Deposits and Design Fees

Cabinetmakers describe how (and how much) they bill for design work. June 23, 2006

What kind of fees are you charging for drawings and a price? I typically tell my customers sketches and talk are free, but drawings and a fixed price are not. I got myself in a sticky situation where I gave a prospective customer that line and everything was going well until I sat down with them over prices.

The husband is a self-described successful businessman (actually a quick talking salesmanesque figure). He knew my reputation and immediately told his wife that they should go with me. "Just sit down with my wife and price whatever kitchen she likes." After doing 2 sets of drawings, I gave them a profitable price on an inset beaded FF kitchen, painted white, best hardware, etc. It was about 5 grand outside their budget. He went on the offense and I got a little defensive. Awful meeting later, and I'm thinking the whole deal is off. He's really an-in-your face guy (jerk). The price was $35k for the kitchen and 3 window seats. The kitchen is pretty small. So after the fact, what do I charge for 2 sets of drawings? My labor rate is $55/hr.

Forum Responses
(Business and Management Forum)
From contributor M:
I have found that my design costs are about 8% of total job cost. This includes initial visit, site measuring, correspondence, reasonable changes (usually limited to 3). I always get this money upfront.

From contributor J:
This an issue that is hard to deal with for most shops. How do you bid if you don't know what you are bidding and how do you get paid for the drawing if you don't get the bid? This is how I handle this and it works well for me. I tell the customer to bring in their floor plan and I look at what styles of cabinets will fit in their space. I bid per cabinet, so it doesn't really matter the actual dimensions of a wall - I can make the style of cabinet work with what I have bid for a given wall. For example, If I had an 84" wall with a fridge on it, I would bid 2-2 door uppers, 1-1 door upper, 1-2 door, 2 drawer base, 1-4 drawer base, 1- fridge panel and finished ends or fillers depending on what is needed. I can then adjust the sizes of these cabinets to fit the actual size of the wall later, but the cost doesn't change. I can do a whole house this way in about 10 minutes and this gives them a price. I tell them how I bid and that their price may change slightly if I need to add or subtract cabinets. I do not do drawings until I have a deposit. This works for me and my customers have never had a problem with it. In fact, I think that it makes sense to them and lets them know that I am a legitimate business.

As for your situation, I would send a bill at your shop rate for the hours that have been spent. I do not think that you will get it, but I would sure try.

From contributor T:

Getting design fees upfront has always been a tough situation. It's a very sticky subject, as you already know. Another tact would be to quickly propose a $25K kitchen with the look that the customer wants. Once they see the look they want, they are willing to put down a deposit. Then you let the customer propose additions, changes and extras, which will always bring the job up to, say, $35K. It's always best to let the customer pay for what they want, not what you want. This way, the initial design fee gets included in the upgrade without ever having to mention the word "fee."

From contributor B:
I just had this situation happen yesterday. I met with them, left a CD of past jobs, emailed a conceptual drawing, with cost estimate. I got an email back that they liked my work, would probably hire me, but could I change a few things in the drawing. I wrote back "However, due to the fact I am so busy, I cannot do revised drawings on a project I have no contract and deposit on. Think of it as a retainer. If you feel you're ready to move ahead, I would want to get your project lined up in my schedule as soon as possible." I then asked for 10% of the first estimated cost of the job to do revisions, going toward the whole cost of the job, with additional 40% with contract and balance upon completion. The job is moving forward. And I'm not kissing their rears to get the job. This sounds like pre-qualifying the customer. And it feels pretty good!

From contributor B:
My method is somewhat similar. I'll give a free estimate and maybe a conceptual drawing or two. If they want to move forward, I get a design deposit of $350. If we end up over their budget or something else doesn't work out, the drawings are theirs when we're through with the design. If I feel they are going to be a pain in the butt, my actual bid/proposal price may be higher than if I had just met them on the street. If they take 6 weeks to decide on just how they want everything designed and by then I'm 3 months behind, they are free to find somebody else if they don't want to wait. I've never had anybody balk at the $350. It helps my cash flow, and I know I'm not doing the work for nothing!

From the original questioner:
I mailed them a "Minimum Kitchen Design Fee" invoice for 8 hours labor ($55x8=$440). I figure I can mail 1100 to them before I break even on stamps.

From contributor H:
Whenever we do drawings of any kind, they have no measurements or written prices on them. They are conceptual. I tell clients that an estimate is just that. An estimate is subject to change. If the client wants to keep the drawings and shop them around, I get 100.00. But if they want all the details to shop around, then it's 10% of the estimate. If they come back after shopping, they are credited the 10%. But oddly enough, most folks just decide to go with us after hearing that and avoid the hassle.

A dogmatic, in your face personality is testing you for intimidation. Unfortunately, it sounds like you have already given this guy the drawings and all the info he needs to shop this job around. If you are in a position where you can let this job go, do it. Call the guy and tell him that you do not want to do the job anymore. Not that you can't, but rather that you won't. It will likely stop his in your face attitude. He'll approach you differently and you may just get the job anyway. It's happened to me more than once. I have worked for some very nice folks who turned out to be the clients from hell. And I have worked for folks no one else would. And they turned out to be great clients. Difference was that I knew what the PITA clients were going into the job. It's a tough situation and as many things is this business, one size does not fit all.

From contributor W:
When we meet with a client and discuss their needs and budget and so forth, we say there's a $500 design fee, which is applied to the final project. We do presentation drawings without any dimensions. At this point they are hand drawn, but I'm moving towards CAD. We do some finish samples (and/or bring some we've done before). When we do the presentation, we give an estimate of what it will cost. Often I'll have the actual contract ready at the first presentation - if I don't think we'll be making many changes. We tell them upfront that minor changes will be no cost, but major re-designing will be billed at $50 an hour. I add the design fee into the overall project price, and then deduct their design fee payment off the overall price - that way, I get paid for design, but they have an incentive for going forward with the design.

So far this has worked, because most people are referrals and are very interested by the time we first meet. As we grow and market more - and get potential customers who don't know our work as well - we're looking to codify more what exactly is included in the presentation phase, and perhaps have varying design fees depending upon the scope of the project up front.

My background is interior design, so I spent time doing design proposals and not getting paid until I sold the client furniture or drapery or whatever for the project, so I started charging for my design expertise up front. When I moved into this business with my biz partner (whose background is in cabinetmaking), I applied the same reasoning. Our projects are quite varied, only occasionally something like a kitchen that can be standardized, so it's hard for us to give a hard and fast price to a client upfront, but we definitely get some sort of price point from them, and tell them if it's unreasonable and worth their (and our) while to even start designing.