Design Industry Trends – Shifting Priorities and Practices (Part 2)
As promised last week, we’re continuing to explore shifting industry trends based on an article at BusinessOfHome.com. In it, author Caroline Bourque shares insight into the results of a survey of some 900 interior design firm owners relative to shifting design industry trends, priorities, and practices.
It should go without saying (yet here we go saying it anyway) that the past few years have been some of the most challenging in the history of the design trade. From what some believed to be the end of the design business to a relative boom, challenging times persist. Whether you find yourself dealing with twitchy clients or coping with ongoing supply-chain issues, the survey reveals a few other hills to climb moving forward. (We know where you can get some great hiking boots!)
Increasing Labor Costs Forcing Design Rates Upward
“As [interior design] firms increase compensation, squeezing a business’s net profit and margins, they’ve also been forced to raise their rates – a decision that’s being met with some client pushback.”
This “pushback” from clients appears to be a direct result of those aforementioned escalations in interior design fees and “long timelines in the wake of [ongoing] supply chain issues and material shortages.”
The response from many designers has been an exploration of set fees. “While the report reveals that 80 percent of designers still charge hourly fees or hourly plus markup, [other] firms are beginning to trend toward fixed fees, which are used solely or in addition to hourly rates by 40 percent of respondents [to the survey].”
This then creates a new problem for a significant number of designers: undervaluing their services and setting their fixed fees too low. “Nearly two-thirds of all firms charge $200 [per hour] or less, with most charging $150 [per hour] or less. Meanwhile, the majority of smaller, newer firms charge less than $150 per hour.”
Administrative Challengers are Increasing
“Changing billing practices was one of the top strategies to address current business challenges,” for a majority of respondents. Further, “maintaining contact with current and former clients; increasing networking with local building and real estate professionals, contractors and service providers; and improving social media presence” were also problematic.
“Along with a detailed look at information like average gross sales, salaries, and benefits, the report also includes observations and insights about this period of new industry highs and lows.”
If you have questions about these design industry trends and how they are affecting your business, Ted remains available for business consulting to the trade. Simply… Contact TD Fall today.