Value vs Price - The Business of Interior Design
As the co-owner of residential interior design firm Robb and Company, you would not believe the number of times I have seen homeowners confuse the value of our interior design services with the price they were paying. And to be honest, that was all on us.
Back in the early days of our business, how we presented ourselves often led to confusion, discussions, debates and tantrums. To make things even worse, sometimes we even dropped our prices to keep the peace & happy clients. At the end of the day, this focus on price wasn’t good for anybody.
But…somewhere along the way, we came to the realization that we didn’t need to debate price with clients if we kept focus on value.
By identifying & staying focused on the value we were providing our clients, price became less important…especially for the homeowners who value…value. And aren’t those the kind of clients we all want?
For today’s article, we dive into the topic of value vs price for all us interior design business owners…and we’ve got some help from a group of people way smarter & more experienced than I.
Darla Powell - interior designer, interior design digital marketing guru, speaker & podcast host - Wingnut Social
LuAnn Nigara - window treatments business owner, podcast host, speaker, author, coach & educator - A Well-Designed Business
Eric Lee - interior designer, podcast host & business success coach - Designers Business Community
Rebecca West - interior designer, author, interior design coach / consultant - Seriously Happy Coaching & Consulting
Crystal Collinson - interior designer & podcast host - The Productive Designer
Rick Campos - interior designer & podcast host - Design Biz Survival Guide Podcast
Andrew Mitchell - interior designer & interior design coach - The Design Coach
Maria Martin - interior designer & podcast host - Designer Discussions
I asked each of these fine people if they could speak to interior designers about the difference between value and price.
Here’s what they had to say:
Darla Powell - Wingnut Social
As an agency owner, price is associated with return on investment. For example, when a Wingnut client signs just one lead from our digital marketing efforts, that can pay for their digital marketing budget for the entire year!
That's a tremendous value. Some agencies may charge less, and that may seem like a better, more attractive "value," but the marketing is wholly ineffective or subpar, and the investment is usually wasted. The adage "you get what you pay for" is so true, and as interior designers, we are constantly offering that value-to-price ratio to our clients. Marketing is no different.
You can contact Darla at:
LuAnn Nigara - A Well-Designed Business
To talk about value and price from the perspective of an interior design business we must first establish an understanding that all interior design services are luxury services.
Luxury by definition is choosing something that adds pleasure, and or comfort to the user, but is not necessary. So, whether you are hired to select a single paint color or to design a new build from the ground up, interior design services are not a necessity.
Moving on from this, the next step is to understand that for the luxury client, value trumps price all day, every day. They are seeking you out because they cannot do what you do. Your talent, your business, your services are valued by them and they understand this value comes with a price.
In my experience, the design professional who "owns" this mindset, is rarely involved in debates about price with their clients.
For consumers to be educated consumers, it must start with the design professionals.
You can contact LuAnn at:
Eric Lee - Starfish Coaching
Value is subjective and intangible.
Price is objective and mathematical.
Value is limitless.
Price is bound by the shopper's comparison. Building value in a customers mind requires years in the art of Sales. Setting a Price requires only the basic understanding of economics.
To the business owner selling a luxury product or service; the price you can command is directly proportional to the amount of value you can build in your customers mind.
My word of advice? Don't compete on Price. Instead, create the greatest value for your customers and you will get your price.
You can contact Eric at:
Rebecca West - Seriously Happy Coaching & Consulting
The topic of value vs price is something I get SO excited about! People will literally pay *anything* if they perceive that the value they’ll get is more than the price they’ll pay. That means it’s our job as service providers to make sure that our customers understand the value they’ll get for their money! Unfortunately, too many of us describe our service in terms of the process or clients will go through, not the value they’ll get.
Back when I worked as a ballroom dance instructor, they trained us to think of that as the “sizzle vs the steak” - the steak is the thing someone might BUY, but the sizzle is what they’ll GET. The flavor, the provenance, the ambiance, the experience of eating - that’s the sizzle, and that’s the thing that sets one steak (or service) apart from another.
I’ve been working on this specific thing with one of my coaching clients. She’s a licensed therapist, and her work focuses on helping caregivers have homes that nourish and restore them so they are equipped to give their patients what they need each day. When we first started working together her website was all process-focused, like “when we work together first we have an intake meeting… then I’ll price your project… then we’ll create vision boards… etc”
But process only becomes important once you’ve piqued someone’s interest in the *value* of your offer.
So we’re working on leading with what will happen to-and-for her clients if they give her their hard-earned money. And the answer is that they’ll come home and instantly feel calmer, more restored, and refreshed, less likely to reach for the cookie jar (health benefits!), less likely to snap at their partners and kids (relationship benefits!), and more able to wake up the next day and do it all again, with a foundation of health created by their home. That’s something worth paying for, especially if it means they can avoid other long term costs like having to pay therapists, personal trainers, and divorce lawyers.
The same holds true for interior designers.
You can contact Rebecca at:
Crystal Collinson - The Productive Designer
Value is the perceived benefit that will be received from the product or service.
The question is, is value synonymous with price?
Why is a Louis Vuitton leather bag 10 times more expensive than a similar quality leather bag?
What makes it more valuable?
