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.