When you offer flat rate packages, there are quick, profitable projects and then there are projects that drain your time until your hourly rate is whittled away.
While you can’t keep every project to the same time limit, you can protect yourself, so that every project is either profitable…or really, really profitable.
There are a few key elements that you’re going to want to keep in mind when determining the appropriate price for your e-design packages.
You need to factor in your desired take home pay, your business expenses, the number of hours you’re able to devote to client packages, and so much more.
In this guide, we walk you through a step-by-step process for calculating your package rates accurately (goodbye guesswork!).
Plus, we offer actionable tips to help you start earning more money in your design business right away.
What’s in this guide:
- Misconceptions about e-design pricing
- How to determine the right prices for your e-design packages
- Tips for boosting your income as an e-designer
Misconceptions about e-design pricing
Before we dive into the step-by-step process for determining your prices, we need to address a couple of elephants in the room.
We don’t want you settling for less because you think you have to offer ridiculously low prices.
E-designers don’t have to compete on price with big companies
If you’ve ever wondered, “How do I compete with big e-design companies?” The answer is…you don’t!
You do NOT have to compete with these companies to have a successful business.
What you do need to do is ensure that you are compensated for every hour that you work. Some of these companies are offering design packages at $59 or $79 for a design. Think about it, you would have to complete all of the deliverables in that package in under an hour if you wanted to walk away with even a tiny profit.
Instead of trying to beat them at their own game, you want to work with clients that understand that your expertise is worth more and who want a better, more custom service.
Attract your ideal clients, and just say NO to people who try to talk you into lowering your prices.
E-design doesn’t equal cheap design
One myth we always want to dispel is that e-design equals cheap design. It doesn’t.
All it means is that you serve a tech-savvy crowd who likes to work with designers online and are happy taking on the shopping themselves.
If you’re putting all of the same effort into planning out their space and choosing the perfect paint colors, furniture, and decor that you would with an in-person client, then there’s no reason you should charge any less.
How to determine the right prices for your e-design packages
Ready to price your packages?
Follow these steps.
Step 1. Ask yourself the right questions
The first step is to be honest with yourself about where you’re starting out and what you need to achieve this year.
DesignFiles member and fellow e-designer Chaney Widmer of Mix & Match Design suggests asking yourself these important questions:
- How much experience do you have?
- What are you offering in your design packages and how long does it take you to complete the design and deliverables?
- How much do you need to earn this year to meet your revenue goals? (Be sure to factor all expenses in!)
- Is your revenue driven only by how much you charge for your time, or do you have additional revenue coming from affiliate sales or commissions?
Step 2. Calculate your minimum hourly rate
So how do you determine exactly what you are worth?
Follow these steps:
- Set a goal for your take home, pre-tax income. (Ex: $100,000)
- Add your estimated annual expenses to your desired pre-tax income to calculate your total top-line revenue goal. (Ex: $15,000 in expenses + $100,000 pre-tax income = $115,000 revenue goal)
- Divide your yearly income goal by 12 to determine your monthly income. (Ex: $115,000 ÷ 12 = $9,583)
- Divide your monthly income by 4 to determine your weekly income. (Ex: $9,583 ÷ 4 = $2,395)
- To determine your hourly rate, divide your necessary weekly income by the number of hours you have available to work on client projects specifically. (Ex: $2,395 ÷ 25 hours = $96)
When calculating the number of hours you can work on client projects, make sure to leave enough time for administrative work and marketing (assuming you’re not outsourcing any tasks). Even if you have time to put in an 8-hour day, you can probably only work 5 hours on client projects.
And if you are outsourcing, make sure to add those bills to your expenses and save enough time for managing your assistants (meaning you’ll still need time in the day to devote to your business, and you probably can’t put in 40 hours in client work).
In the above example calculations, we came to $96 as the hourly rate you need to be charging to hit your goals. That is a fine starting rate, but if you have more experience, you may want to charge an even $100 or even $125 per hour. This will allow you to earn more and reach your income goals faster.
Note: You don’t have to share this rate with clients unless you want to.
You can bake it into your package prices.
In the following steps, we’ll figure out your deliverables and package rates.
Step 3. Determine the deliverables for each package
What are you offering in your design packages?
