[00:00:00] Speaker A: Foreign.
[00:00:08] Speaker B: Welcome back to the Interior Collective. I'm your host, Anastasia Casey. And today we are diving into a topic that every single interior designer has to master if they want a profitable, sustainable business. And that is creating proposals, pricing projects and confidently selling the bid. Because here's the truth. You can be the most talented designer in the room, but if you cannot build an accurate quote, present it with clarity and hold your ground when pricing pushback comes up, your business will feel reactive instead of strategic. And this is not just about choosing hourly versus flat rate. This is about understanding your numbers, gathering real data from your past projects, accounting for your team's time, structuring a proposal that protects your profit and and then having the confidence to walk a client through that number without shrinking when they raise an eyebrow. So I invited someone back who I trust deeply on this topic. Lindsay Borchard, principal of Lindsey Brook Design and my co founder of Design Camp. Lindsay has been incredibly transparent about how her pricing has evolved, what she has learned through trial and error, and how she has built systems in her studio to create accurate, timely and profitable quotes.
Today we are getting very tactical. We are talking about how to calculate flat fees from behind the scenes, how to blend hourly and flat rate models, and how to turn around proposals efficiently.
Finally, how to handle negotiations without discounting yourself into resentment. If you have ever hesitated before hitting send on a proposal, if you have ever wondered whether your number was too high or too low, or if you have ever reduced your fee just to secure the project, consider this episode a mini mastermind from what you can expect at Design Camp this season is presented by Laloy, makers of rugs, pillows and wall art collections that are grounded in ethical production, innovative craft and meticulous design. Learn more about LOLOY by visiting their website loloirugs.com that's L O L O I rugs.com and follow Laloi Rugs on Instagram and TikTok.
Today's episode is sponsored by Design Assist, the staffing solution built for interior design firms starting around $12.50 an hour. It's professional production support with full time overhead schedule. Scale smarter with designassist.com forward/ideko that's design with a Z.
Hi Lindsay, welcome back to the show. The number one fan favorite most downloaded episodes ever of all time are always yours. No lie 100%.
I'm so excited to have you back because you have shifted things up and we talk about this all the time at Design Camp. Design campers always get like the latest greatest things you have learned have implemented the whys and hows of how you've changed it, but we haven't updated our podcast listeners in a while, so we wanted to dive into proposals and pricing philosophy once again.
[00:03:06] Speaker A: And we actually really haven't talked about proposals. Like, we haven't really deep dive into proposals. So I'm excited about this.
[00:03:13] Speaker B: Yeah, not on the proposal side, the concept of pricing, but not actually like, how it's presented.
[00:03:18] Speaker A: So.
[00:03:18] Speaker B: So, Linds, before we get tactical, I'd love to start super high level. What does a good proposal mean to you today versus when you first started your firm?
[00:03:29] Speaker A: I think, yeah, it's such a good question because I love going back and looking at, like, old stuff too, because I think in the very beginning, and I will probably talk a lot about this because it's come up in the last two years, but in the really beginning, they were long.
They were over explaining. It was almost like I was focusing more on selling my worth, you know, than I was about. And. And I was also focused on them, like, saying yes, because I wanted to land the job.
And now it's way more strategic. I'm pricing well. One, I've built like, a. A much better pricing model based on strategy.
But I'm really trying. And with the proposal now, I'm really trying to protect the business and our process and trying to attract more alignment with the clients rather than convincing them to say yes.
I think that my mindset has changed, and I want the proposal to reflect the business and our process and how we want to run that more than landing the, like, perfect project, if that makes sense. You know, I think that over the last several years, I've just come to a place and like, I. We'll get into this a little bit with team members and stuff, but I think I've just come to a place gratefully so that I could say I really want the clients that we have to be a certain caliber of client, and not necessarily the caliber of a project, but a caliber of the client.
And that is really what has driven the way that we present the proposal now rather than the actual project.
[00:05:26] Speaker B: Hmm. That's such an interesting differentiator. And I think that it's also super refreshing because I tell the story at Design Camp all the time about how I was at that retreat and they kept saying I had to, like, niche down, niche down, niche down. And I was like, no, I cannot say no to work. Like, we have to pay the bills. But reframing what that perfect project look like looks like it might not be the actual project. But the perfect client or the ideal client who's going to work on that project can actually be the outcome that you're really focused on.
So let's talk about how your pricing structure has evolved over the years. And I know that we have gone in loops and loops and loops, trying literally everything, because the ultimate goal is always to be making data based decisions.
And in order to gather that data, you have to try different things. So what has triggered those changes? What have you tried?
And then we can get into, you know, where we're at now.
[00:06:31] Speaker A: Well, if you listen to the other podcast, you'll know that I've tried pretty much everything.
And I think that when I first started, I started with what just felt like reasonable. I was like, really just guessing, like I had nothing to go off of. And I was just trying to land jobs. And I think that that is okay. And when I say okay, I mean I think it's okay to price in the very beginning to land jobs if that is your main goal. But the guessing, like you cannot guess, you really shouldn't guess, right? And that's like exactly what I was doing in the beginning. And then I have tried everything from straight hourly, straight flat rate.
And, and now we're, we, we price per phase in different ways. And I think then I, you know, when I was pricing hourly, um, it really, you say this set design camp, but it really caps your income and it punishes efficiency when you get really good at your job.
And there really is, if you are trying to be competitive in your area and you're just gonna cap yourself and it's not like you can just raise your rates and all of a sudden be a thousand dollars an hour because you're so good, right? And you don't want to punish yourself for being good at your job. So we started doing a hybrid and pricing for phases.
And before about a year or two ago now, we were pricing mostly in hourly and we've now switched over to flat rate for, for most of our phases.
And that really stemmed from changing our pricing strategy into a business strategy.
And the goal wasn't to charge more per se, even though proposals kind of ended up being that way. But the goal was to work better.
It was to support the life that I wanted and to support the business that I wanted and how I wanted the business to run.
And that like really again, just shifted my mindset into kind of pricing for the ideal client, not necessarily the ideal project.
I think most designers don't actually need a new pricing model fully. I think that they just really need a clear understanding of their process and the capacity which they can work. And then the pricing is really just the output of that. And that's what we really tried to understand with the way that we price projects now.
[00:09:15] Speaker B: Yeah, so you were talking, you just mentioned that you are flat rate for most of the phases. And we will go into your exact pricing model in a little bit. But what you mean by that, and I, or please correct me if I'm wrong, is that there might be flat rate, but sometimes that is a flat percentage, Sometimes that is a flat number based off of different things. Or flat rate is always like you're giving a flat number and that's a dollar amount, not necessarily like a percentage of a project or things like that.
[00:09:43] Speaker A: Oh, it's always a dollar amount. Yeah, I. We really don't do percentage.
Well, we do percentage for procurement, but we do not do a percentage for our flat rate. Our flat rates are always based off of data and an hourly cost associated with, you know, and many firms can do it differently if they have different rates for different designers. We have one rate for all of our team, but we base it off of that hourly rate and the data that we have. And this, I mean, it's many things, the scop of work, all of that is the flat rate. And it is a dollar rate. It is not a range. It is a flat rate. And it's very black and white and clear.
[00:10:24] Speaker B: Okay, so when you look back at your earlier proposals, what do you think you were most underestimating?
[00:10:33] Speaker A: Okay, I. I spent so much time thinking about this question because I was like, what was I underestimating? I mean, obviously I was underestimating my time, but more so I was really underestimating my responsibility. And what I mean by that is I priced the visible tasks, right? The, like, what it is that we're actually doing, but not the invisible work, which is decision making, client education, which, you know, I'm like a huge, huge advocate for. We spend a lot of time educating the client, and now we've gotten smarter with it, with the documents and the stuff that we provide, but there's still so much of that that we're still working with the client through our different phases in our process of. In the workflow that we have for a project.
And also, also, I wasn't really pricing for, like, the mental load or the internal meetings. And some of that is, you know, cost of doing business too. But I think that you do need to take those into account and you will learn. Hopefully you'll Learn what those things are by all the pre work that you're doing in the onboarding phases or phase or screenings or vetting or whatever you want to call it. You know, I think that we try to get as much information, we try to ask a lot of questions so that we can fully understand what that, like, responsibility cost is going to be on a proposal.
[00:12:00] Speaker B: Okay.
[00:12:02] Speaker A: When.
[00:12:04] Speaker B: If we go back, you mentioned, you know, you started out guessing, and you are like, you shouldn't be guessing. I know for, you know, a portion of our listeners, like, haven't made the jump yet. They haven't started doing this. They're like, okay, how do I do this without guessing? Do you believe that designers should always start hourly and then move over to flat rate, or is that a myth in the current market and kind of what you're seeing?
