When you are just starting your interior design business it can feel really weird to set your design fees. How much should you charge? Will people really pay you what your worth? What are you worth, anyway?

Setting the right price for your interior design services is ESSENTIAL for succeeding in business. The right price not only pays your bills and leaves you money to travel, it also establishes your credibility amongst your colleagues and competitors. Set your price too low – no one takes you seriously. Set your price too high – you may not have the confidence to pull off that rate, because no one else will believe in the value if you don’t believe in the value.

So, what should you charge? Don’t hate me for saying this, but… it depends.

You can come at this question from two sides, and here we are going to look at the simple math of how much you should charge based on what your lifestyle demands. Are you more “Goodwill and Happy Hours at your local pub”, or “Gucci and 3-star Michelin dinners”? Either one is okay, but ideally your income and your lifestyle will match up.

Let’s do some simple math based on the answers to these three questions:

1. What does it cost you to live every month, including a basic amount of safety and play money? Don’t know? Sounds like it’s time to track your monthly expenses. Remember, smart and self-sustaining is SEXY!

2. How much does your *business* cost every month? Most businesses aren’t free, but you do want it to pay for itself!

3. How many hours a week can you comfortably commit to work each week, and not damage your health or your relationships? Being a design-preneur is not for the faint of heart. Many entrepreneurs regularly work 18 hour days – eek!

4. How many hours do you think it will take you to run your company (scheduling, marketing, paying bills and taxes, researching things, cleaning toilets,… you know, all the things that aren’t designing for the client)? We’ll call this BIZ time, separate from DESIGN time.

Ready? Let’s math!

Say you need $8000 a month to cover both personal and business expenses.
Say you want to work no more than 40 hours a week, or 160 hours a month.
And say you think you will need 2 hours of BIZ time for every 6 hours of DESIGN time, which will mean 40 BIZ hours a month, and 120 DESIGN hours a month.

(Don’t worry at this point about what is realistic – let’s just do some math.)

Okay, so those 120 DESIGN hours need to make you $8000. If we live in a pretend world where we get to keep every dollar we earn, then $8000/120 hours means we could charge $67 an hour and make our goals a reality. Not too shabby!

But wait! Uncle Sam will be taking some of that money away. Let’s say he takes 30%, then your rates need to be about 30% higher to get you your $8000/month business expenses and take-home wages. So, $96 an hour. No problem.

That’s it. Really. You now have a basic framework for a number that will fund your lifestyle. Yea!

So what’s next? Well, now you have to figure out what your colleagues and competitors are charging, and what your market (and clients) will pay. You also have to figure out how you are actually going to charge. Just because you have figured out an hourly rate doesn’t mean that you have to bill your clients hourly. You might find that a flat fee or other structure is a better fit for you and your clients so they don’t have surprise bills and you can benefit from becoming more experienced and more efficient over time. Check out my post on whether to charge hourly or flat fee here.

Oh yah, and then you are going to have to Track. Your. Time. That is the only way to know if your guess that you’ll need 2 BIZ hours for every 6 DESIGN hours is even remotely accurate! Running a company takes a TON of time, and you may find that you need 3 hours of BIZ time every day, meaning you only get 5 hours of DESIGN time if you are committed to only working 40 hours a week. Okay, so that means you have 25 hours a week of DESIGN time, or 100 hours a month. No problem, you’ll want to charge $80 an hour (oh wait, plus taxes and stuff, so maybe $114 an hour). Yah. Track your time. I mean it. Here’s a big ol’ blog post I did talking about that.

Good job math-ing my fellow design-preneurs. I knew you could do it! Just figure out the number of hours you want to work, how many will be available for DESIGN work, and how much you want to make every month, and you can start to figure out if your business model will reward you with a Seriously Successful business! 

May your business always make you Seriously Happy!