Why & How to Discount Share

Mark up Or Discount Share: Which is Better?

I was talking with a group of design students the other day and they asked me why it would be better for them to shop on behalf of their future clients on danielhouse.club rather than with a retail store. At first, the question was startling. I wanted to exclaim “umm, 35% OFF EVERYTHING, MAN, aren’t they teaching you math here?” 

 Then, suddenly remembered that there was not one single conversation around how to bill clients in my whole design education.wasn’t even really a conversation about how one might go about getting a client, just the assumption that I would have some one day and when I did, I would need to know what to design for them.

The assumption wasn’t wrong, but it would have been nice (and I’d probably have a fair bit more money right now) if there had been some education around how to charge for my work. In case you're in the same boat, take heart. The legendary Mario Buatta is rumored to have been three years behind in his client billing when he died. 

 

As a quick aside before I dive in, when I first decided to begin my own interior design practice, I clung to a book called Business of Design: Balancing Creativity and Profitability. Though I’m not going to reference it directly right now, I’d recommend it to anyone starting out in our field. The book came out shortly after the 2008 economic downturn, which really seemed to be the last gasp for our industry’s traditional fee structure. That was, from my understanding, some sort of fee for actual design (I think a flat fee) and an approximately 30% markup on everything purchased on behalf of the client. Check out the Bunny Williams interview by Business of Design Author, Kieth Granet where she says that's the way she works. 

 

Good traditionalist that I am, once I got over my fear of billing at all, I embraced this classic method. It worked much better than the short and miserable period I tried hourly billing, but there was a problem. It's no longer commonplace for designers to have access to wholesale pricing on the goods they sell. Often, we are competing with huge retailers that might offer us 10-15% off. If we mark it up 30%, it costs our clients more money to shop with us than without. There's lots of ways to justify this and I think many of them are valid, but clients are still happier if you are able to deliver a financial benefit. 

Now, I share 25% of my discount on everything, which really adds value for both parties. Despite my love for my clients, I don’t share my discount out of the goodness of my heart. I share it because it is more profitable to me and because it stretches their budget so we can achieve more together. 

 

    There is a catch to all this, which is the math works best if I’m able to secure a 35% discount for every piece. It takes a lot of work to develop the relationships required to hit that discount with enough vendors that a client has a healthy range of goods to choose from. That’s where The Daniel House Club makes a huge difference. We manage the vendor relationships on your behalf so that you never have to worry about whether or not you can profitably share your discount. So to answer the students’ original question, the difference between shopping with a standard retailer and shopping with Daniel House is night and day and you’ll notice it most in your pocket book.