[00:12:32] Speaker A: I think that starting hourly and then eventually, like, graduating to flat rate is a bit of a myth.
But I know that it is a very, like, easy way to start out. I mean, we, we did that too. But hourly pricing can be helpful. It's a very. Well one. It is a very helpful learning tool, like a hundred percent. Right? Because you're charging for exactly your time and what it is that you're doing. And it's a very helpful learning tool early on, especially because it teaches you where your time goes.
But I don't think that it's a prerequisite for running a strong and profitable firm.
And I think that on the flip side, Flat Rate works when you have process and you have defined scope and the confidence really to lead a team and a firm. And some designers, you know, develop that faster than others.
And I say that because, you know, and I say this at Design Camp a lot. Talking about pricing is very emotional, and you really just have to, like, take that emotion out.
I think the most important knowledge that you can have is how your process works, your time, where your energy goes, and then you can price any way you want. That feels right for you and for your firm. Because again, there's no right pricing model. Like, it's really only the one that supports you and your business and how you like doing things.
I think a lot of people make the mistake and go, oh, I'm going to do flat rate, because then I don't have to track anything. I hate tracking, so I'm gonna do flat rate so I don't have to track. Well, we actually have tracked more. I am like a crazy person with my team about tracking. We track more and in grave, grave detail, way more. Now in flat rate than we ever did in hourly.
We could be a little bit more general with our hourly because it was what we were doing and we were charging the client. But with flat rate, you're not.
You're not doing that. So you have to be really careful about making sure that you're still tracking when you do flat rate.
[00:14:57] Speaker B: What do you think is the biggest mindset shift a designer needs to make before they can confidently charge what they're worth?
[00:15:07] Speaker A: Well, like I said, a lot of designers approach pricing from a very personal place.
They often will, like, put together a number and be like, oh, my God, I can't send this, because that is way too much. But, like, that might be too much for you, but you have no idea if that's too much for your client.
And I kind of learned. I mean, yes, on the flip side, there are going to be clients that associate money with a personal experience, but I kind of have learned that clients don't necessarily experience pricing that way. When they're reading a proposal, they're really looking at more structure.
So a great book that I suggest everyone reading if, especially if they have personal emotional attachments or detachments from talking about pricing, is Psychology of Money.
That book has really helped change the way I think of money think the way that I talk about money, and has made me understand, like, my own personal experience with money.
And I think that it has taken me time, but I did this. I did this early on. I mean, I didn't read the book early on, but I really tried to separate the internal experience from the external role I play.
Meaning that I can feel nervous.
I feel nervous plenty of times when I write a proposal and I hit send. But I could still price correctly and feel nervous at the same time.
[00:16:43] Speaker B: You know, two things can be true at once.
[00:16:44] Speaker A: Two things can be true. I can be really excited about a project and really, really want it and still hold firm on my boundaries, too. Meaning that I'm not gonna, like, you know, say that I'll offer this and do this just because I want to land the job.
So I think that.
No, leadership is a bitch. I'm not gonna lie.
[00:17:05] Speaker B: It.
[00:17:06] Speaker A: Leadership doesn't require you to feel fearless.
It just requires you to show up and be consistent. And that is what I have really tried to, like, hone in when I'm trying to price. And there are some times where I land it, and sometimes I don't and not. And I don't mean in the sense of landing the jobs. I mean that there are some times that I am really good And I am taking that emotion out and I'm putting on my leadership and business cap and I just know that I've priced it the correct way that works for our firm. And there are other times that I let that emotion come in and have missed the ball completely. Completely, you know. So I think the more you can remove the emotion and think leadership and business strategy, the better it's going to be for you.
[00:17:48] Speaker B: I think something I've heard a lot this season with talking with other designers and I've heard so many times from you at Design Camp is just remembering that we are in a luxury service based industry and the reality is most of us working in this industry cannot afford us working in this industry. And what you just said is so true that we're approaching. We can look at these proposals sometimes and say is way too much like I could never. Well, no, you could never. You are not doing that $6 million house. Like that's not, that is not your world. And it is all very relative. And what clients are looking to you for is guidance and that education to tell them this is what it's going to cost to work with a luxury service based industry. As an interior designer plus the contractor and the architect and all of those other things. You are stewarding that project. And I think that that's a really good reminder, Lindsay, that like you have to separate own reaction to it to, to stop softening it. I hear so often, so often on the show, people are like, well, I always kind of, you know, fudge our numbers before we hit send at the end of the month because I don't feel like something should take that long or you know, we had three people in that meeting and we probably should have only had two or whatever it might be.
And I think that you are so good about removing the emotion and keeping focused on this is what it took. And we are absolutely human. So maybe there are times when we did under budget or under allow for this particular instance and this is why we're still going to charge you for it or you know, at some time sometimes, and I know you do this as well, there's someplace where you actually made a literal mistake, a mistake. And you're like, in those instances we cover that. But having those money conversations and, and remembering that you are a professional service provider, just like when you go to your doctor, they're not sitting there negotiating what is on that line item bill for you. So let's get into current team structure. How many people are on your team and what you really feel your role is within the firm today.
[00:20:05] Speaker A: Okay, so we have an operations manager. She's been with me the longest.
She really is, like, big picture and helps me understand all the legs and arms and head and neck of our business and how they all work together.
Then we have a showroom manager and designer. So we have a separate store in our office space, and she handles everything from buying to store events to working with our designers here with our trade program. And then we have a separate design service that we offer through there, and she manages that. And then I have three designers on our design team. They're. They're actually, like, separated into two groups.
And then we have a procurement manager and myself. We also then have, like, a CFO that's an independent. You know, all those kind of things.
And, you know, who really knows what I do?
[00:21:02] Speaker B: I feel like the question of the lifetime. Exactly. It's like, what is our job?
[00:21:08] Speaker A: I feel like I definitely need to figure that out. I need to, like. I mean, I'm. I'm still. I'm not gonna lie. Like, I'm still wearing many hats. I'm still doing a lot of everything. I'm still trying to figure this one out. I would love to have more of, like, an actual defined role of. This is exactly what I do. But I'm not gonna lie.
[00:21:26] Speaker B: We're.
[00:21:26] Speaker A: We're down a designer on one team, so I help her a lot more than the other designer. So sometimes I'm her assistant, and other days I'm what I probably should be doing more on a CEO level of, you know, managing the inside of the business and working on bringing in new business and working on expanding, whatever we want to expand. But, yeah, I mean, that's just the reality of it. I don't have myself figured out at all, but it's working.
[00:21:58] Speaker B: I think that's part of being the business owner and the CEO is being the visionary and figuring out what comes next and being the person to get it done. So when there are holes in the team, whether it's temporary or longer term, you're the one who's filling in those gaps as well.
Okay, so now that you have this team structure built out, which is shifting, you're down one designer right now. How does that influence how you're pricing?
[00:22:29] Speaker A: So obviously, when it was just me early on, I was just charging for my time, my time only, I just had to worry about myself. But now every role on the team carries responsibility, carries decision making, accountability, and pricing has to account for that entire ecosystem.
That was a big shift, especially last year realizing that pricing isn't just about profitability, which is crazy because I do say, like, you have to price for profitability.
But now I've really come into a place where it's about. I mean, it is for. For profitability, yes. But it's also about protecting the team and the quality of work.
And for me as well, and I think a good rule of thumb is that.
And what I've heard from, like, our great CFO that we work with is that your team really should be earning three times the amount that you pay for them. Meaning if your girl is $20 an hour, you really should be charging $60 an hour. And it really should be based off of where that money is coming from. So, for example, Lisa, who is our store manager, wouldn't. Her salary wouldn't really be a part of that equation because she is not part of our design revenue. She would be associated more with the store revenue. So it's really just like the designers who are associated with that design revenue. So that's like a good rule of thumb to start with. If you have, like, absolutely no idea how to start pricing or adjusting your price when you bring on a team member. And I think that's a really important thing, is that when people, especially when it's just them first and then they're bringing someone else on, they don't adjust their price because they might have started pricing just based on, well, it's just me, and I just have to cover X, Y and Z expenses.
And then. But now you're bringing on someone else and they don't adjust that. So it's really eating into your profitability where if you are starting to bring on team members, you have to remember to price accordingly, change your pricing for those.
And that's what I think is so great when you start off that way, because then when you bring someone else on, if you feel like, well, I can't raise my rate another three times or whatever it is, you can adjust it slowly because you've already have room from the first time that you hired, you already switched your pricing up. But yeah, I mean, I think now we're really just trying to. We really have to price and make sure, you know, everyone's time is accounted for.
But it's also that, you know, I want to take care of my team and I want to make sure they're not burnt out. And, you know, so also you have to think of capacity and how much then it's going to take away from me doing the inside of the business stuff too. So if we have a lot more projects, I'm going to probably be pulled a lot more to be on those projects than I am going to be, you know, doing something else in the business that I should be doing.
