Interior Design Fees and Markup: How to Price Your Work

Most interior designers earn from two sources: a design fee for their time and expertise, and procurement income from the furniture and finishes they source, either as a markup on trade price or as a separate procurement fee. There is no official fee scale in the UK, so the right figures are the ones that cover your costs and your time at a profit. Choose a structure that suits the project, calculate it from your own numbers, write it into your letter of appointment and track the margin as the selection changes.

The main fee structures compared

Work out your hourly rate from your real costs

Even if you quote fixed fees, you need an hourly rate underneath to know whether a fee is profitable. The calculation below is an example only; replace every figure with your own.

1. Target pay: what you want to earn before tax, e.g. £45,000.
2. Annual overheads: software, insurance, studio, accountant, samples, marketing, travel, e.g. £15,000.
3. Total to recover: £45,000 + £15,000 = £60,000.
4. Working hours: 46 weeks × 37.5 hours = 1,725 hours.
5. Billable share: admin, sales and sourcing that you cannot bill take time; at 60% billable that is about 1,035 hours.
6. Break-even rate: £60,000 ÷ 1,035 ≈ £58 an hour.
7. Add profit: with a 15% margin for reinvestment and quiet months, ≈ £67 an hour.

The billable share is where most designers fool themselves. Track your time for a month, including the hours spent copying product details and chasing deliveries, before you settle on a figure.

Turning hours into a fixed fee

For a fixed fee, estimate hours stage by stage (survey and brief, concept, sourcing, design development, presentation, procurement, installation), multiply by your rate and add a contingency for the unexpected. Then make the assumptions visible in the proposal: number of rooms, number of concept options, revision rounds included, number of site visits. Anything outside that list is charged at your hourly rate, and the client knows it from the start.

Stage payments and client funds

Invoice the design fee in stages rather than at the end, so your cash flow follows your work. One possible split, to adapt: a first instalment on signing the appointment, a second on approval of the concept, and the balance when the final scheme is presented. Link each instalment to a deliverable the client can see, not just to a date.

For procurement, avoid funding orders yourself. Ask the client to pay for furniture, or at least the supplier deposits, before you place the order, and state this in your terms. A studio that advances thousands of pounds of stock on behalf of clients is acting as a bank, without the interest.

Markup on furniture: trade discount, markup and margin

Many suppliers offer the trade a discount off retail price. What you do with that discount is the core of your procurement model. First, get the vocabulary straight, because markup and margin are not the same number:

• Markup is calculated on cost: (selling price − cost) ÷ cost.
• Margin is calculated on selling price: (selling price − cost) ÷ selling price.
• A 25% markup gives a 20% margin. Confusing the two is the classic way to earn less than you think.

Example for illustration: a lamp retails at £1,000 excl. VAT and your trade discount is 20%, so your cost is £800.

Procurement income is not free money. It pays for sourcing, quotes, orders, deposits, chasing, receiving, inspecting, returns and the risk of a damaged item. If you buy as principal, that risk is yours; if the client buys directly and you act on their behalf, it is theirs, and your fee should reflect the difference. Take advice on how this is set up in your terms.

VAT

If you are VAT-registered, you charge VAT on your fees and on goods you resell; private clients will generally think in prices including VAT, so show both clearly. Registration becomes compulsory above a turnover threshold set by HMRC. Check the current threshold and your situation with your accountant.

Transparency: what to tell the client

Clients increasingly know that trade discounts exist. Hidden margins discovered late damage trust far more than a markup explained at the start. Your letter of appointment should state:

• How the design fee is calculated and when it is invoiced.
• Whether you apply a markup, keep any trade discount or charge a procurement fee, and at what rate.
• Whether you receive commission from any supplier.
• How delivery, storage and installation costs are handled.
• Who contracts with the supplier, deposit terms and what happens with returns or defects.

Disclosing the model does not mean showing every trade price on every document. You can present client prices in the client presentation and keep trade prices internal, as long as the basis is agreed.

A worked example: hybrid fee on a two-room project

Illustrative figures for a living room and main bedroom, using the £67 hourly rate calculated above:

If the project takes 95 hours including procurement, income per hour is £7,200 ÷ 95 ≈ £76, above the £67 target. If revisions push it to 120 hours, it falls to £60, below target. The lesson is not the exact figures but the habit: compare actual hours with the fee at the end of each project and adjust your next quote.

Track the margin as the selection changes

Margins rarely go wrong at the quote. They go wrong when the client swaps a sofa, a supplier changes delivery charges or an item is replaced by a cheaper alternative and nobody recalculates. Keeping trade and client prices in your FF&E schedule is the minimum.

In Phasen, you enter each supplier's discount and delivery terms once; every product then calculates its cost and margin, deliveries are grouped per supplier, and the project's overall margin shows live against the client's target budget in costing and budget. Client documents show only what you choose, and on the Studio plan margins can be hidden from the team. When items are ordered, order tracking keeps status and lead times on the same product. Independent decorators can see how it fits their workflow on the page for decorators, and plans are on the pricing page.