Escape the Hourly Rate

Imagine a designer named Henrietta Marchbank who furnishes and decorates houses and apartments. She does no construction. Mr. and Mrs. Ravenscroft have bought a new apartment overlooking the park. The developer finished it, and it is empty. They want all six rooms furnished, with curtains, rugs, and lighting, and their paintings hung.

Henrietta charges $275 an hour, billed monthly, the way the firm she trained at did. Mrs. Ravenscroft calls on a Tuesday, while Henrietta is driving between two installations. She asks how Henrietta charges, and Henrietta gives her rate.

“And how many hours would six rooms take?” Mrs. Ravenscroft asks. Henrietta says it depends on how many rounds of choices the Ravenscrofts want. “Somewhere between 300 and 450,” she says. Mrs. Ravenscroft says that she will think about it. The next week, she hires the designer her neighbor used, who gave her one fee at their first meeting.

Suppose instead that Henrietta has stopped billing by the hour. When Mrs. Ravenscroft asks how she charges, Henrietta asks two questions first. Which rooms are they doing, and what have they set aside for the furnishings? Mrs. Ravenscroft says all six rooms, with about $500,000 for the furnishings. They would like the curtains and the dining table made to order.

“Then my fee is $110,000 for the whole apartment,” Henrietta says. “That’s from the first plan to the day your paintings go up. It comes from the budget and the pieces we’ll have made, and it stays the same if you fall for a more expensive sofa. You’d pay it in three parts, as the rooms come together.”

Mrs. Ravenscroft asks what happens if they want the terrace done too. “I’d give you a separate fee for the terrace before I start it,” Henrietta says. Mrs. Ravenscroft asks when Henrietta could come to see the apartment, and books her for Friday.

Henrietta has the same eye both times. In the first version, Mrs. Ravenscroft asked what the apartment would cost and heard a rate and a range. The answer could be anywhere from $82,500 to almost $124,000, and she would not know which until the last bill. In the second version, she heard one figure on the first call. So her next question was about the apartment.

So charge for the whole job, not the hours, and give the fee on the first call. Here is why an hourly rate holds a designer back, the three ways to charge instead, and what four designers found.

An hourly rate leaves the client’s first question unanswered

Here is the course’s view of the question a client brings to the first call. A family furnishing a home wants to know what the whole job will cost them. An hourly rate answers a different question, which is what one hour costs. Nobody can work out the total until the work is done. So the client has to agree to a price they cannot know.

The unit of your price also decides what the client looks at. A bill in hours puts time in front of the client. So each month, they weigh the hours against what the hours bought.

A price also tells the client something before any work exists. A client takes a higher price as a sign of better work. A fee for the whole apartment says what you think the job is worth. An hourly rate says only what an hour of your time costs, and every designer the client calls has one. So the client can line your hour up against theirs.

A designer can charge for the whole job in three ways

A fixed fee is one figure for the work you agree on, set before you start. A percentage is a fee worked out as a share of the project’s budget. A retainer is the same sum every month for as long as the work runs.

Each one suits a different kind of job, and the matches below are the course’s suggestion. A fixed fee suits a job you can count before you start, such as three bedrooms with a set list of pieces. You can price only what you can count. A percentage suits a job whose size follows the budget. On a decorating job, a larger furnishing budget means more pieces to find, order, and place. So the fee grows with the work. A retainer suits a long project, such as a whole house furnished over a year or more. The client pays a known sum each month, and you are paid as you go.

Set a percentage once, on the budget you agree at the start, and fix the fee there. That is the course’s suggestion too, because a fee that rises with every purchase leaves the client without a known figure. With the fee fixed, the client knows that a more expensive sofa is chosen for the room, and not for your fee.

A Vermont designer raised her hourly rate until she could not, then asked what her projects were worth

Brooke Michelsen is a designer in Waterbury, Vermont, who worked for years at a design firm in New York. In 2024, she told Business of Home’s 50 States Project how she changed the way she bills. She started with an hourly fee and a percentage, as the New York firm did. “I was chicken at first, and I just charged the most I thought I was worth,” she said.

Over time, she raised her hourly rate, until “I realized that I couldn’t up my rate anymore.” She also hated tracking hours. She felt the firm was losing money, because nobody on her team tracked them well. “So I said, ‘Well, what are these projects worth?’”

Her answer was to bill the way architects do. The fee is a percentage of what the project costs, billed in four phases of construction, with a fee on purchases. Half of each phase is billed at its start and half at its end. “It’s much more lucrative,” she said. Her clients like it too, “because it’s a known number.”

When Michelsen checks her percentage against what hourly billing would have charged, “it all does kind of pan out to be the same.” So the rate was not what changed. In her account, the money the firm had lost was in the hours nobody tracked well. Now the fee for each phase is set, and the client knows the figure from the start. When a client asks, she is now more open to a fixed fee, set from the first scope of the job.

The houses Michelsen works on are built from the ground up, and a decorating job has no phases of construction. What carries over is her question, what the project is worth, and a fee paid in parts as the work moves along. A decorating job has stages too, such as the plan, the orders, and the installation.

A New York designer works his fee out from the furnishing budget, and his clients stopped questioning invoices

Francis Toumbakaris runs Francis Interiors in New York. In 2024, Business of Home asked him and five other designers how they bill. “If I billed hourly, I would leave so much money on the table,” he said.

His fee is a percentage of the budget for furnishings and decor, “typically ranging from 20 to 40 percent.” Where it falls depends on how complex and large the project is, and how much millwork and furniture he will design himself. Then he treats the result as a flat fee. “This flat-fee structure ensures clarity and predictability for our clients,” he said. His clients “stop whining over bills and questioning line items on monthly invoices.”