[00:25:33] Speaker B: Right. Even if it's not literally design hours, even if it's just reviewing, if you are reviewing across 10 projects versus four projects, that is that much more time that you can't, you know, be getting back to your CFO or working on, you know, that next proposal, et cetera. Okay, big question. Everybody get your pencils out. Let's get into current pricing model, because we still have to actually get to proposals. So how are you charging specifically?
[00:26:02] Speaker A: Okay, so I would really say. I feel like it's such a loaded question when people go, how do you charge? It's like, okay, okay, let's break this down. But in reality, I. I charge by phase. And I think that this is the best way because each phase. And again, it goes back to our process. We're charging by our process. Right.
So phase one for us is always design work. And that's going to be from pretty much onboarding to the time that they approve designs. And we're moving into either execution or, like, site visits, things like that, which I guess is execution that used to be hourly. Now that is flat rate.
So that's going to be a flat rate based on. And I think we had. I think when we did the last podcast, I was just transitioning into that, so that is now flat rate. And then phase two, which is design admin, which is going to be like your site visits, working with contractors, trades, you know, all. All the kind of like, internal stuff that is also a flat fee based on ours. Except I will say that the biggest change that we're making this year, because last year we didn't make it and it really bit us in the ass, is that we had a flat rate for all of execution of construction. And that was like a rookie move on my part.
Like, nine years in, that should never have been, like, I should have known better.
But, you know, you live and learn. And we learned quickly that we cannot do flat rate because there's so many variables that come in that. So design admin now is more like internal admin, which would be like building your spec book.
[00:27:48] Speaker B: So building your spec book is not part of the initial design.
Present design. Okay, got it.
[00:27:55] Speaker A: Yeah. No, so I would say that, like, phase one ends when they approve the design. So, like, after revisions, after we've designed, you know, all construction, all furniture, they say, yes, now we move into phase two admin, which is going to be spec book proposals, getting all that information, like updating the drawings for the final package for the contractor, whatever it is.
And with construction, obviously if it's just furnishing, we go from there to phase three really quickly. But with construction phase I would say to a. Or to be actually would be site visits. And that is an hourly rate, not flat rate anymore. But we do have a range of hours that we provide to people based on data. So they are not in like they're just not clueless about how long it's going to take.
And then phase three is procurement.
And procurement is everything from ordering, following up on those orders, getting those products and materials to the project and getting everything ready and in place for install, which is phase four. Phase three is a percentage.
That is the only time that we use a percentage and it's a percentage of the subtotal of the items we order. So if we are ordering a hundred thousand dollars worth of product, we are charging 12% of that for our procurement fee. And that covers all that time to do those things. And then phase four is install, which means install of furniture. It's not, we're not installing cabinetry, we're not installing all of that. Right. So install furniture. So if they obviously aren't doing furniture with us, that phase doesn't really exist for those clients.
And that is based, it is a flat fee based on a day rate, which of course is ultimately based on hours too. But we package it as a day rate and we also have half day rates if we need to.
We really implemented that in Covid time when like things were coming in very PC, we tend to try to not do half day rates anymore because at the end of the day, if we're doing a delivery that's taking half of a day, unless it truly is just like one piece that's going to take two hours, it still takes a whole day to be focused on that project. So that would really kind of depend on that particular project and when things are actually coming in.
But so again it's price by phase and in these different ways ultimately all kind of leading back to flat rate, except for site visits.
[00:30:42] Speaker B: Okay, couple things I want to follow up with first. I want to start with a clarification because I have heard language used accurately, but. But I want to make sure that people are understanding what we're talking about. So when we're talking about proposals today, we are talking about like scope of work, interior design, project proposal, service fees. Exactly. Because I Know you hear proposals and a lot of people are thinking more of the line items, furniture, and they're thinking of that as proposals. So I just want to back up to clarify that that is what we're talking about. And then I also want to go back to Phase 2B as you're giving people a range of the site visits. Because I do think not only does that tell them what to expect, but it also is like, great, if you actually want us on site twice a week, happy to. That's going to change this pricing. You can expect this to be closer to this site side of things. So that does still allow you to educate your clients and let them know what to expect while also keeping some skin in the game as far as you telling them. Really we're comfortable coming to the site just this many times, but if you want to make sure that you know, every tile that is laid we've looked at, then you're going to look at this on a, on a higher, higher range.
[00:32:01] Speaker A: Yeah. And the, and the lower number is our minimum. Like a lot of times if, well, not a lot of times, but if a client were to say, well, well, what about if we take care of this? Or what if this. It's like, no, that's the minimum of us needing to be there. And I know we'll go more into like internally how we figure that out, but that is based on data and the certain site visits that we require to be there in order for our client to sign on with us.
[00:32:24] Speaker B: Right, to guarantee. Well, to as best as your ability, guarantee the execution of your design.
[00:32:31] Speaker A: Yes, exactly.
[00:32:32] Speaker B: Okay, so let's get tactical. When you are building the proposal, this is the service fees from scratch. What are the first inputs you are gathering?
[00:32:44] Speaker A: Okay, so scope of work, obviously that is a big one that really lays down the foundation of what we are doing in that project.
Um, and it's by phase and how our process works. So I do want to, I know we'll kind of get into this, but I do want to clarify like what I gather as far as information for the proposal doesn't mean that all that information lands on the actual proposal. But internally, this is what I'm gathering first. The scope of work and a detailed list of scope of work. So that is like probably the biggest, most important thing, especially if you're going to go into flat rate. And honestly, even if you decide to do hourly because you still want to give people a arrange. Right. So you're not just going to send them a proposal and be like, okay, Well I charge $150 an hour. Like that's easily said in a phone call. Right. You need to still break down what it is that you're covering and they want to know an estimate of what those hours are. Right. So you really need to understand the scope of work and what it is that you're doing.
Then after that, this was, this is the big one that I'm starting to realize. Last two years we layer in risk, responsibility and decision making. So I want to understand the complexity of the project and kind of the load that it carries, rather than not just the hours that it takes to execute it.
We talk about those invisible hours. That's that. And then lastly, I layer in time and figure out the tangible aspects of the project. So that would be timeline. If they've given me a timeline or if they haven't given me a timeline, that would be leadership, involvement and level of customization. That's a big one. So we all know that there's going to be some people who want bells and whistles and some people who want kind of bare basics, but want a pretty house that is like two completely different levels of work.
So that's kind of the grounding, the first kind of actionable things that we put in for, for a proposal.
[00:34:51] Speaker B: Can we dig in a little bit deeper into understanding gathering the scope? Because I do feel like this is where a lot of designers experience scope creep because they didn't ask the right questions up front or, you know, they haven't guided their clients accurately to be like, you know, I guarantee that you're going to want to do, you know, the dining room that is open to this area, et cetera, et cetera. Talk to us about how you're gathering the space scope. And I know you guys do remodels and primarily remodels, but then also a lot of new builds as well. So how are you gathering that scope to really make sure you have a comprehensive understanding?
[00:35:33] Speaker A: So I mean, that all comes in the onboarding process of either the phone consultation or the in person consultation.
I really like an in person consultation. Now, obviously if it's a new build, there's not a house to walk through. But I really like to have an in person consultation and it's pretty much a requirement unless, like I said, it is a new build and it's just a piece of land that you have right now.
I like to walk through. And honestly, even if it is a piece of land, what we do is we have what we would consider our, or what would be our in Person consultation. We just have on the phone with the client where we're walking through the plans, if they have plans, and we're walking through every room and we're trying to understand what they want in that
[00:36:22] Speaker B: room,
[00:36:24] Speaker A: what, what level of design that they want or need, the goals that they want in that room.
Obviously, a bedroom might have multiple, you know, functions, and we need to account for that, or it's just a guest bedroom, and that's very easy. So we need to go through each space, whether we're physically in the, in the house or not, and fully take detailed notes of what that means.
And then we're asking the questions of the type of customization they want.
And these are things that maybe they have not even thought about. And that is also very telling as to how you're going to price this project.
[00:37:03] Speaker B: So what data are you using to inform your estimates? Are you pulling from past projects that match exactly? Are you time tracking? Are you doing square footage benchmarks or combination of things? How are you using the data? What is the data you're looking for?
[00:37:22] Speaker A: So it's a mix, time tracking, for sure. Like I said, I've gotten really crazy about that. So it's really understanding where the team is spending their time from other projects.
So mostly, I would say mostly I rely on pattern recognition from past projects, data from other situations that, you know, we can now put a price on.
And that is all just the price of learning through experience.
Square footage is an interesting one to me because I have definitely in the last couple of years have started using that as a reference.