When you’re determining how to set up your design packages, you first need to consider all the design deliverables that you want to include within those packages and how long it’s going to take you to complete each deliverable.
You might include a set number of concept boards and revision rounds, a shopping list, and a how-to guide to help the client handle installation such as hanging artwork or installing light fixtures themselves.
Make sure to go through this process for all of your design packages.
Most e-designers offer 2 – 4 packages. You want to have enough so that you help the client choose the best fit for their needs, but not so many that you make the decision confusing or overwhelming.
Step 4. Estimate the time it takes you to complete each package
The next step is to estimate how much time it takes you to complete each package. Make sure to estimate plenty of time. (On your next few projects, track how long it takes you to complete each task, so you can improve the accuracy of this estimate.)
And don’t forget to estimate time for revisions.
If you’re thinking that you can’t accurately estimate the amount of time it takes to complete revisions…that could be a sign that you don’t have strong enough boundaries with clients.
You should have a set number of revisions that are included with each e-design package (typically one or two). Then, if a client still needs further revisions, you would then charge your hourly rate for the extra time, making sure to include that in your contract.
Knowing this strategy, it should be a little easier to estimate the entire package time-to-complete including revisions, since you’ll be able to charge more in the rare event that someone still needs revisions beyond your typical allowance.
Step 5. Calculate your package rates
The next step is to take your estimate and multiply it by your hourly rate.
For example, let’s say that you estimate that it takes you 8 hours to complete your most basic package.
8 x $96 is $768. We can round that up to an even $775 for the cost of your lowest package.
Step 6. Track real project time and update your prices accordingly
It’s okay to start with estimates, but you shouldn’t rely on them for too long.
It’s important to actually track your hours, otherwise, you’re just operating on assumptions.
Inside of DesignFiles, we include a time tracker to make it easy to track every minute you spend on each and every project.
You can then average out the time it takes you to complete a specific project.
Let’s say you’re calculating your average for a One Room package, and this is how long it took you to complete each of your last 5 projects:
- 8 hours
- 9 hours
- 10 hours
- 8 hours
- 10 hours
Your average for these 5 projects will work out to be 9 hours. If you were estimating 8 hours previously, then you’ve been undercharging.
Even if that’s your average, you should still aim for higher, so that you’re profitable on the more time-consuming projects. The goal should be for your final number to be at least 20% higher than what the project actually takes you.
To calculate the 20% higher value, just multiply your estimated number by 1.2. For example, if the project takes you 9 hours on average, then your estimated time should be 10.8 hours (9 x 1.2).
Multiply that number (10.8) by your desired hourly rate, $96. The total is $1036.80, meaning your One Room offer should cost at least $1050.
With better math, we just raised your base package from $775 to $1050!
Step 7. Review your pricing annually
Reconsider your pricing every year. You might want to do this in the fall and then update your prices at the end of the year.
You don’t have to change your prices every year, but you should at least calculate them to make sure…
- You’re on track to hit your new income goals
- Every aspect of the design process is covered
- You aren’t losing money on unprofitable packages
You may need to raise your prices because you’re including more deliverables, because projects are taking longer than you expected, or because you have bigger financial goals.
5 tips for boosting your income as an e-designer
Of course, calculating your e-design prices is just the foundation of creating a profitable business.
Here are 5 ways to boost your income:
1. Include affiliate links in client projects and marketing
More and more designers (especially e-designers) are turning to affiliate links to help grow their income.
Most e-designers don’t manage the ordering and installation process for their clients. Their clients tend to prefer doing it themselves and want to shop from retailer sites that provide fast shipping. So, most e-designers include a shopping list along with their final design.
Clients can then purchase the products directly from this list.
You can include affiliate links in your shopping lists so that you get a commission from those sales.
With DesignFiles, it’s easy to add affiliate links for every product you recommend.
You can also add these links to your blogs and social media posts to earn commissions from your followers!
Check out our complete guide to affiliate commissions for interior designers for all the details.
TIP:If you have an active resale certificate or are able to show some other form of proof of your trade standing SideDoor is a great option for designers who want to access high margin trade products for their eDesign projects but still allow the client to shop the items themselves.
