#9 Biggest Mistakes Interior Designers Make With Fees

So very happy to find this site, fee setting is the biggest issue I have with my clients, every job is different and every client different, some will not pay the hourly but will pay full retail price. I do require a retainer per room so there is no brain picking. Many thanks for this site.

We appreciate you appreciating us! We really work hard to support you and your colleagues. Yes...fees are a huge problem in this industry. Each client is different, and so is each designer. That's part of the reason there are so many problems in the industry. There isn't a consistent approach, and few clients really understand what is involved in interior design.

I have that problem RIGHT now with a client that has been the "client from Hell" from the beginning. I should have paid attention to the warning signs from the (a) late signing of the contract, (b) the client's misinformed understanding of the contract terms, (c) the assurance that I would indeed be paid. I've been patient, reduced the fee at their request and sent the certified letter from my attorney. I'm ready to file in Small Claims Court, but if someone has a better idea, please LET ME KNOW ASAP! The money is significant but the concept of getting burned just rankles me! Should I put a lien on their property? Unfortunately, I allowed the client to pay all the bill except a $500 deposit when the house sold so the retainer idea wouldn't have worked. They took it off the market before that happened so now I'm out a bucket of $$$$. I'm not going to do that again even though I have several times in the past with no bad consequences.

In Connecticut the value at Small Claims is $5,000.00. I have taken clients on 3 occasions and
always won. One client was a Doctor, $2,500.00, the second was an attorney, $5,000.00who paid me before
the court date and the third was also an attorney $3,500.00 who paid before the court date. As long as you
have a paper trail your good to go. Never be afraid to go up in front of a judge, that was the reason both attorneys did not show up, total embarrassment. I also did not have a written contract just verbal and I still won my case against the Dr. Take both parties to court if its a couple, you can then attach the husbands salary if the wife is not working of if one is self-employed.

Thanx for your info and (unfortunately for you), your experience regarding Small Claims Court. Thanx also for the suggestion to go after both the husband and wife. Much appreciated...

Thanks,

Sandy Hare

Home Therapy & Staging
541-968-8533
sandy@drdesignhome.com
www.drdesignhome.com

Thank you for sharing your experience. I'd add that a written contract is essential, especially these days. I even include a clause right below the signature on my proposals that once the deposit is paid and we receive the signed proposal, that the order is non-cancellable. This is a secondary contract and if I ever had to take a client to court over it, I have a signed contract and that extra contract for support.

Hi Sandy - I've been through this before. Have you talked face-to-face with the client about the bill? The letter from the attorney won't solve the problem. Since you didn't specify how much they owed you, you can take them to court over this, but the cost might outweigh the benefit. I am not an attorney, so I am sharing from my experience and from my attorney's coaching. He told me in this situation that you may get a judgment, but that does not ensure that you will be paid. Also, check the rules in your state about your ability to file a lien. Your strategy must be around what you personally can do to get in front of the client and negotiate a payment. It's not fun, and you must prepare for how it will go. Be aware that emotions will be high for you and for the client, and that your job is to stay in control. This is the best strategy for getting paid. Because there were warning signs from the beginning,(which I know you will now heed in the future, I would bet that this client has done this before to other people. There are people that enjoy the game of manipulation, and I have a feeling that is exactly what you're dealing with in this case. At this point, prepare for a difficult meeting. Prepare for anything they might say that will get your adrenalin rushing through your body. Know how you will address each point with complete confidence. Now it's about strategy and preparation. Also prepare for the worst-case scenario. You may not get paid. The take-away is to avoid these clients when your gut is telling you there is a problem. You mentioned a few of the red flags in a & b. Also, when the project is not going well at the beginning, rather than continuing with the project because of potential revenue, or your sense of commitment to completion, it is best to fire the client. The stress isn't worth it in the end. I am so sorry you had to go through this, and I thank you for bringing it up to help others avoid this scenario. If I were to poll the majority of members who have been in business for any length of time, I doubt there is one person that hasn't experienced a problem like this. Please share your advice for Sandy. I know my advice is only from my point of view. Yours is welcome, too.

Thanx for your advice, Gail. Unfortunately, the client had already moved out of state when we did the transaction, so I don't think there will be any opportunity for a meeting, but I'll keep your suggestions in mind if they decide to come to town. My attorney has already told me that I don't qualify to place a lien on the property, since I don't qualify in the state of Oregon as a "contractor", but I think I'll move forward on the Small Claims Court option. I took someone who wrecked my car to SCC many years ago and got a judgment against him; even agreed to have him pay me in monthly installments. He declared bankruptcy three days before the first payment was due! Yea, I know there's a chance that I'll never see the money, but I just don't like the idea of letting them get away with it. I'm sure you're right about the type of people they are. It does however, give me some solace to know that just about everyone in our business goes through it. Lesson learned, to be sure!

Thanks,

Sandy Hare

Home Therapy & Staging
541-968-8533
sandy@drdesignhome.com
www.drdesignhome.com

Hi Sandy...some of us learn the hard way more than once! (me) I just don't want you to spend a lot of mental energy on something that has a small possibility of getting resolved in your favor. I am so sorry to say that, but if they are now out-of-state, there is also an issue of venue, and different states have different laws. It could be very costly to go after them and force them to appear in court in your state. Thank you for openly sharing this because it will help our colleagues be prepared for things like this. I am so sorry you have to go through this. I feel for you.

I always get a retainer at the time my contract is signed by the client. The retainer is a credit to the last bill.

I take a retainer at the beginning of the project and hold it until the end of the project. The retainer gets applied to the last invoice. If the retainer is more than the invoice balance, I refund the difference. If it's less than the invoice balance, then the client is responsible for the balance after the retainer is applied, but it's usually a pretty small amount. Holding a retainer for the duration of the job always makes me feel more secure that I won't get stiffed, and my clients have been pleasantly surprised to get money back at the end.

How do you apply your retainer?

I apply the retainer to the last time billing invoice for the job. I've done this successfully with all my clients so far, without any hiccups, and it only applies to design fees, not product purchasing. With regard to purchasing product, I collect the full amount upfront before I place any orders. If there are any additonal charges that come later, like freight charges or delivery charges, or whatever, I invoice and collect those amounts prior to delivering or installing anything in someone's house. Unfortunately, I've learned over the years to CYA (cover your a**), and I've seen my previous design employers get into terrible binds after product has been delivered and then not being able to collect the final amount. Your vendors still need to get paid, so you either get stuck shelling out the money from your own pocket, or you end up looking like a jerk to your vendor by telling them you can't pay them because you're waiting for your client to pay. That doesn't work, it's not fair, and I've seen many vendors refuse to continue doing business with some designers because of tactics like that.

Hi Tammy - thank you for sharing your comments. I'd suggest one more thing that will really simplify your paperwork. Come up with a flat percentage for freight, delivery, inspection, etc., and add that to your proposal. It makes your paperwork so much easier, and the client doesn't get overwhelmed with additional paperwork per order. I agree with getting the 100% up front. I've done that for years. You're also absolutely right about the cash flow problems. That's a way to go out of business in a hurry, and a designer's reputation is their brand. The relationship with subs and vendors is every bit as important as the client relationship. Don't you think?