I would, I would say early on it was never really a driver because two homes at the same square footage can require wildly different levels of customization and involvement.
But I will say that it's definitely good to reference back to and kind of have like a range of a square footage number that is comparable maybe in the area that you are in, just to like, if, especially if you don't feel confident about a number. So if you were like, put a proposal together and you're like, holy shit, that is a huge number. And then if you had a really good square footage benchmark, you can calculate that and go, oh, well, actually I'm in line with that square footage amount. Or if it's wildly under, you adjust, or if it's wildly over, you can be like, okay, maybe I cushion this a little too much and where can I pull back a little bit?
So I never really use it as a driver, but it's definitely a reference point. I think that if And I do know some designers who do charge by square footage. You just really have to have, like, a square footage amount for every scenario, which could be a lot of work to do because you need to have, okay, this is my, you know, low, medium, high kind of range. So that once you know the scope and once you know the level of customization and the type of client that they are and those risk factors, you can adjust it or you can pick the category that fits that. But I feel like that that's. That would take, like, forever to kind of gather and it still feels a little risky and.
[00:39:36] Speaker B: Yeah, because maybe someone likes lots and lots of stuff, but it's the same amount of square footage.
[00:39:40] Speaker A: So, though. Right, Exactly.
[00:39:42] Speaker B: There's a lot of sourcing differences.
Okay, so how detailed is your internal budgeting before the client ever sees a number? So you're working on this proposal. Do you have, like, a copy that you and your director of operations are looking at and are like, okay, this is like those categories that you talked about. This is how much we think goes into each category. Or based off of getting that whole number, you're like, this is our number. The client sees exactly the information you have in your brain.
[00:40:13] Speaker A: So our internal documents of how we figure this out is very detailed. And that is something that our director of operations and myself, and honestly, our design team, too, have really put together and have tweaked over, especially over the last two years when we switched to flat rate.
What the client sees is not that the client sees something that is clean, kind of more of like the confident version of what happens internally, which is kind of working through that messier math and the what ifs and the scope and all of that.
I think designers sometimes show too much of that thinking to the clients, which I have learned, because I used to do that too. But I have learned that that creates uncertainty. And so I've pulled back recently on what the external proposal looks like to clients.
[00:41:07] Speaker B: That makes sense. Like having the very specific breakdowns allows room for more questions.
[00:41:12] Speaker A: Well, and for micromanaging, which I hate. You know, who likes that?
[00:41:18] Speaker B: So let's talk about contingencies and boundaries when it comes to client revisions. Scope creep, decision delays. When you're working in this flat rate model, how are you protecting yourself in those scenarios?
[00:41:35] Speaker A: So we do not include revisions at all in our flat rate, because what I have found, and I think you can definitely do it in a way where you say this flat rate includes these revisions, but we've learned from our mistakes, and when we have done that Even when we have been a little bit more detailed to say, like, you get one or two revisions, it's like, no, you really. If you're. If you want to include maybe one or two rounds of revisions, you have to be very detailed in your proposal and also in your contract of what that includes. So if you say one round of revisions, well, that could be to a client. They can say, well, I want this whole room done. You said one round of revisions. And you say, oh, well, no, I meant like one.
One mirror would be like, finding a new mirror would be a round of revisions. Right. Like, you have to be really understanding of what that means.
So I just felt like it was such a gray area of. And every project's going to be different with those revisions that I've just like, excluded it completely out of our flat fee. And I've left that responsibility for the client, really.
And it's kind of the same thing with scope creep. So I don't allow any scope creep to be included in the proposal that we are giving them. So let's say, for instance, we're doing a house, and they say, oh, well, we don't need you to do the dining room right now. Or outdoor is like a great one. We don't want to work on outdoor. We'll do that, like, later. Right? Okay, great. Then that is being left off of the proposal. We are not touching that.
Or maybe they say we just want to do the, the. The barbecue, like, outdoor kitchen. Right. So we would have that in the scope. And then as we're doing that, they go, oh, but you know what? Now we want to do, like, a fire pit and we want to do an outdoor lounge space and blah, blah, blah. Okay, well, that's going to come on another proposal.
And that is we do it, I guess, realistically, we do it two ways.
If it is a small amount of scope creep and very itemized, like, we know exactly. If they say, well, we need you to design a fire pit area and a lounge area, I will give them a proposal for a range of hours that it takes because that is very easy for us to figure out. We're not like, adding in this whole, like, ADU now that they're popping up in the backyard. Right.
But when they have a bigger scope like that, we will create a whole new proposal and they will have to approve that and it will get an addendum in our contract and everything, because that's a much bigger.
Almost like a second project in a way, you know. But if it, if it's small Enough. If they're like, oh, we want you to do our daughter's room now. Furniture, easy enough. We'll put a range of hours and we'll kind of track that as revisions in our. Let's say we've given them, you know, a couple of options, because we do. We do give them a couple of options in our proposal. So we will say with this number, you are not giving two full options of a bathroom. You're getting an option A and a B, which means that maybe it's a third of the projects or a third of the project products that are changing. Maybe it's like, you know, a quarter of it, but, you know, maybe it's the materials and the mirrors and the lights are changing. But it. You. You will not just see one thing. I do think people like options, and that's okay. And let's say they are having a really hard time deciding between those two. We will not move forward until they decide whether they want to see revisions for that and, like a whole new option. Or maybe they're just, like, weighing out those options. If they're just weighing out options based on things we've already given them, we don't charge them extra time for that. It's just going to delay their project, which we will tell them that it will.
It's only when they want to see multiple and multiple and multiple options that we will.
Those essentially are revisions. And honestly, I'll do revisions all day long because it's a money grab for us. And again, it puts that responsibility on the client. But there's also a level of like, how many options do you really want to see before we can, like, move on? And it's like, holding up this. This flow that we're in. And at some point we'll either say we need to realign ourselves with why you want to see that many options. Sometimes it's a personality thing, and that's just who they are. They just really want to weigh out everything. Or sometimes it's that, you know, we are not. That the visions are not coming together, and that's a bigger problem.
[00:46:10] Speaker B: Honestly, stopping the project makes sense to me when you are billing flat rate because you've already collected this money. But decision delays affects your cash flow and paying your team if you are not able to continue logging billable hours. So do you have any advice for someone who maybe is still using an hourly model and they're still just decision delays because people are so busy with their other stuff, they cannot just pick a decision or they just, you know, can't get with their partner or whatever it is. And you know, suddenly it's like four or five weeks have gone by and that's non billable time that's just getting eaten up.
[00:46:53] Speaker A: Exactly. I would say put a cap on the time frame in which they need to make a decision.
So usually like in our contract we say they, I mean technically it's seven days that they need to make decisions, otherwise the project stops. I tell clients if you're on vacation or if something's coming up, like we can extend that, but you need to let us know.
And if it's more than two weeks, we usually start moving on to other projects. And we tell them we cannot guarantee that we will be able to pick right back up when you're ready to because we might then move projects that we've allocated to either start at a later date, we're going to start now, or maybe it's a project that we've already started, but we've pushed off something in their project because we're in this phase of project A and we'll take on project B. So I would say to just cap at whatever time frame you are comfortable with, whether that's a couple of days, a week or two or whatever. And then I would put some major boundaries up and tell them this is what's going to happen and it's, it's not to punish them, it's just the reality of that we need to bring in cash flow and you can be as honest about that as possible.
[00:48:12] Speaker B: We will get into you coaching us
[00:48:14] Speaker A: through how to actually talk about these
[00:48:15] Speaker B: things and enforce these things later because you are my coach in this, in this concept. But then, okay, I also want to back up to client revisions the concept that here's your flat rate and no revisions are included. I know that there are people listening that are like, that would never frickin work for my clients. Like people would laugh at me if they're like, revisions are not included in this number. You've gotta be kidding. How do I even know that I like what you're gonna present me even 50%.
How do you get around that? And you did go on to explain that like, well, they are technically seeing like two options. Like, you know, I was just shooting a project with you and you were like, we showed them this project that was like all wood and then it was all green, but they didn't wanna commit to all green. And so we showed them like lots of iterations of how we broke up the cabinetry, color and material.
So how do you coach a client through essentially trusting you enough to be like, yes, revisions are going to be billed back, but you're going to probably mostly really love it the first time.
[00:49:22] Speaker A: So the first thing I ask them, if they do say, if I, you know, if I'm explaining, okay, this is our proposal. Our proposal and our, you know, you're talking about your pricing. This is like in the consultation phase, right before I even start a proposal. We're talking to them about our process and how our pricing works because it is very customized to their project. And we will say, this does not include revisions. And if they say, oh, my gosh, it doesn't include revisions, well, how, you know, they usually say, well, do you just show one option? Like, how do I know I'm going to like it? It's like, well, then I ask them, what about.
