How to Charge for Your Services as an Interior Designer: Why Hourly Rates Are Essential

There’s been a surge of advice lately encouraging interior designers to adopt ‘value-based charging’ (VBC) for their services. The idea is appealing: charge based on the value you deliver rather than the time you spend. But when you dig into the advice being offered, it quickly becomes clear that practical guidance is thin on the ground.

In most cases, it boils down to one simple instruction: make it up. 

Guess a fee, test it on clients, and adjust it based on how they react. This lack of structure and accountability in fee calculation is deeply concerning, especially when setting fees correctly is one of the most critical aspects of running a successful interior design business.

What Is Value-Based Charging (VBC)?

Value-based charging is a fee structure where the designer sets a price based on the perceived value of the transformation they deliver rather than the time they invest. It sounds great in theory - charging not for hours but for the end result. The idea is that if clients feel the transformation is worth a significant amount, they’ll be willing to pay a higher fee.

However, the fundamental flaw lies in its vagueness. How do you define and measure value in interior design? Is it the increase in property value? Is it the personal satisfaction a client feels from living in a beautifully transformed space? And if so, how do you objectively quantify that satisfaction and justify the price?

The Pros and Cons of Value-Based Charging

Pros:

• Potential for Higher Fees: If your reputation is strong and your service perceived as invaluable, you might command substantial fees.
• Flexible Pricing: You’re not tied to a set hourly rate, allowing for greater earning potential.
• Marketing Appeal: Clients might be intrigued by a ‘value-driven’ approach, especially if it’s framed as delivering bespoke, high-impact outcomes. 

Cons:

• Lack of Clarity: I can’t find a standard method for calculating these fees, the only advice I’ve found is - guess your fee. Literally, leaving designers guessing.
• No Accountability: There’s no built-in way to ensure the fee covers the actual time invested.
• Risk of Client Disputes: Clients may question whether the promised ‘value’ has actually been delivered, leading to potential conflict and dissatisfaction.
• Inconsistent Income: Since fees aren’t grounded in measurable time, income can become erratic and unpredictable.
• Word of mouth: most designers' number one source of new clients is referrals - clients talk to one another, beware damaging your reputation or trustworthiness with inconsistent, variable pricing.  
• Time is a resource in your business; if you don’t keep records of its use, you can’t analyse and compare projects, and use this knowledge to intentionally drive up the profitability of your business. 

Where Does Value-Based Charging Work?

VBC originated in the world of business consultancy, particularly in the 1980s when management consultants tied their fees to measurable outcomes for large multinational corporations. The idea was to link compensation to the quantifiable improvements that a consultant’s intervention could produce, measured through specific key performance indicators (KPIs).

In advertising, VBC can also work, particularly when the outcomes are clear and measurable - think Coca-Cola’s pioneering campaigns where increased sales could directly justify the ad spend. But even in advertising, the practice isn’t universally adopted because it’s hard to attribute value directly to a single campaign.

The critical point here is that in both cases, success is quantifiable: sales increases, productivity gains, efficiency improvements.

Can Value-Based Charging Work in Interior Design?

In short: yes…at the top end of design. 

At the very top end of interior design, where clients are already accustomed to paying extremely high fees, value-based charging can theoretically work. In these cases:

• Clients are less price-sensitive and more driven by prestige, exclusivity, or the desire to work with a renowned designer.
• Marginal gains in value (e.g., a slightly more luxurious finish or a more renowned design signature) still justify disproportionately higher fees.
• Subjective perception of value is stronger: clients are not just paying for a beautiful room but for the association with a top-tier designer’s brand.
• Fee negotiation becomes more abstract, focusing on brand alignment and luxury positioning rather than a rational breakdown of hours. 

However, even at this level, the calculation of the fee is still indirectly rooted in the designer’s time and experience, just at a vastly elevated rate. Clients may be paying for reputation and exclusivity as much as for design work itself. The perception of value is linked to rarity and prestige rather than the practical value of the transformation.

At this point, you want to turn your service into a Veblen service, where the more you charge, the greater the demand.

Characteristics of a Veblen Service:

• High Price as a Status Signal: Think the Hermes Birkin bag - the cost itself becomes part of the appeal, signalling that the service is exclusive or high-status.
• Perceived Expertise: Clients believe that a more expensive service equates to superior quality or access to rare skills.
• Social Proof and Reputation: The service is typically delivered by a renowned expert or high-profile professional, whose reputation justifies the cost.
• Scarcity and Exclusivity: Limited availability adds to the perception of value (e.g., working with a designer who only takes on a few high-profile projects a year).