On his largest projects, with design fees over $300,000, he prefers equal monthly payments. They run for as long as the project is expected to last. These projects usually include a renovation, and he calls the plan a “gym membership with Francis Interiors.”

Toumbakaris uses two of the three ways at once. The percentage sets how large the fee is. On those largest projects, the monthly payments spread it out like a retainer. Either way, his clients know the total before the work begins.

A New York designer stopped billing by the hour because it meant defending each hour

Rodney Lawrence is a designer in New York. His clients live on the Upper East and Upper West Sides, in the Hamptons, and in Connecticut. In 2023, he told the 50 States Project how he bills. He charges a design fee for the concept and the early design work. Then he takes a commission on what the firm buys, which is a share of the price of each purchase.

He has tried billing by the hour. “I find that you spend so much time recording what you’re doing that you spend less time actually designing,” he said. Hourly billing also changed his talks with clients. It “means you’re justifying to a client, like, ‘Yeah, I spent 20 hours looking for the perfect toilet for you, but I only spent five minutes finding the perfect rug.’”

The toilet took longer, and the rug may matter more to the room. A bill in hours asks the client to weigh them the other way around. With one fee for the whole job, the talk with the client stays on the rooms.

Why showing the hours behind a fee goes wrong

Imagine a designer named Imelda Thewlis who has moved from an hourly rate to one fee. Mr. Ostrowski hires her to redo the living room, the library, and the front hall of his house. There is no construction, only new upholstery, curtains, rugs, and lamps. Her fee is $48,000.

Imelda writes the proposal late, after an installation. She wants the fee to look fair, so she adds a sentence under it. “Based on about 160 hours at my rate of $300.”

Mr. Ostrowski calls the next day. “If it’s 160 hours, could we do 120?” he asks. “My wife and I can choose the lamps ourselves.” Imelda does not want to lose the job, so she agrees to $36,000. The lamps the Ostrowskis choose are too small for the library. When a friend asks about Imelda, Mr. Ostrowski says she did good work, but the library did not look finished.

Imelda’s fee was right. Her mistake was showing the hours behind it. Once Mr. Ostrowski had a rate and a count of hours, the fee was an hourly bill again. So he took hours out of it, the way he would take items off a list.

The version that works keeps the hours in Imelda’s own notes. Her proposal names the three rooms, what she will choose and have made, and the fee. “The fee for the three rooms is $48,000, paid in three parts,” it says. Mr. Ostrowski asks how she arrived at it. “From the three rooms, and the upholstery and curtains we’ll have made,” Imelda says. He asks when she can start.

A fee set before the work starts does not have to be a guess

Many designers bill by the hour, and a fee set at the start can feel like a bet against the job. Elle Cantrell, a designer in Atlanta, gave her reason for billing hours in the same roundup as Toumbakaris. “Clients are so different with the amount of time needed based on their level of involvement in the project, so estimating a fixed fee is nearly impossible,” she said. Of the six designers asked, Toumbakaris was the only one who did not bill full design work by the hour.

Cantrell is right that some clients take far more time than others. Measured against this lesson, the answer belongs in the fee, not on the clock. Toumbakaris sets his percentage higher for a project that is more complex. Michelsen checked her percentages against her old hourly bills and found they came out about the same. So look at what your last few projects came to by the hour, and set the fee from those.

Then write down which rooms the fee covers and what it leaves out. A room the client adds later gets its own fee, quoted before you start it. Many designers who move to a fixed fee set it too low. So count the calls and small requests into it before you quote.

How to move a new client from an hourly rate to one fee

1. Choose how you will charge for the kind of job in front of you. Use a fixed fee when you can count the rooms and pieces before you start. Use a percentage of the furnishing budget when the budget sets the size of the job. Use a monthly retainer for a project that runs a year or more. For example, a designer furnishing a family’s two guest bedrooms might choose a fixed fee.
2. Before you give any figure, ask which rooms the client wants done and what they have set aside for furnishings. If they have no budget, build one with them room by room, with a range for each, as Michelsen does. For example, a designer furnishing a new townhouse can ask, “Which rooms are we doing, and what have you set aside for the furniture and curtains?”
3. Set the fee once, from the budget you agree, and fix it there. Round it to a figure that sounds decided. Write down which rooms it covers. For example, a decorator with a $300,000 budget and little made to order might set the fee at $65,000.
4. When a client asks for your hourly rate, say how you charge instead, and then give the fee. For example, a designer who furnishes apartments can say, “I don’t bill by the hour. For the four rooms, the fee is $85,000, from the first plan to the last lamp.”
5. Keep the hours behind the fee in your own notes, off the proposal and out of the conversation. When a client asks how you arrived at the fee, name the rooms and the work. For example, a decorator can say, “It comes from the five rooms, and the curtains and headboards we’ll have made.”
6. Bill the fee in parts tied to the stages of the work, as Michelsen bills her phases. For a decorating job, the stages might be the plan, the orders, and the installation. For example, a designer’s proposal can say, “A third on signing, a third when the orders go in, and a third at installation.”
7. When the client adds a room, give a separate fee for it before you start. For example, a designer can say, “The mudroom isn’t in this fee. It’s $12,000, and I can start it in May.”
8. Start the new way with new clients, from a date you choose. Clients on hourly bills finish their projects on the terms they signed, as when you raise a price in stages. For example, a designer might quote one fee to every new inquiry from March 1. Her two open projects stay hourly until they finish.

Next: You will see how to design for a couple who want different things, without taking either side.