Putting a Price on Retail

More and more designers are coming to accept that their clients are requesting off-the-shelf retail products for their projects. Clients are getting those glitzy catalogues in the mail from West Elm and Pottery Barn or are checking out Restoration Hardware and Design Within Reach, and it all looks pretty good to them. Ready-to-wear design.

For designers, of course, this creates a conundrum. You are accustomed to purchasing at wholesale or to-the-trade prices and tacking on a markup to cover the cost of your time and services. But how do you markup a retail product whose price is known to the client?

Lately, I have been inundated with queries from designers who are not sure how to deal with incorporating retail items into their purchasing, especially as retail prices can fluctuate. Retailers themselves have to cope with this problem. That’s why you see statements like “this week only” or “preview sale” on their advertisements.

You can’t control retail prices. (In fact, there are laws against doing that.) You can, however, protect yourself by doing what retailers do – stipulate that you will charge the cost at the time of purchase. I recommend using a “best net cost,” which is often the retail price available at the time of purchase less 10-15%, on average. You then charge your normal markup for your time and services, plus the usual taxes, delivery, etc. At a 35% markup, that works out to a net 125-130% of your actual cost.

If the client chooses to purchase the item themself, well, so be it. If not, you have a clear, consistent and justifiable rationale for your pricing that can be well documented and is in keeping with industry standards. Moreover, it’s not about the individual price of products, but about the overall budget and how everything that you obtained satisfies the client’s wish list. You can’t ask for more than that.

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4 responses on “Putting a Price on Retail

  1. william mcintosh

    I believe that you should be paid when the client purchases the item themselves if you have brought the item to them or even when they have brought the item to you and ask your opinion. We are being paid for our opinion and expertise – not to push paper. I have a clause in my contract that reads ” Commissions will be paid on items….. selected , designed , and/or approved by WMD….”. Being hired to do your job and then suddenly having a new “design assistant” – or being your clients design assistant – is not acceptable to me and I make it clear from the start.

  2. Lloyd Princeton Post author

    Bill, I very much agree with you and was trying to help designers feel comfortable charging their mark-up on top of retail purchases. Often, they feel like they can’t charge more and at a 10-15% discount awarded by a retailer, that doesn’t leave much room for profit unless you go over. I am definitely not advocating just “accepting” a client doing something on their own, and think that if a client is going to try and do this with any regularity, perhaps a higher design fee is in order and just a specification binder. At any rate, I believe we are on the same page.

  3. Francisco Torres

    I believe we need to redefine the way we do business such as charging a fixed percentage of final FF&E budget, that is competitive, fairly priced, and tranparent….Allowing always the consumer’s right to make their own purchases subject to limitations & provisions outlined in the Engagement Letter
    with respect to client responsibilities
    for
    delivery, quality of product, etc., which the Client will assume including but not limited to additional fees for delays, should the product impede the design process overall.

  4. Lloyd Princeton Post author

    Francisco, I think you make a valid point and appreciate you sharing this! Clarity with clients is paramount!