Examples of Veblen Services:

• High-End Interior Design: Where clients are willing to pay exorbitant fees to secure the services of a celebrity designer or a studio with an elite reputation.
• Luxury Personal Training: Where the cost is justified not just by expertise, but by the status associated with training with a famous fitness coach.
• Exclusive Consulting Services: Top-tier management consultants or branding experts who charge six or seven figures for their insights, often due to their track record of working with elite clients.
• Private Membership Clubs or Mentoring Programs: Where high fees themselves indicate the prestige and rarity of being part of the group.

Until you have this elite status, charging purely based on perceived value amounts to charging what you think the traffic will bear. It’s risky, vague, and leaves new designers especially vulnerable to undercharging. 

Because: 

• There’s no guidance on where to start, or 
• How to ensure that your fees cover your expenses and deliver profitability.

Ultimately, even experienced designers who seem to be charging high ‘value-based’ fees are simply applying a higher hourly rate, often earned through years of experience, reputation building, and strategic branding.

Charging for Time Is Professional and Profitable

Charging an hourly rate is not a fallback or a second-best option. It’s the cornerstone of professional practice in many industries, including law, architecture, and consultancy. These professions are not considered low-rent or unsuccessful, quite the opposite. High-end interior designers do this too: they just charge significantly higher rates.

The articles I’ve read on value-based charging infer that there is something demeaning in charging by the hour, and that this model will never compensate you appropriately for years of experience and high-level skills, but check out www.theexpert.com where Rita Konig charges $1,800 for 55 minutes, or Sophie Ashby charges £1,000. That is not humiliating. 

If your hourly rate is unfair - put it up! 

If the market won’t bear this hike - if clients stop buying - it isn’t your fee calculation method that needs changing - it’s your business planning and marketing. 

Why Hourly Rates Are Essential

Charging by the hour starts with a thorough understanding of your design process. By breaking down each stage of a project and estimating the required hours, you create a fee that accurately reflects the effort involved. This gives you the confidence to promote your services, knowing that your charges are fair, transparent, and sustainable.

Your hourly rate should be carefully calculated to:

1. Cover Your Expenses: Include rent, utilities, software, insurance, and more.
2. Provide a Target Salary: Reflect the value of your expertise and growing skills.
3. Accommodate Part-Time Work: Include holidays and downtime.
4. Account for Unbillable Hours: Acknowledge that admin and business development take time.
5. Consider ‘Occupancy’ Rates: Realise that not every available billable hour will actually get sold to a client.

When you track your time meticulously, you gain invaluable insights into your profitability and efficiency, allowing you to strategically raise your hourly rate as your reputation grows.

Supply and Demand: Building Desire for Your Services - The Journey To Veblen

One of the most powerful ways to increase your hourly rate is by leveraging supply and demand. When demand for your services rises, you can confidently increase your fees because clients will be willing to pay a premium to secure your expertise.

How to Build Demand for Your Services:

1. Demonstrate Expertise: Share practical insights through blogs, videos, and social media.
2. Social Proof: Showcase testimonials and case studies to build credibility.
3. Visual Evidence: Maintain a cohesive portfolio that reflects your style and design philosophy.
4. Personal Branding: Develop your professional persona to attract your ideal clients.
5. Media and Publicity: Get featured in relevant publications and podcasts.
6. Networking and Referrals: Build relationships with past clients, suppliers, and industry contacts.
7. Signature Projects: Cultivate a unique style, niche, or method that sets you apart.

As demand increases, your time becomes more valuable. This is the simple reality of a thriving business: charge accordingly and with confidence.

How to Calculate Your Hourly Rate

To help you get started, here are four resources:

1. Hourly Rate Calculator: A free tool on my website to help you calculate the minimum rate to charge clients.
2. Webinar Recording: Watch my detailed walkthrough of calculating design fees based on the recognised stages of the design process.
3. Join My Facebook Group (Hothouse): Get advice and feedback from other designers.
4. 1:1 Consultation: Book a session with me to fine-tune your fee proposals and business strategy.

Visit my website for more information.  

Conclusion

Many frustrated designers reach for value-based charging because they’re struggling to sell their services at their existing rate. But if you can’t convert clients at £10,000, why would they rush to buy at £15,000? (Unless you've hit Veblen levels).

The route to higher fees isn’t about changing how you charge, it’s about changing how you market. Build demand, raise your profile, and increase your hourly rate as your brand gains traction.

I wonder if some commentators are confusing having an hourly rate with charging by the hour? An hourly rate is a unit by which you measure and build your business - it doesn't mean your clients signing a blank cheque while you look for cynical ways to splurge their time/money. 

An hourly rate is not a fallback, it’s a rock-solid business strategy. It empowers you to know your worth, track your profitability, and set your business on a sustainable path to growth. Instead of fretting about conceptual and ill-defined ways of charging, focus on stretch goals for your business: set yourself the admirable goal of increasing your hourly rate by [insert your desired percentage here] this year by pursuing proven, defensible strategies that deliver results.