What is it about not having revisions scares you? Is it that you feel like we're not going to be aligned? Because I have plenty of work on our website, on our Instagram, that shows the type of projects that we excel in and that we're really good at. And if those don't align with you and you don't feel confident that that overall look is not going to be aligned with your project, then we're probably not a really good fit.
So that's number one. And I try to understand, like, what it is that they don't like. If they say, well, we just want to see a couple of options, then I tell them, well, in the presentation, you're going to see an option A and an option B, meaning. And I will go into grave detail. I will say, meaning if we're doing a bathroom, maybe the shower floor tile stays the same, but the wall tile is going to have two different options. Maybe the plumbing is going to be one finish in option A and a different finish in option B. It does not mean that you're going to see two completely different layouts and two completely different material options. I say, sometimes on a rare occasion, that will happen. Or you'll get a option C. Because when we play around with design, we also love all of them and can't make up our mind. We will just show you all three options. So a perfect example is we had a powder bathroom where we showed three options, and the only thing that really changed was the wall, the application on the wall. So we showed them one option with a wallpaper, one option with a plaster, and one option with just a paint. And that was really helpful because we were able to give them three different Looks and three different budget options. So sometimes that happens and we explain, like, sometimes we really into it and you'll get a little bit more, but it's mostly. Oh, and I also talk to them about. You will have an extensive homework and concept phase before we even start the project where you are answering questions, we are understanding what you like, what you don't like, and we show you a concept presentation to make sure that we are all aligned with the style and the color palette and the feel of the home and all of that before we even start so that you don't get into a place where we show you those initial A and B options and you go, oh, my gosh, I need to see, you know, everything else. Now. There are some times where people in the beginning when we're asking that question and they say, well, I like to just see, like a lot of options and I like to just, just like compare. And, you know, that is a little bit of a red flag to me. I'm not gonna lie. It's not. And when I say red flag, it's not a red flag as a deal breaker that I won't work with them. It's just that risk, that risk factor that I was talking to you about proposals. So if they're telling me, well, I just, I really like a lot of options and I'll make better decisions if I have more options, then I know, okay, we have to account for some of that time for those risk factors.
[00:52:48] Speaker B: Definitely.
Okay, so you talked us through how we're handling client revisions, scope creep, and decision delays. How are you accounting for kind of those unseen administrative time that so many designers forget to bill for?
[00:53:07] Speaker A: So, great question. Some of those items to me are just a part of doing business. So, for example, we send out weekly emails to our clients on Mondays explaining to them what we are doing for that week. There's also room to ask questions if we need to gather some information from them that we do not charge for. That time is not allocated in our proposals in a line item way, mostly because that is just us going the extra mile. And it's almost like an amenity for them from what they're already paying.
It also helps us internally. It means that they're not going to be contacting us in the middle of our workday when we're working on something else and we have to stop that project and whatever. I mean, obviously that does happen, but it reduces that greatly.
We also have a pretty intensive section in that internal templates to figure out our proposals to account for admin and these things that we think might happen, it's kind of like the what ifs, but we project that based on information we already have on the client too. So again, that decision making client who has said, who has, you know, almost warned us a little bit about how that, how that is going to work from our extra time for. Oh, this is a good one. We have started asking, or I have started asking people how they like to communicate and I will tell them we have feedback forms and we have you fill these out and this is going to be like our way of getting the, you know, feedback for the designs. And a lot of people will say, oh, well, can we get on a phone call to do that? It's like, well, yeah, we, of course we can. We have flexibility in our process for that reason because we want to be flexible in how the client also likes to work. I don't want it to be black and white of like, we only work this way. And you have to, you know, work the way we work.
[00:55:03] Speaker B: You just saw my founder series talking about Nate Berkus when he told me, no, girl, we're using a Google Doc.
[00:55:09] Speaker A: Yeah, exactly. But on the flip side of that, we have to account for that some way too, because those extra phone calls, if we're talking about possibly four or five or six phone calls reviewing, you know, construction, maybe revisions, furniture, maybe we're on the phone call again, that could be up to four hours that we haven't accounted for if we don't know that information, you know, beforehand. Or we also like talking about like, well, how much handholding do you really want? And I don't mean hand holding in a bad way. I just will say, perfect example. We have a client who we were helping them pick a contractor and we were s, we told them we love this contractor, but they take a lot more of our time up than this contractor. He will be cheaper than the other contractors, but you will pay more for us to handhold him. Really? And they were okay with that because we knew that information, we gave that information to them.
So we really try to understand the client prior to how much extra we're going to need to like cushion the project. And again, that goes back to that onboarding process and asking the questions.
Unfortunately, you really have to think of all the scenarios that are going to apply to the project.
For example, with that contractor. That's a perfect example. There's going to be some projects where they say, oh, we have a contractor on board and you don't need to help us do the bidding. Process. So we have spent up to 25 hours or more on just helping someone find a contractor and reviewing bids and going back and forth with the contractor, multiple contractors that we didn't account for that much time of it. We maybe accounted for like you know, a couple hours. But you really, that's why understanding the full scope and then really trying to understand the what ifs are gonna cushion you for those admin things that maybe you're not charging for or that just come up and you know you're gonna let go maybe the first one or
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[00:59:28] Speaker A: Okay, so. So I would say start by outlining your process. And if you don't have a process, try to.
That is like, to me, like one of the first things to understanding pricing. Really.
They go hand in hand. I shouldn't say it's the first thing, but they really go hand in hand. So I would say to list the process.
Break out a project into phases if you need that. That to me, really helps.
Not feel overwhelmed by like, oh, my God, this process is going to be like pages and pages long. Just start with onboarding, then just start like phase by phase, right?
And kind of list out what you maybe even think. Like, even if you don't know for sure, even if it's a guesstimate, start there.
But what I want designers to do is really start tracking that. So the first, you know, couple of projects, they're going to track one or two things consistently. Just start there. Because it could get very overwhelming trying to understanding everything and do that for, you know, two or three projects and then make notes after each project is finished. This is what we do, and this has helped a lot. We want to ask what felt easier, what was heavier, especially heavier than expected. Right? So that the whole, like, finding a contractor was a perfect example of that. At the end of the project, we were like, well, we need to up those hours. That felt that was a lot heavier than we expected. And what surprised us. So if there was anything that we were like, oh, we put a lot of hours to that, but we don't need that many hours because maybe we're really good at that.
And then you'll adjust from there. So you'll build a simple. You'll then build a simple range. Low, medium, high is really good for the next project.
But if you don't have any projects to start on, just practice before you have the clients. Meaning that you can practice on your own house, your parents house, your best friend's house. And it doesn't mean that they are literally wanting to refurnish everything. You can take your own home, time yourself creating a floor plan and sourcing furniture for your living room and really figuring out what that takes. But again, write out the process of designing a living room and then do those things. Line item tasks and put that time on there.
It could be sourcing, it could be pulling a spec. You could just treat it like a project and then that will give you the information faster than if you're going to just wait for projects to come and then learn from those. But your first few projects are going to be that. They're going to be learning experiences, and that is okay.
That's how I learned and that's how everyone does do it. I just wish that I had practiced first and really understood rather than just throwing a number to the wall and hoping that it stuck. Because more than likely that number that stuck was way lower than what it actually needed to be.
And you know you're going to evolve and you're going to learn from those and it's going to continually change. So I don't think that anyone needs to feel like they have to have the right pricing number or structure from the get go, because that might not happen. You just have to be, like, really smart and strategic about it. That's what I wish I would have
[01:02:52] Speaker B: done in the beginning and be so open to pivoting. Like, every single project, you can, you can tweak before that next proposal goes out. I will say, if you haven't gotten started or even if you have and you're like, am I missing steps? Like, what am I not considering? Renee and Brooke did a collab with me on our interior design process outline, and they took their proprietary information from dozens of designers and put together a general interior design process outline for a full scope project.
And it includes general timeline. So this is going to take three days, is going to take two weeks, blah, blah. So even if you just want to cross reference it, I'll link that in the show notes. But it helps you to at least remember or, like, get started outlining that process if you're, like, overwhelmed and want to get a better idea than just breaking down a single phase at a time. Because you know someone's on your knocking at your door today and you're like, I need to send something by the
[01:03:53] Speaker A: end of the week. Yeah, exactly. And I will say that, like, that is definitely a really good benchmark to have, but you have to, you know, like, I, there's a lot of designers that will DM me or we'll talk at design camp and be like, well, how long does it take you to do a living room? It's like, okay, well, my answer could take this, but I've been doing this way longer. Or I have designers that do this and my designers are really fast at this or some designers are fast at other tasks than, than other designers are. And you have to understand and know that. So I do think it's really important to have those benchmarks and especially if it is something that you need to get out and you want to feel confident about it, but really try to put your own experience into it because that's what's going to be best for you and understanding how much money you need to actually be bringing in to also, you know, have profitability.
