I just returned from giving a lecture at Americas Mart in Atlanta where the hot topic was: How do you get your client to commit to a budget? When a client is asked their budget the usual response is “I don’t know, you tell me how much it costs.” This is an enormous pitfall because once you figure out how much it should cost they normally come back with “Well, that is way too much, I was thinking half!”. One person in the audience said they normally tell their clients to call him when they have decided on a budget, this sounds good in theory but what happens if they never call back? Once you are in a dialogue with them are you ready to let them walk away?
Does anyone have any successful ways of getting a budget out of their client? Please do share!
Hi Vicente,
You can’t give anybody more than an educated guess of what things are going to cost until you’ve become familiar with the clients, their tastes and their willingness to spend—I don’t mean how rich they are—I mean their attitude about forking it over when push comes to shove. (You and I know that a sofa can cost twenty thousand dollars, but civilians do not know this.) Some of the more amply-moneyed folks don’t necessarily like to let go of it. Some with not so much amplitude will shop ’til they (or you) drop. I think Thorsten Veblen based his entire career on the study of these attitudes towards wealth and acquisition—’The Theory of the Leisure Class’ being the centerpiece of his oeuvre.
Okay, enough high-falutin’ shop talk; here’s my method in a nutshell. Based on your depth of experience in the field, your knowledge of the marketplace, and the study of some chicken entrails, figure out what you think the job is going to cost. Double that figure*, because, a) that’s probably what it really will cost, and, b) if that number doesn’t frighten them, you’ve got yourself a good client. Possible side bonus: if you can bring it in for less, you look like Momma’s little princeling. They will name a child (or dog) after you.
I think your audience member had the right approach (or, non-approach, in this case)—if they don’t call back, forget about it. It would never have worked out, anyway, and you’ve saved yourself headaches; more importantly, you’ve saved your time and your talents for those who may have the enthusiasm and the avidness to acquire and enjoy, expense be hanged.
*This is known as the ‘Mr. Blandings Equation’
(Oh, those folks who wanted to spend only half of what was proposed? They’ll be down at the Maserati showroom, trying to decide on the leather in the new Quattroporte.)
Hi Vicente,
You can’t give anybody more than an educated guess of what things are going to cost until you’ve become familiar with the clients, their tastes and their willingness to spend—I don’t mean how rich they are—I mean their attitude about forking it over when push comes to shove. (You and I know that a sofa can cost twenty thousand dollars, but civilians do not know this.) Some of the more amply-moneyed folks don’t necessarily like to let go of it. Some with not so much amplitude will shop ’til they (or you) drop. I think Thorsten Veblen based his entire career on the study of these attitudes towards wealth and acquisition—’The Theory of the Leisure Class’ being the centerpiece of his oeuvre.
Okay, enough high-falutin’ shop talk; here’s my method in a nutshell. Based on your depth of experience in the field, your knowledge of the marketplace, and the study of some chicken entrails, figure out what you think the job is going to cost. Double that figure*, because, a) that’s probably what it really will cost, and, b) if that number doesn’t frighten them, you’ve got yourself a good client. Possible side bonus: if you can bring it in for less, you look like Momma’s little princeling. They will name a child (or dog) after you.
I think your audience member had the right approach (or, non-approach, in this case)—if they don’t call back, forget about it. It would never have worked out, anyway, and you’ve saved yourself headaches; more importantly, you’ve saved your time and your talents for those who may have the enthusiasm and the avidness to acquire and enjoy, expense be hanged.
*This is known as the ‘Mr. Blandings Equation’
(Oh, those folks who wanted to spend only half of what was proposed? They’ll be down at the Maserati showroom, trying to decide on the leather in the new Quattroporte.)
I still maintain that one of the problems is that the glossy interior design magazines never show prices next to the rooms. So I, a civilian, still has no idea what things really cost. Nor do I understand the differences in what a budget will get me.
I don’t do interiors, but when I get a money question from clients I ask them what their budget is..then we talk, it is like a dance. I will get to the point where I explain what I should be paid, gently, and I go into great detail about what I do. When there is still a conflict between the two amounts I tell them I can certainly work for their price but the work will be “less”. Needless to say I have had interesting discussions with some people. But it weeds out clients I would be very unhappy working for.
I used to work in software, and people really didn’t know what they were buying. Everyone knows what a sofa is, but what the heck is in a “software system?” So I used the car analogy to get the idea across. I told them, you can have a Yugo, a Honda, or a Ferrari. All three vehicles will get you somewhere, but there are differences. The Yugo is cheap, and it will wear out fast, but then maybe you don’t need a “forever solution” right now. The Honda is like a good suit, dependable but not terribly exciting, and it won’t have all the bells and whistles. The Ferrari is screaming fast, and you’ll beat all your competition, but it’s obviously expensive and quirky. So I let the clients choose, I’m not making a judgment on them or their wallet. Most of my clients were “Hondas,” but I had one who started as a Yugo and ended up in multi-Ferrari land, over time.