Here’s how it works. You can sign up for an account on SideDoor for free where you can source products from 200+ trade vendors and access designer discount rates. You can add your mark-up to the items and create a shoppable collection that you direct your client to. Your client buys the products through SideDoor who handles the ordering and delivery of the items directly to your client at no charge to you and you average 30% per order instead of the 2%-7% commission you would get with standard affiliate programs. The end result… more profit without the headache of managing the products.;)
2. Have a specialization or niche
Before becoming household names, every coveted interior designer started out the same way: Scrappy and fighting to land even the cheapest of clients. So how did they turn the tide and actually start selling their services in a meaningful way? They specialized.
By specializing you are saying to potential clients: “I am an expert in this area and this is why you can feel confident hiring me over another designer.”
By specializing you make it possible for clients to actually search for and find you because you have the specific skill set they’re looking for. And because YOU ARE THE EXPERT in the field, people are willing to pay more to access that expertise.
So how do you figure out what to specialize in?
This is easy. All you have to figure out is what you truly love to design. When someone says, I want a space that looks just like the Taj Mahal, do you swoon? What about a french farmhouse family room, or a bright contemporary kitchen? Whether it’s the style you’re most passionate about, or even the problem you’re most excited about solving—how to create storage in a minimalist interior, or how to make more earth-conscious design choices—whatever gets your heart pumping or your curiosity peaked is what you should specialize in.
3. Know who your ideal clients are—and aren’t
You need to know your clients at an intimate level, and that has to do with more than just your niche. For example, if you design nurseries, your ideal client is more than just a parent.
Consider the issues they’re facing. Do you love working with busy working moms? Or with moms who—no matter their employment status—are struggling to create the relaxing, functional nursery of their dreams all on their own?
When you dig deeper into your clients’ emotional motivations and the transformation they crave, you can create a more effective website (see Tip #4 below) that will draw in the right leads.
You also need to pay attention to what your ideal client does and doesn’t do.
Your ideal client does:
- Makes the decision to work with you easily
- Sends back the design questionnaire within 2 days
- Respects your time and boundaries
Your ideal client doesn’t:
- Doesn’t ask you to lower the price or offer a discount
- Doesn’t hound you every day asking when the design will be finished (even though you told them the estimated timeline)
As you work with more and more clients, you’ll come up with your own lists. Pay attention to prospective clients and if they show off any red flags, they’re probably not worth your time.
And if anyone tries to talk you down from your prices, just say no.
4. Create a website that calls in your ideal clients
By building a website that’s beautiful and usable, you prove to clients that you’re a legitimate entity who cares about their business appearance.
Think of your home page as your store front. You should keep it clean and well branded so people know what kind of business you are without working too hard. The site should be easy to navigate and each page and blog post should direct potential clients to do exactly what you want them to–sign up for a consultation, buy a design package, or contact you for more information
Make sure to have these elements working for you:
- Copy – Call in your ideal clients and share the transformation that your services will provide. Include details about your process so you show the great treatment they will receive.
- Design – The design of your site should appeal to your ideal clients while matching your interior design style. For example, if you specialize in calm, clean interiors, your website should have that overall effect.
- Social proof – Make sure to add testimonials or case studies
- Pricing – Either add your prices to your page, or include a starting rate. This ensures that you don’t get lead messages from people who can’t afford you. You might also allow clients to purchase directly from your website.
With DesignFiles, you can embed your packages directly into your website, so clients can purchase the package of their choice.
If you don’t want clients to be able to purchase directly from your website, you can qualify them first via a lead form or a short call and then send them the link to purchase the package later.
Here’s an example section from e-designer Chaney Widmer’s full room service page. She clarifies what’s included and what isn’t and offers a starting price point. This allows her to quote a custom price while keeping her inbox free from leads who can’t afford the baseline price.
5. Use software and processes that speed up your work
You can increase your (hidden) hourly rate, even when you’re not increasing your pricing.
How? By getting tools that make you more efficient.
For example, if you use DesignFiles, when you save your design board, the product list is automatically generated for you, saving you hours of needless work. You can then edit the product links in the list to include your affiliate links so you can earn on every sale.(see Tip #1).
Plus, you also have all of your design work, client questionnaires, and client communication in one place, making it so much easier to stay organized and work efficiently.
Want the best design tools in one place? Join us! Start your free trial of DesignFiles and take as long as you want to test our features with one project.