Maximizing revenue from design projects (Part 1)
Author
Melissa Van Loon
WORKBENCH’s Business Operations Specialist
Interior design is a creative and rewarding profession, but it also requires careful planning and management to ensure profitability. In this article — we will share some tips and best practices on how to extract the maximum revenue potential from every interior design project, from proposal to completion.
“Efficiency and profitability go hand in hand, and it all starts with a well-structured process.”
Avoid the Common Pitfalls that Can Lead to Financial Losses
Before we dive into the strategies to increase your project revenue, let’s first identify the common pitfalls that can lead to financial losses:
Miscommunication: Poor communication can lead to misunderstandings, rework, and unhappy clients. Make sure you communicate clearly and frequently with your clients and design team, and document everything in writing.
Errors: Mistakes during design or execution can be costly to rectify. Avoid errors by double-checking your work, using quality control measures, and hiring reliable contractors and suppliers.
Over-Delivering: Going beyond the agreed scope without additional compensation can eat into your profits. While it’s tempting to impress your clients with extra services or features, make sure you charge accordingly for any additional work or value you provide.
Client Changes: Frequent alterations to the design outside the contract parameters can increase project hours and costs. Manage client expectations from the start, and use change orders to document and charge for any changes that occur during the project.
Scope Creep: Expanding the project scope without proper adjustments to the contract can lead to financial strain. Define the scope of work clearly and stick to it, unless you renegotiate the contract terms and fees.
Follow a Well-Structured Process to Ensure Efficiency and Profitability
Efficiency and profitability go hand in hand, and it all starts with a well-structured process. Here are some key steps to follow:
1. Starting with Your Proposal
Your proposal is your first opportunity to showcase your value and expertise to your potential client. It should include the following elements:
Scope of Work: Clearly define the scope of work, outlining the specific services you’ll provide and the ones that you don’t. For example, will you handle the procurement, installation, and styling of the furniture and accessories, or will you only provide the design concept and drawings?
Value Proposition and Process: Articulate your value proposition and process, explaining why you are the best fit for the project and how you will deliver the desired results. Highlight your unique selling points, such as your design style, experience, awards, testimonials, etc.
Deliverables: Detail the deliverables for each phase of the project, both for the design team and for the client. For example, for the concept phase, you may provide mood boards, sketches, floor plans, etc., and for the client, you may require their feedback, approval, and deposit.
Pricing: Set competitive pricing based on research and past project metrics. Consider factors such as the project size, complexity, duration, location, etc. Be confident in your fees; don’t apologize for them or undercut yourself.
2. Your Contract: The Project Roadmap
Your contract is not just a formality; it’s the roadmap for your project’s success. It should include the following elements:
Scope of Service and Work: Include the scope of service and work from your proposal, and make sure it aligns with the client’s expectations and budget. Specify the inclusions and exclusions, and the assumptions and contingencies.
Terms and Conditions: Include the terms and conditions that govern the project, such as the payment schedule, cancellation policy, liability clause, confidentiality agreement, etc. Make sure you protect your rights and interests as a designer.
Signatures: Ensure the contract is signed by both parties and regularly referred to throughout the project. Use it to remind your client and design team of the milestones and project parameters.
3. Project Process: Managing Every Detail
Once the contract is signed, it’s time to execute the project according to the plan. Here are some key steps to follow:
Kick-off Meetings (with Design Team and Client)
Review the scope of work and terms of the contract with your design team and client. Clearly define roles, responsibilities, and hours allocation. Foster creative discussions to align expectations and set the tone for the project.
Weekly Check-Ins
Manage project resources, scope, and remaining hours. Problem-solve on how to stay within the hours allotted and avoid scope creep. Discuss client issues and potential issues with the upcoming milestones. Timesheet review to ensure that time is being put into the correct phases and there is no scope creep. Even if you are a small team who work together one on one you need a weekly check in regarding the process of the project.
Time Management
Define hours per phase and task. Involve the team in estimating hours, your designers need to learn how to do this. Stay organized, set timelines, and manage resources effectively. Ensure that your team has access to the tools and resources they need to perform their jobs efficiently. This includes software, equipment, and ongoing support.
Resource Management
Hire individuals who align with your firm’s values and culture. Onboard new hires thoroughly not just the first week but for the first 6 months. Prioritize personal and professional development. Regular reviews and mentorship for designers. Share workload to reduce overtime.
Managing Client Expectations
Keep clients informed and address issues promptly. Call out additional work before proceeding. Use the contract as a reference point to justify your fees and decisions.