There’s a certain ethical question here, too. The decorator who sold John Thain a four-figure waste basket was not helping the reputation of the industry, let’s put it that way. Even if people want to show off by spending money, it’s best to model a little restraint.
And this shouldn’t even need to be said, but the accounting should be honest. I once had a decorator client who worked for the House of Saud. She kept several sets of books. The blatant overcharging and skimming was just mind-blowing. I finally quit that job when I realized she was cheating the IRS as well as her clients!
This is a question I am very interested in hearing what others think. I have yet to have a client who when asked what is your buget will have a an answer to give me. Most often it is ” Well I have no idea”
They tend to answer my question with a question.
This is a classic avoidance tactic. I know that it is.
It puts the ball back into my court. I think that clients feel they do not want to have you thinking that you can spend more on the project than absolutely neccessary.
There are 2 ways I have been trying to handle this and although not foolproof they are allowing me to get a better sence of where my clients head may be when it comes to making these kind of purchases.
1. I start by putting the questions back to them.
It is kind of like asking your child “How was there Day” You may get an” I don’t know , Fine “kind of an answer.
I find in both cases if questions are more specific,
I get more specific answers.
Such as ” How much would you feel comfortable spending on a sofa” a chair ect.
I can give them a range of what they could pay for say a sofa and what they would get in that range.
2. I also explain that these questions are neccessary for me to start sourcing pcs. That we both want the same thing. A design that is within there purchasing power. I explain that it is a waste of both of our time for me to say start looking at completly custom pcs. when for example they are only willing to spend $$$ and the custom pc is going to start at $$$$.
Some clients do not realize that there is such a broad range when it comes to prices.
These things seem to bring the topic of buget
back to its root. How much can you spend. Instead of a the client seeing a yellow caution light they hopefully are seeing a green light now.
One that says it is safe to proceed, safe to expose what I think when it comes to spending money. By safe, I mean they do not see you the designer as someone who wants to take advantage.
Also I find that the answers to specific questions can give me a good feel to the type of client they are. It is true that some people, my husband being one just do not have a good handle on what things he does not purchase cost. Once educated he is usually fine with spending what is required.
Project cost is the trickiest subject because there are variable factors that can’t be known until there are bids on specific drawings and specs, yet you have to establish a reasonable target from the start. I present myself as a manager of the budget as well architect and designer, and offer strategies for controlling costs and maximizing results. I want to find the client’s comfort zone or specific budget if they have one, but establish that cost, scope and quality are all variables. Given the opportunity, a client will often set a project scope and budget too far apart, pressuring me to solve the impossible or stop the process before it has begun. I refocus the discussion by encouraging them to invest in a design and pricing process to find the best balance of cost and quality.
I first discuss a typical range of project costs depending on whether the project and services are architecture, interiors or both and based on quality level. Then I pose a question similar to Scone’s: Put yourself/s on a scale of 1 to 10 where 1 means that cost is the only issue and 10 means that quality and satisfaction are the only issues. Their choice, usually in the center, narrows the budget range. Then I explain the range in bids that can be expected from the same set of plans and specifications (often a 20-30% range or more) and discuss a completed plan/spec multiple bid process vs. a negotiated bid with one contractor’s estimate at the end of the design phase, and also discuss the use of alternates. The goal is to move the project forward linearly toward maximum results without getting locked into major redrawing or abandonment. Designing and drawing is easy. Managing client expectations, budget and the team that fabricates and builds is tough!
It was good seeing you in Atlanta, Vicente. Any other thoughts you have from time to time on managing budgets would be much appreciated. – Gary
I love that you are bringing up these sometimes perplexing topics.
I launch the budget discussion after I have an idea of the scope of the project, how quickly they’d like it done, and I’m absolutely certain the client understands what factors into arriving at a design fee. Then as casually as possible I ask, “have you thought about a budget yet?” Sort of like, “have you thought about where you’d like to go for dinner?”
The answer is usually, “well, not really” then I tell them they have time to think about it. The other thing I’ve found helpful is telling the client they won’t be spending the entire budget at the outset…that it isn’t like the design shows where everything happens almost instantly. That in fact, it really takes months.
But first, during the “scope” part of the interview I try to get a feel for the client’s values, lifestyle needs, style preferences. So I can find out if those $400 a pair shoes are a the highest priority. Or do they proudly and gleefully show me the bargain they got at HomeGoods? (never a good sign). Or do they understand that quality has a price. This is the part of the interview where I usually find out if I can or can’t work with them.
I agree with EM, shelter magazines should show pricing. This would go a long way towards educating clients on realistic costs.
The fashion industry is design’s opposite in this regard. Watch a runway show, and within seconds we can find out how many thousands of $$ that gorgeous de la Renta costs. We are immune (to the shock) of fashion’s high price, and in fact, we expect it. If our clients and the public saw prices on a regular basis they wouldn’t be so shocked. And they’d happily pay 3 or 4 times the price of the Jimmy Choos for a mirror they’ll have for the rest of their life — decades longer than they’ll have the shoes. Don’t get me wrong. I love shoes.