Quality is not the issue of the bag, both will last a very long time, both carry things, so why are people willing to spend 10 times more? It is about how the bag will make them feel, there is a perceived value to what the customer will get from owning this bag.
Pricing for services is a bit more challenging and is thought to be difficult to calculate and can often seem arbitrary.
When pricing design services, we need to look at what the customer/client will receive from these services.
How will the service solve the buyer's problem?
If we can clearly identify the problems, and how the service can solve these problems, then the Client will pay for the service as they see the value. Value is determined by what your customers believe your service is worth, it is that simple.
You can contact Crystal at:
Rick Campos - Design Biz Survival Guide Podcast
Establishing pricing and demonstrating value are two key components of the business of design. They are also two very different things. I believe that they should be considered and developed separately first and then combined to compliment and enhance the business model.
Establishing a pricing structure is a business exercise which relies on data and financial goals specific to your business. Every design business is unique and requires their own pricing and profit structure to be not only sustainable but also scalable. I recommend sticking to the numbers and not comparing yourself to what other designers are charging and what the market may bear but rather what your business requires to produce quality work and be profitable. Your pricing should be based on what it takes to get the job done, to pay yourself and your team, and make a profit.
Demonstrating value is more of an an emotional and experiential process. To me the proposition of value is the client experience. You always want to demonstrate value through interaction, communication, and emotional connection. There is no science behind value - it is perceived - and it can outweigh the price of an item or service ten fold depending on the delivery. My advice to designers when discussing value is to create a consistent and memorable client experience through whatever means necessary. How you make them feel will always outweigh what it costs.
You can contact Rick at:
Andrew Mitchell - The Design Coach
“Understanding the value that we bring to a project will inform everything we do, from the time that we dedicate to setting up solid processes, to the confidence with which we deliver a proposal or push back on a request to discount our services.
Sometimes knowing our value means saying no to opportunities that don’t align with us.
Saying no to a project can help us avoid working with someone with poorly aligned values, on a job that sucks our time and resources and leaves us feeling unappreciated, disrespected, and professionally compromised.
Saying no can be one of the most empowering decisions we can make and can open the door to better suited opportunities. Consider the energy expended on a difficult, demanding client who’s project is not aligned with your business vision. How could that energy be better spent?
Believing in ourselves doesn’t mean offering a guarantee that things will always go to plan. As interior designers we juggle many responsibilities, often having multiple plates spinning, affected by external influences that can’t be counted or predicted. Believing in ourselves means that we have a plan in the first place and have the necessary attitude and aptitude to deal with any plan changes as they arise.
Knowing our value requires an awareness of what we bring to the table but takes more than just trusting our instincts and believing in our talent. It requires knowing that we can reliably deliver outstanding results by having the systems and processes in place to effectively manage the expectations of our clients.”
You can contact Andrew at:
Maria Martin - Designer Discussions
As an Interior designer, we are selling the invisible. The items people see is only one part of what a designer does and is the only place where “price” could be assessed. The items that they can’t place a price are where the value of an Interior designer comes into play.
Our work can be described in an analogy. If you were to rent a beautiful home on the beach for your family it would be vacation for your family. If you were to hire a chef, housekeeper and car and driver, it would become a vacation for the whole family. It’s the customized service and knowledge that would begin to stand out as a whole experience. The enjoyment, relaxation and comfort of a luxury experience is value.
The service provided is sometimes not seen but deeply appreciated. When establishing wealth and building resources having a member on your team that can leverage that- is value. Interior designers have the resources and skills to achieve the goal in a way that best for everyone. The value add by having an expert is value that cannot have a simple price placed on it.
You can contact Maria at:
Douglas Robb - Robb & Company
Before I add my two cents, I need to remind everyone that I am NOT an expert in this panel of experts. While I have built & sold businesses in the health & fitness field, I am still pretty new to the world of interior design. I am here to:
Learn
Share what we are doing to grow & improve our own residential design firm - Robb & Company.
With that said, here are my thoughts on How to increase your value to potential clients
Increase your education / skills. The skills required to run a successful interior design business are different than the skills you needed as a junior designer - design, clients, sales, business, hr, etc. How can you level up your skills?
Identify your clients’ needs & how you can fulfill those needs - I always fall back on Maslow’s Hierarchy of Needs when thinking about what my clients really, really need.
3 forms of leverage you “can” use to increase your value - which works best for you?
Labor - labor needs to provide more value than they cost
employees
virtual employees
contractors / service providers
services you deliver
contractors
trades
suppliers of goods - furniture, lighting, fabric, art, etc
Money - Capital - this form of leverage favors the rich
take on debt to scale the business - need to spend money on people/tech/activities that produce more money than they cost.
Media & Code - the most democratic form of leverage
buy, rent or create software that improves business performance
social media
video - entertain & educate
books - entertain & educate
podcasts - entertain & educate
If you want to learn more about Robb & Company’s approach to increasing our value to potential clients, take a look at Interior Design Value Equation - What makes an interior designer more valuable? The “success formula” that is described in this article isn’t new - I’ve seen it described by all sorts of really smart business people including Alex Hormozi - but I’ve never seen it applied to residential interior design. So, I thought I would share.
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