[01:04:40] Speaker B: Well, and there's also the difference. I believe that our timeline, you know, it'll say two weeks before that next deliverable gets to the client. But that doesn't mean it took two weeks to work on. If you have three designers, maybe that only took one day. But your timeline that you send to your clients is based off of two weeks. So. Okay, the like money question, or I should say the key question that is just floating around in my head now is like, how long realistically does it take you to turn around a well belt quote or proposal, Lindsay? Because I'm like, this is a shit ton of stuff. And I'm like, you've now spent a hundred hours on a project that someone hasn't even signed with you. How long does this actually take?
[01:05:21] Speaker A: I usually tell the clients one to two weeks, they will get a proposal from me. And it, like you said, it doesn't mean that I'm working on this one to two weeks. It means that I really try to get it out within a week because I think two weeks is starting to like be too long. But it will depend on if I have an install that week. I'll, I'll be really transparent with them and be like, I have an install coming up. It's going to take my whole week. I'm actually not going to get started on this until X date and then you'll have it five days from there. Whatever.
I, I mean, I think realistically if I think of like the hours spent on it, I probably spend maybe 15 to 15 hours, maybe 10 to 15 hours because I have that template. So like the major groundwork, like the, the, what's the word I'm looking for? The like tedious stuff is done and I, sometimes I feel like the tedious stuff is what actually takes the longest, right. To like build it. So we're not like building a new proposal every time.
And the, the biggest thing is I step away and then I come back. I don't rush getting it out.
I feel like if I push a quote out too fast, it usually means that I skip the thinking part and that's when issues show up later in the, in the project. So I really try to, like, work by phase. I'll like put all the scope in and then I'll adjust that. So like our, when I put the, when I, when I say put the scope in, I'm usually deleting line items. That doesn't include. So our, our template is really big and it tries to include every single outcome and in room and everything.
So I usually are just like deleting and getting the framework and then I usually will step away. Even though I haven't actually put much thought into it. I'll step away and then I'll come back and then I'll start really going, okay, what are those risk factors and what is the responsibility and what are the conversations that I've had with the client that's going to make me want to like up these hours or maybe take it down a little bit in certain line items or phases?
And that's when I will try to do the meaty part of the proposal and then I step away again and then I come back usually a third time to look at it. And I will also say that I usually at that point know what design team is going to, would be on this project. And I usually will show the designers on that project or I'll try to. Sometimes it doesn't happen, but I will show them the proposal and be like, does this here, here's the scope of it, here's what's happening. Does this seem feasible?
I've lowered the hours here, but I've upped the hours here. You know, some of my, like I said, some of my designers are faster at drawings than others. So if I know that that designer who takes longer is gonna be on it, I might have to up the design, the drawings, line item a little bit more.
Um, but I'll have someone else look at it before and then that's when I'm comparing it to a square footage amount and you know, all of that and then I usually am good to go.
[01:08:23] Speaker B: Okay, so what does the actual proposal look like? Is it a simple number? Is it like, I think you mentioned it is a phase breakdown because you are pricing per phase. How much narrative is there and like how much pretty fluffy stuff? And is there like an actual single page of a scope of work document?
[01:08:46] Speaker A: Yeah. Okay, I'm gonna like, go through this.
I made notes so I like, make sure I don't forget because I do think that this is what people wanna like, really know what it looks like. Right. So I really think, and I probably have said this at some point today, but the proposal to me now is about clarity and alignment rather than. And supports the work ahead rather than just saying yes. Right. So everything that in our proposal supports that.
So, number one, we have a welcome page.
It's usually like, how we work, my role, how we make decisions, what the client can expect from the relationship and the team members. So it's, I think that's like one or two pages. It doesn't have to be, again, it doesn't have to be paragraphs of how we work. It's just like short little experts of, of kind of what that is. And then we go into project overview, and that's gonna be your scope. That's gonna be the overall intentions and the goals for the scope of work. So that will be a room breakdown of everything that we're gonna do now. It does not mean that we are listing tasks for those rooms. And that's where I think people.
Designers lose people with proposals and where it gets really overwhelming for a client. When you're going to put kitchen and you're going to then write out designing cabinets, pick paint colors, pick backsplash, pick this, it's like, okay, I don't need to know that. I just need kitchen. We are reworking layout, picking materials and designing, you know, whatever. Very broad, but under the. So the client will understand exactly what we're doing in that room. Room. So that will be room by room.
Then we have scope of work for the lb, for our process. So, like our phases and what that includes. So we'll say phase one is going to be this, and it includes these things and it does not include this. So, for example, with the design phase, one will explain what that design phase entails, what we're going to be doing. It means that we're going to be drafting. It means that we're going to be doing, you know, if you do Photoshop renderings, If you do 3D renderings, like whatever, whatever deliverables, you know, you do for your design, that will be listed there.
It's also going to list out what's not included. So, meaning no design revisions.
We do not include that task list here and we do not include time breakdowns here. It's really just an overview of what each phase looks like from. From our process.
Then we have a couple pages of deliverable examples. So high list of deliverables. I'm not showing them every single thing under the sun that we will give them I'm not showing them an example of a concept, I'm not showing them an example of a design board. I'm not showing like they don't need to see all that. I show them functional examples that, that they could put a visual to when I say spec. So like a spec book is a good example. If I see spec book, they're like, what if they've never worked with a designer, I've never done a remodel, they're not going to know what that is.
And that the spec book takes a lot of time and it's very heavy with information and needs to be exact for the contractor. Right. So I'll give an example of like one page of what our spec book looks like.
And then the last couple of pages is the investment.
And that investment is separated by phase because we obviously charge differently for phase and we actually have a different hourly for our design phase than we do our design admin phase.
So we, we separate it by phase and then we have like an overview total of some of those phases. Now obviously the procurement phase is not going to be listed. We still list it out and say 12% of your spend, but we obviously don't have that number. So most of the time our total number is going to include everything except the procurement phase.
Excuse me. And then we have a general payment schedule. I think that's really important because they need to understand, like if you're going to show them a hundred thousand dollar proposal, they're going to be like, oh my gosh, $100,000. But if this is over a year or so, and if you break that down, they'll be like, okay, this is much more manageable, right, Than being like, here's $100,000, like we're not going to do that. So I think the payment schedule is really important. We used to only put that in our contract announce and our proposal.
And then we have one page of the parameters and the policies, which is just the revisions, scope changes, communication, expectations, things like that.
Kind of like a what's not included again, so they really understand what the, what the proposal does not include.
And then one last page of next steps and basically saying how we move forward if you approve this proposal and what does the next kind of phase look like.
And that's really it. It's probably, you know, maybe, I mean, obviously depending on the scope. Sometimes the scope could be one page or four pages depending on the size of the project, but it's usually around a, you know, six to eight page maybe proposal.
I don't include a ton of pictures, which is kind of a shock to people because I feel that evokes an emotion. And I don't want people to view this with emotion in mind.
And if, for instance, we have been getting a lot more people who want a more.
When I say modern, I feel like more contemporary look. But we. And we are doing some of those projects currently, we. But we don't have a ton of that in our proposal yet. Like out in the world yet. Like finished projects in your portfolio? Yeah, in my portfolio. So if I have pictures of more traditional houses that we kind of specialize in or that have just done more of in the proposal, then they're going to put an emotion with that and be like, oh, well, I don't know if she's a good fit because, like, this work is really traditional and they just haven't seen what we can do with a modern and contemporary design, even though we can do it and put our own spin on it. So I feel like that just puts emotion into it. So I take that out. Now, obviously there's pictures, like I said, of deliverables of our spec book and deliverable of an example of a mood board or whatever. But, like, I don't overly fluff the proposal anymore. I used to do that.
And I don't include, like, anything to do with budget yet. That comes later. And that those are talks that we might have had with a potential client, but it's not listed anywhere in the actual proposal because that takes a lot of work to figure out, like, budget of materials, budget of construction, like, whatever, we'll do that later.
And then I also don't. I do know some designers will put like an inspiration page that's like almost like a mini concept page for that project. And I don't do that either because I feel like you don't have enough and information yet to provide that to a client where I could confidently say, yes, this is exactly what they want. Unless you have taken that information and that intake from the client, like, let's say you've asked them all those styling questions or you've given them the homework prior. I don't know why you would do that. But if in your process that is included and you do want to include, like, here's an example of what we could do for this, then that's fine as long as you have the correct information from the client. But we will not.
[01:16:26] Speaker B: Yeah, you don't want to give them the opportunity to opt out because you missed miss the mark with something that you didn't have all the information for.
[01:16:33] Speaker A: Exactly, exactly.
[01:16:34] Speaker B: Okay.
