating properly means never being the first to say the number. I get that, in some situations. But the thing is, you’re not in the business of negotiating. You’re in the business of trying to sell them a service. And the whole negotiating when you have no baseline to start from, is a terrible game to find yourself in.
Why? Well, there’s really two big problems. The first is that the client has absolutely no idea how much what they want, costs. They know what they want, and they may have a vague idea of how much they can spend, but by no means is it an exact number. It can actually go up and down by thousands (and sometimes by tens of thousands), depending on the information they’re given, and if they like what they see.
So when you ask them what their budget is, they really don’t know what to say. They also don’t have a clue what that number should include. Does that budget include paying for you, the furniture, the trades labor, the reno costs, everything? Or does that just include paying you? Or just the furniture? They really have no idea.
The result? They guess. They give you a number that’s kind of what they can spend. And the result of that? Well, you both end up with less. You end up with a smaller project and lower profits, and they end up with less of a design. Why? Because as you well know, people tend to “low ball” numbers in order to not be taken advantage of. So they tell you a number that’s on the low end of what they can spend and then they think to themselves, “If it makes sense for me to spend more, I will.” But often times, that opportunity never really presents itself.
Now what’s the second issue? Well, when you ask the client what their budget is, the client is put in the position to essentially guess your worth, which is not a fun place to be. How? Well, the client has no idea how much it costs to hire you and work with you. So when you ask them, what’s your budget? To them it can feel like a game of, “Guess my worth as a human” where the only winner is, well, no one. And the answer is, well, who knows. It’s just an awkward guessing game where everyone ends up losing. The client just ends up getting stuck between a rock and a hard place – the rock being the low ball number so that they’re not being taken advantage of, and the hard place being a high number so that they don’t offend you, and with the consequence ultimately being, that they just fall through the middle.
So, what’s the solution? Be clear and upfront about your pricing. Give the clients the information they need to know, to make their decisions. Give the clients enough of an education about your pricing and the way you work, before you start talking to them about their budget. That way they can give you a more realistic number, when it comes time to ask them. As them telling you a random budget number of $5k, and you thinking that’s their absolute budget, but it really isn’t, they just thought that was a good number to start with, gives you very little information to work with.
Clients Don’t Want to Play an Everyone Loses Guessing Game
Clients want to know how much things cost. They don’t want to be in a guessing game where everyone loses. Most people don’t want to offend someone else with their low number, but they also don’t want to be taken advantage of with their high number. And when a client tells you their budget, you don’t know if they’re telling you their low number, or their high number. You just know you have a number.
When you’re thinking about buying something, but you don’t know how much it costs, your first question is, naturally, how much is it? Then you decide if you can pay. That’s the way this whole buying and selling thing works in most situations. The buyer essentially says to the seller, “you tell me how much it costs, and I’ll tell you if I can afford it.” A pretty clear and straight forward system. One that empowers both the buyer, and the seller. And one that should be used, as often as possible.
Now I know you’re probably thinking to yourself, so if I don’t ask clients what their budget is, how am I going to weed out the projects that I don’t want? Well, first of all, like I said above, you will be asking for their budget still, but not as a stand alone question. And second, charge for your initial consultation. And charge in a way that’s at a consistent level with how you charge from there on out. You don’t want to be charging $200 for a 2 hour initial consultation, but then after that, be charging $250 an hour. That just doesn’t make sense, and also won’t capture the kind of client that you want.
And then, you tell them your project ranges for the service level that they’re a match for, before you ask them for their budget. If your full service design projects typically cost between $20-40k per room, depending on whether or not reno is involved or not, then tell them that.
So the steps would be:
- You’re on the screening call and have already asked them your opening questions, chatted a bit, and now you’re onto asking what they’d like to do with their project and how they’d like you to help
- You tell them the typical ranges for your projects, depending on the type of room (which will obviously take some initial work on your part), what it includes, and what the difference is in the high and low end
- Tell them a simplified version of your design process and that the next step would be the initial consultation, which would be this _ price
- Then ask them if they’d like to set it up. If they say yes, then you know that they’re able to pay the initial consultation, and are capable of paying within the range you gave them.
Don’t Overcomplicate Money
Simple as that. So often we over complicate the money talk, because it makes us UBER uncomfortable. I get it. To be honest, it makes me uncomfortable too. Talking about money is the worst. But what’s far worse, is playing a game of money cat and mouse. Running round, and round, and round, and then never really having a clear end. It’s just this, uhh, ok, this number, then the other person agrees or disagrees, and then everyone tries to forget that it ever happened so they can move forward.
But the thing is, you’re the business owner, and therefore, you set the price. The client is looking for you to do so. They want you to tell them how much it costs, so they can then decide if they can pay that number or not. And it doesn’t have to be an exact number, you don’t want it to be of course as there are big ranges in interior design. But if you want to niche down and get really focused on serving a certain segment of society, you need to start really knowing what your ranges are, per room type. And be able to state that clearly (and matter of factly) when talking with your clients.
So just as you set the design process, set the price. Set the tone for whose in charge. Set the tone for what you charge. You. You set everything, and then the client gets to decide if they’d like to move forward or not. That’s the way the buying and selling situation works the best. The seller puts forth their number, and then relies on the customer to take it or leave it.
Take It or Leave It
And that’s what you want. You want to have people take it or leave it. Having a hemmy hawwy conversation that’s confusing, awkward, and uncomfortable where you’re saying, how much are you willing to pay, I don’t know how much do you charge, I don’t know how much will this cost me, is not an efficient place to be for anyone. It’s also not a powerful place to be in, for either party.
So get clear and comfortable with how much your projects cost, and get clear and comfortable saying how much your projects cost. Don’t rely on your clients to tell you how much they can pay you. They have no idea, and they neither want to pay too much, or too little. So the next time you’re going through those initial money conversations with your clients, you have to tell them essentially, in order to work with me, expect to pay in this range. And they get to simply say ok, or bye.
Because you’re not Bob Barker, and they’re not there to guess how much a bottle of detergent costs. Nope, you’re a business owner and a designer, and you get to say what it costs to work with you. And the client gets to say if they can afford it or not.
Let me know in the comments below, how comfortable are you talking with clients about money and budgets?
And if you’re ready to start delivering the kind of client experience that can increase those prices, you can find out more about that here (and save more than $100)!