Another thing I’ve learned over the years is that after a project has started and the client really gets into it and wants to add on, I applaud the initiative/idea, but it is vital to remind them immediately this is now beyond the scope of the original plan and budget.
That aside, I really enjoyed your presentation at AD Home in New York, thanks so much!
This is always the BIG question we propose at the end of the first meeting. Clients ALWAYS say “I really don’t know what my budget should be”. I respond by saying ok “What if I say $XXX? (I estimate a nice size budget that I would love to see ) Are you comfortable with that number? They usually say “Well maybe not that much”. I respond “What about $XXX? Are you more comfortable with that number? They usually say “Yes, that is more what I had in mind”. And then of course I say “Then you do have a budget!” We take this number and put together a spreadsheet that will let them know what that budget will ultimately get them. It seems most clients will add things as we work together but because THEY added items then the budget no longer is relevant.
As a designer I would love to be hired by the “Sky’s the limit” client but they have alluded me so far.
However, I am very grateful for ALL my clients and what I consider very reasonable budgets in this economy.
A calculation that has worked for me is breaking it down per square foot, just like a builder does.
I give them high, middle, and low estimates.
65.00 per square foot
100.00 per square foot
150.00 per square foot
I once read on another design blog that they used similar guidelines, but broke them out as “coach”, “business” and “first” class, like on a plane — a bit off putting for me, but the numbers work out almost to the dollar — i compared it to a few completed projects and was amazed.
Hi Vincent,
Oh, I wish I could have heard you speak!!!! This is such an interesting topic to me. I have been working as a decorator/designer for about 10 solid years now and have tried many many ways to approach the budget issue. One good learning experience that the “fall” of the economy brought to my attention, was how to structure my billing, be much more cost conscience in certain areas, learn where to save for the client (letting them know how much you are saving them), and where to spend heavily. It boils down to educating your client about the budget. Teaching them as you go along.
I charge on a a cost plus basis. Clients, seem to react positively to knowing what I am paying for something (designer net). In their heads, its being
“allowed in” the secret world of designers. And, it relieves a lot of stress of hiding invoices or client price shopping. No more secrets. It is what it is! And, I am willing to “bubble” my design hours for a total package deal of time billed costs. But, I do treat this and write this up as a binding legal document. There are clauses inserted and specific words used to cover myself. Especially If I feel like the hours have gone past what I guestimated or that I being taken advantage of with my time. For instance, I may allow max 4 choices for a fabric before additional time is added to the bubbled time. This keeps the client from allowing themselves an endless sea of fabrics. Great for those that can not make up their minds or for those that are trying to decorate for a friend for free at the same time. You know the types!!!!!! I learned this the hard way!!!!
The design business has forever been changed with the use and freedom of the internet, the desperation of the vendors to sell to anyone (all you need is a tax number these days), and the incredible world of knock offs. This is where educating your client of where to save and where to spend heavily (antiques, art, rugs…..) comes into play. I am actually working on an article about the lost art of “antiqueing” and respecting the age and the costs of fine antiques.
I could go on an on, but long answer to your question, is to take some extra time, and YOU create the budget for your client including your time billed. Most people have no idea what a room would cost. After the budget has been created, it gives you a platform from which to work. The budget may need to be tweaked and adjusted, but it puts both parties on the same playing field. Educate them on how you came up with $ amount, and there will be limited surprise costs that makes for a happy design project for both parties. *****JUST make sure you protect yourself and include as many clauses as you need for unknown and hidden costs and parameters on your time.
****Keep all notes, papers, anything you may need to cover yourself if in case there is a dispute.****
Good luck to everyone!!!
Beth McMillan ~ McMillan Interiors INc.
Bham, Al
Would love to have heard the speech and comments. For several years we have given a short project questionaire to our potential clients. The last question ion it is “What is your budget for this project” Of course they usually need to be guided to this figure. We approach it from this perspective- We require a 50 to 60 hour retainer to cover x number of points the client wants to accomplish with their project ( remodel, furnishings, media, etc.) This way we are giving the client solid information pertinent to their project and being compensated for our design capital. Upon their acceptance of our ideas and budget plan, we are ready to roll.At that point we engage in a letter of agreement. We do the design schematic and a bidding process for our client (upfront) so they will know where their project will fall for the work they are asking to be completed. The client is quite sophisticated today and if they do not give you a number or you quote something and they say they want it for half, you really should walk, because at the end of the day, it is what it is. You get what you pay for and if you are a high end commodity ( good design firm) the client has a clue what it means to hire a great design pro, good architect and general contractor. If not, your the one in trouble. and need to address your business model. Desperation breeds bad decisions in business. Love your work, BTW
That is a good question and one I have pondered often. I enjoyed Scone’s analogy of “you can have a Yugo, a Honda, or a Ferrari” and I think I will try that one the next time someone is unsure of their budget. I also enjoyed all the responses and am glad you put that question forward.
Cheers!