Okay. So I still want to get through selling the bid and the conversation and I know our episode is running long because I will talk to you all day, every day about this. So how do you verbally position your fee so it feels grounded and non negotiable?
[01:16:53] Speaker A: Okay.
So I position it as fact.
It's not a pitch, it's calm, it's neutral, it's tied to scope and the responsibility that I've already talked with the client about or the potential client that we've already discussed. I also avoid using languages, language that sound flexible. So I don't say anymore like, oh, we can adjust this or this is just a starting point. Like I try to take that or take it out and also not say that. Even though, yes, we can value engineer this proposal, but that's going to be based on scope and the responsibility that we are doing for this project rather than just saying like, this is just a starting point and we can negotiate like that that's going to lead the client to immediately go, oh, it's up for negotiation and I can get this lowered.
[01:17:41] Speaker B: Okay, what language are you using when you present a quote to anchor its value before the client reacts to the number? And maybe that means before they've even seen the number.
[01:17:55] Speaker A: So I'll say something.
So when I send the email with the proposal, you know, we do, I would say like a little pitch of like here is what you'll get with us type of thing and here's in a little outline of what's in the proposal. Right. And I'll say based on the complexity of the project and the level of support that it's going to require, you know, this is what the proposal is going to include.
That way the client understands what the number represents a little bit more before they actually look at it. You know, when they're reading that email or when I say it, what are
[01:18:31] Speaker B: they actually getting out of the money?
[01:18:32] Speaker A: What is the result of it? What's the value of the money? And not just like the actual number. I think that you just really have to again like take that emotion out and just say, this is what this proposal includes. It does include. This is the value that you're getting. This is the value that we bring and there is a big level of complexity to this project and that number, you know, reflects that. And we can definitely review scope. If that number doesn't align with your budget, we can look back at it and go, where can we adjust this to get to your budget or to get to a number that you feel comfortable with, but that is always going to go back to scope for us and not about emotion of, oh, we just want this job. So I'll lower it 20 grand so I can take the job job. You know, unless you see value in that, like, honestly, it's not my place to say you shouldn't do that. If I saw value in doing that, like, true value, not just, oh, I want to work for free, because I want to get this project that maybe there's a trifecta of things. It's in the right neighborhood, it's with a contractor or builder or an architect that you really want to work with, and it's going to bring you more projects. Then do what you got to do. You got to feel good about that. You know, I can't say that I've never done that. You know, I have done that, and it's. And it has done its job.
[01:19:49] Speaker B: Have you ever reduced your fee and regretted it, though?
[01:19:53] Speaker A: Oh, good God, yes. Like, yes, of course. I mean, I think that that's like the whole process of learning, right?
I mean, we. We were flat fee in the very, very beginning and regretted that and went straight to ours.
So I think that again, it's really just figuring out your process, how you want to work, that really has helped me really understand how to price something.
But it's always going to happen. I mean, it happened last year.
[01:20:26] Speaker B: If you had to look back in your almost 10 year of being in business, Was there like a year that you could put a number on it when you were like, you know what? That was the year I stopped letting someone talk me down on my pricing.
[01:20:42] Speaker A: I would say it was probably like maybe three or four years ago, much further in my business than I would have liked. But I think what happened is I built my team. And when you build your team, you start freaking out of, like, I need to bring in revenue to pay my team. And you start saying yes to a lot of things that don't align with your values or the type of client that you want or the type of project that you want. And I. And I was also leading with, oh, well, I want to take this on, because the project is good, and the red flags were there with the client, and I ignored it because I wanted the project.
And when I really started to shift my thinking of this is not fair to do to my team, and if I align myself with the right client, the project is gonna feel really good. There have been actually, in the last two years, there have been projects That I would say are not our ideal projects, but they have been our ideal client and we were profitable in it. You unfortunately have not seen those projects on our website for a reason. Maybe they're too small or they just weren't like, up to par with the design that we want to head into. But they were great clients to work for and a really enjoyable experience.
And we will now always choose the type of client that we want before the project.
We still want to think about the type of projects that we want to land and of course, try to obtain them. But for us now, it's really about aligning with the right person.
[01:22:13] Speaker B: How do you detach emotionally from whether they say yes or no? Especially when you are looking at cash flow.
[01:22:25] Speaker A: Okay, so if they come back and say, like, oh, that's like, way too much than we were or a lot more than we are expecting or just too much, I acknowledge it.
And then I bring the conversation back to scope and the priorities instead of the number itself. For a couple of reasons. It helps me take emotion out of things and make it more tactical. And I think that it helps the client gain clarity.
And most of the time when they gain clarity, it's much easier for them to turn that maybe or no around into a yes.
But there are definitely times where, you know, clients have said no.
And there have been times where, like, I talked to a potential client for a couple of times and I've done that in person, and they seem really great, and the project is like, you know, what you think is, like a dream climate client, and they have said no, and you just have to unfortunately be okay with that. And it does suck. I allow myself to feel those feelings and to be like, oh, like, what if I did this? Would I have gotten it? And I sometimes, not always, but I do sometimes. I would say maybe 70% of the time, I do. Ask them what led you to, you know, I would say most of the time they'll say we've moved forward in a different direction.
Right? Like, that's the nice way of saying no for whatever reason. So I will just say, you know, can you please let me know why you decided to go into a different direction? It will help me understand, you know, the value that we bring to future projects or will help us align better or whatever.
And sometimes that information is helpful. And sometimes they'll say a bullshit answ that's like, oh, we just went with our contractor's designer, and they just don't give you the answer. And you have to be like, ugh, that Sucks. I allow myself to sit with that emotion for a day or so and then I move on from it because I have to. And I have to, you know, try to understand that a no will mean a yes from something else.
[01:24:39] Speaker B: Yeah.
If you had to put a percentage of proposals that are converting for you right now, like the, the market's a certain way, the industry's a certain way, and I'm talking. You have sent a proposal. This isn't an inquiry, this isn't just a consult call. The physical proposal has gone out. Well, it, you know, a digital one.
[01:25:00] Speaker A: Yeah.
[01:25:00] Speaker B: How. What percentage of proposals do you feel are converting right now?
[01:25:05] Speaker A: I would, I mean, honestly, it's probably like 90%. Um, it's really usually, if we're getting to the proposal stage, I, it does feel like we, we're usually already aligned on the process, we're aligned on the value on the, the scope. It's just about seeing if they're willing to pay for our services. And if they see that same value that we've been trying to talk to them about, if it's a no, it's usually because either it just did not align and I have to take that as it's an okay thing to not be aligned, or we did a bad job vetting them beforehand, meaning that, you know, maybe we didn't understand their needs, maybe they didn't understand how involved we were going to be. You know, maybe they were just hoping that we would just like, like take them to a tile shop and pick out tile. And you know, there's. So that's the kind of hard part about this industry is there's so many different types of designers and scopes that they do and, or services that they provide. And there's so many different ways of pricing something. And so it, it's hard and it's, and it's hard to un. To fully understand sometimes why they said no.
But I, we're usually, when we get to that proposal stage, we know it's just about, kind of like the, about the number aligning because we've aligned, you know, and if we've aligned really, really well, then that number, they see more value in that number. Yeah.
[01:26:34] Speaker B: I feel like for someone who's maybe not at the 10 year mark or have been doing this for 10 years, but they're not where LBD is.
There can be some confusion of people getting sticker shock on that and being like, well, how are we supposed to pay for the house construction, the furnishings? We don't even know what those numbers are. Yet. And yet you're sending me a proposal for a hundred thousand dollars.
Can you give us any thoughts or guidance as to how to educate a client up front of being like, okay, so this portion of your entire project is in the 20% of the total budget range or whatever percentage that is.
[01:27:11] Speaker A: So I would say that typically we are around 20% of the total budget. It we are high level and we let them know that like we are not going to be the, the least expensive designer out there. But here's why. You know, I think the other thing that you can do, you know, or that we do is we have experience in a lot of remodels. So we understand construction costs and we understand what the going rate is for a kitchen remodel. So we could talk to them about overall budget in a way where, where it's not like we're saying, oh yeah, your kitchen's gonna cost 50,000. Like no it's not. We can't even do a kitchen really realistically for under a hundred thousand anymore. You know, so we understand what those costs are. If you are new and you don't, I would say try to connect with contractor in your area, take them out to lunch, send them an email and just say you're trying to understand pricing. What, what is the going rate right now for X, Y and Z rooms or per square foot or whatever. And, and most of the time contractors, if you can get them on email, that's the hardest part is they'll provide answers to you. So I think that that is been very helpful for us to understand. When someone says, Well, I have $200,000 for labor, we could easily say, well that's going to be enough or not enough.
And then also we've put together a budget guide for materials. Now it's mostly for furnishings. It's not really for construction materials because that's gonna range, but we do have a range for like plumbing fixtures, appliances, and we have allowances and we have that document that we can give to them to say here's a range so that they're not thinking that a living room is going to cost them $10,000 to furnish. They, they fully understand kind of what this is. And it doesn't mean that that's exactly what they're going to pay.
We then tell them we're going to, you know, take all your information and give you a budget that, that's customized to your project. But that guide and the information about the contracted labor is going to help them get a better idea of what that Full, bigger picture number with our service fee included.
And we're having those conversations in the first phone call and the second phone call or the in person consultation we're trying to understand.
And sometimes they'd be like, well, I don't, I don't know what our budget is, or I don't know like what this is even going to cost. And I will say, well, what's that top number that if you go a dollar over, you're gonna like go into a complete like meltdown anxiety, you know, like there is a number somewhere that's gonna give you that like nervous feeling. Let's start there, you know, and then we can, and we can try to understand what that like big rounded number is. But it is hard.
But again, information and knowledge is your, your, is your power tool that you need to try to understand so that you could help them feel confident in saying yes. Knowing that, okay, all of this, even though it's really large numbers, all of it does fit into a general overall budget that we have for this project.
[01:30:21] Speaker B: Lindsey, I think that this is one of like the coolest, most value add things that you in particular really push for. For us to introduce to Design Camp was bringing in a builder.
Because not that guest campers that come to Design Camp are necessarily builders or even design build teams, but it's having that direct in person access with these incredible builders to ask those questions that you're still trying to figure out to the builders in your area. And while things are absolutely regional and you know, they pricing varies from market to market, all of the builders that we've had have been able to tell us exactly how to approach builders, what to ask them, what builders like to, to like, how they like to be wined and dined, to be able to start gathering that information. And I think that that has been so, so valuable for designers who feel anxious about pricing pushback. And like you said, you will always feel a level of anxiety. But when it is handicapping you, when it is preventing you from pushing forward in your business, what is one practical shift they can implement immediately?
[01:31:31] Speaker A: Okay, so the, the quickest thing to do is to not react immediately.
Like just take a beat. There's plenty of times where we get that initial email and you want to quickly react to it and quickly try to save it from turning into like a full no or try to turn it around into a yes.
And I, I think that they just need to like sit in the moment for a minute, gather their thoughts, try to take that emotion out and try to be strategic. About their next steps.
I think that it's not a problem that you need to solve immediately.
And I think that when you. Like I said, when you bring that conversation back to Scope, it helps a lot.
I also think, like I said, read that book, the Psychology of Money. That has really helped me. Like, I think anybody who has trouble talking about money or negotiating money or whatever, really, really read that book.
But I think that you also need to stop feeling like you have to audition for the designer part in this project. If you stop. Stop trying to audition for it and really talk about, this is what I bring, this is what I do with calm. Calm and clarity will help them feel aligned with it. And that's, like, the biggest thing I've learned in, like, the last two years is to try to be okay with the no's.
Take a step back, take a. Take a minute. You don't have to respond immediately and have the right information, go at it in a calm way with clarity. And that if you can feel like you've done all you can and it's still a no, then that is not on you.
I think that that's not.
You have to remember that a no is.
If you get a no from someone, it's not saying.
It's not devaluing your worth.
You know, it's just a no to them because of whatever reason. And you have to understand it has nothing to do with your worth. And I don't want anyone to take no's and be like, okay, well, the next one, I have to lower it because we were obviously too high. You just have to be aligned with the right client and the right person.
[01:33:58] Speaker B: My friend Renesh at Tandem, she always says, if everyone is saying yes to you, it probably means that you are pricing too low.
You need. You need those no's to come in
[01:34:11] Speaker A: to be like, this is where we're
[01:34:13] Speaker B: supposed to be at.
[01:34:14] Speaker A: And it also means that you are probably not aligning with the right client either. And I want someone to. I actually would. It would be interesting to hear from someone who is getting every yes to ask them, out of all of those projects, how many are truly aligned with your perfect client, perfect project, whatever that, like, dream scenario is in your head. It'd be interesting to see what percentage is and isn't aligned with that.
[01:34:43] Speaker B: This was so much information. I know people are going to watch this five times over. And again, if you're listening, reminder, this is now on YouTube so you can watch this. So you can really take notes. Notes. But is there anything exciting, top secret, Upcoming that you're able to share in. Like you're my best friend, so I probably know, but please try to surprise me. And then also, what's, what's next with Design Camp?
[01:35:08] Speaker A: Yeah, well, I mean, what's new with us? It's like we have a new showroom and we have a custom furniture line that we now have in our showroom that we're hopefully going to get online and put out in the world. So that's really exciting for us to kind of take that into our own hands and show everyone what we could do with that because so many people always ask about our custom furniture that we do in clients homes.
That's been really exciting. And Design Camp tickets go on sale. So I'm so excited about this Design Camp.
I think the lineup is so fun and, and I'm really excited because we're, we're changing up the programming a little. I mean we obviously do that every time because especially for me, I like I am literally talking about what we are doing in our business at that time. So like, you know what I say now might be even tweaked a little bit more at camp because I'm gaining more clarity with every proposal that I'm sending.
[01:36:06] Speaker B: Right.
[01:36:07] Speaker A: But I, I think we're being just a little bit more strategic with their programming as to like getting a little bit more detailed and dive into certain things that I feel like not that we've been missing, but that we haven't really been able to get deeper into. And so I'm really, I'm just really excited about coming back to Austin and it should be fun. And tickets go on sale on Friday, May 1st.
[01:36:32] Speaker B: Yeah.
I feel like this year, because we have moved to one event this year, you and I were able to really like investigate and find some clarity in like what really makes Design Camp different. And I think at the end of the day, DesignCamp is about scaling. Design Camp is really about running your business. While it has the most beautiful backdrop and the proper is like the coolest place to come stay. And we're not going to say it's not inspiring. Like this isn't a design inspiration retreat. This is really about getting the tools you need to scale your business and the changed up programming and like revisiting how we're presenting information and the information that is being presented. I am super excited for people to a come back. If we've seen you before and also for someone who's been on the fence, I feel like this is going to be a really, really powerful one and super fun. Because like you said, the lineup is like so fun.
[01:37:38] Speaker A: No, I really like retreats and things that make you think about your business. Like, I like that with Design Camp. Yes. There are actionable things. And we will tell you how to price something. I will tell you exactly how I price. I am an open book. You can ask me exactly how I do it and I will tell you. Here's A to Z of how we do things. But what I really like about Design Camp is that most of the clients will come to Design Camp and really leave thinking about their business model and thinking about how they can make make things better. Or maybe this service wasn't working and we can change it to be this. And it really just opens up designers minds to like possibilities. Right. And not just, okay, this is how I do a design presentation.
[01:38:23] Speaker B: Yeah. I think in this particular industry, honestly, especially if you went to design school, you don't know what you don't know about running your business. And I think the magic of Design Camp is, is A. You are spelling everything out A to Z. Our keynote speakers are so open and candid, spelling things out A to Z. But then it's the other people in the room that are spelling things out A to Z. And then all of a sudden you have this whole menu of options that you can be like, wait, that makes a lot of sense for me. I want to tweak this. I want to put a D and Q together and that feels like my next move.
And I think, I think that that can be really hard to obtain that information in day to day life when you're serving your clients. And so to have this like explicitly carved out, four days of like super intensive connection education, I think it's just an important thing for people to take time to gut check, refresh, reframe their way of thinking. So yeah. Tickets go on sale next Friday, May 1st. We are so excited to welcome you all back to Austin. We have great partners on this event and the keynotes are killer. And yeah, I'm just, I'm just excited to be going back to camp.
[01:39:44] Speaker A: Me too.
[01:39:45] Speaker B: Lindsay, thank you so much. I can't wait to interview you at Design Camp on this topic because I'm sure it'll be completely different then I learned.
[01:39:53] Speaker A: Oh, it's not completely different. Like my team will tell me tiny
[01:39:58] Speaker B: repeats, tweak, tweak and repeat.
[01:39:59] Speaker A: Yeah.
[01:40:00] Speaker B: But thank you so much for your time. As always. Your grace in this industry of sharing every lesson you have learned along the way is my biggest inspiration and my true north. Star.
I love you so much and I'll talk to you in five minutes, okay? Okay, bye.
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[email protected] the Interior Collective thank you so, so much for tuning into this episode. Producing this show has truly been the only honor of my career and I cannot believe I get to have these conversations. A big, huge thank you to our production team at IDCO Studio in Quinn Maid. Your contribution literally makes this podcast feasible and the biggest thank you to you, our listeners. Your sweet notes, DMs and reviews mean so much to us as we work to keep our show free and always accessible.
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