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How Interior Design Firms Make Money from Your Renovation

March 26, 2019
BOOKMARK

Your questions on pricing models, profit margins, design fees, and more, answered by Singapore interior designers.


As far as it goes when it comes to making a purchase – whether it’s a new TV, food at a restaurant, or the services of an interior designer – it’s only natural for any savvy customer to ask, “How much?”

To answer this question, we spoke to three different interior design firms in Singapore to get a clearer picture about pricing models, quotations, and more. Here’s what they had to share:

James from Charlotte’s Carpentry

Cassia Crescent by Charlotte's Carpentry
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Interior Firm: Charlotte's Carpentry

Could you tell us more about design fees in Singapore? What’s the typical rate like?

From what I understand most designers in Singapore charge a 10% design fee. But in our case, we don’t charge one because we provide it (design work) as a service.

There are also companies that outsource the entire project to a contracting firm that’s a third party. In such cases, the interior designer is just handling the design/planning and material selection, while the actual construction work and project management is handled by the contractors.

So in a way, such interior design firms won’t have to do any quotations, costing or site work. Instead, they’ll probably be handling drafting and other design-related work. What I can say for certain, is that for Charlotte's Carpentry, the interior designer who you’re liaising with will also be the one who’ll be handling all the technical aspects of the renovation.

How do you earn from a renovation project?

Usually, our earnings only come from the renovation work that we do, such as carpentry and electrical works. The rest of it, such as coming up with floor plans and furniture shopping, we provide it free as part of our service.

Shunfu Road by Charlotte's Carpentry
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Interior Firm: Charlotte's Carpentry

Do interior designers earn on materials, such as tiles and laminates?

For most material suppliers in the market, they offer their products at a better rate to interior designers, and what we earn is the difference. For instance, if the recommended retail price of a piece of tile is $5, we get it at a lower cost than if you were to buy it directly.

Other than that, we usually charge for the renovation services that we provide, from tiling to carpentry, which is justified given that this is actual work that has been done. We rely on a combination of these two things to make a living.

From what I understand from my clients and friends who are also in the line, most companies in Singapore are using this model as well and don’t bill their customers in other areas, but I can’t say for certain that there aren’t exceptions or that this won’t change in the future.


Lesley from Imago Dei 3

The Central by Imago Dei 3
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Interior Firm: Imago Dei 3

What’s your company’s approach to money matters? Is it different from the rest?

I think the way we quote is different from what most firms do in Singapore. First, we come up with an initial budget that’s reasonable to build the house that our client wants. After that, we’ll charge an in-house fee over that agreed sum, which can be divided into two components: a) a design/consultation fee and b) a project management fee.

I feel that presenting a fee like this, in an upfront manner, is the best way that we can be transparent to our clients.

Typically, what we do in the first appointment is to discuss the project details or what’s going to be built with our clients and based on these requirements we’ll then present the labour and materials breakdown in the second meeting, before letting them know how much our fees will be.

So far, the response to this approach has been good, my clients are comfortable because they are able to better gauge if we are the right people for the job, plus they are aware of how much we’re making.

The Light @ Cairnhill by Imago Dei 3
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Interior Firm: Imago Dei 3

What’s the usual fee (or percentage) that local interior designers charge for their services?

I wouldn’t really call it a market rate, because these numbers are probably different between companies and can change due to factors, such as the scale of the project; but I believe that the general range for project management fees is somewhere between 20% to 35%.

For our firm, depending on the job scope, our design fee is from 5% to 12%, and we promise to answer all the questions that you have, from material selection to choosing the right appliances for your home.

Paterson Suites by Imago Dei 3
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Interior Firm: Imago Dei 3

Do you have any advice for homeowners on finding the right price for their renovation?

I do empathise with homeowners who say they want more price transparency. What I can recommend them to do is to meet more designers; from there, they’ll be able to observe the price differential across the industry – which can get pretty big, even at the level of small and medium firms.

Also, the perception that interior designers are unaffordable isn’t entirely true – we’ve managed to clinch quite a few deals from customers who previously approached contractors and were quoted 30% more than we proposed.


Jermyn from Renolux Interior

Bedok Reservoir Road by Renolux Interior
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Interior Firm: Renolux Interior

What’s the quotation process usually like?

Usually, designers will come up with a cost estimate based on the floor plan and renovation requirements. In Renolux’s case, we’ll also conduct a site recce before providing a more finalised quote, and that’s because a floor plan can only show so much as compared to the actual house.

After that, if there are any changes to the renovation plans, they will be billed under what we call a variation order, which takes into account any addition, omission or alterations to the original project scope.

Also, for Renolux, we don't collect the deposit right after the contract has been signed. We'll only do so after HDB has given permission for renovation works to start, which is more reassuring for our clients.

Changi Road by Renolux Interior
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Interior Firm: Renolux Interior

Some homeowners are uncomfortable with working with interior designers because they perceive their service as pricier. What do you have to say about that?

In a way, if you were to hire an interior designer, it may not be more expensive than working with a direct supplier or contractors, because you’ll be getting professional services in return, namely project management and technical expertise.

Also, renovating on your own may take more time because it takes technical expertise to understand and coordinate the entire process. For example, which comes first, the carpentry or flooring? The false ceiling or electrical works? It can be difficult to tell without the right experience.

In addition to that, you can think of interior designers as mediators. With us, you only need a single point of contact, instead of needing to coordinate with multiple contractors. This way, everyone’s time is saved, and you get a smooth renovation experience.

East Palm Condo by Renolux Interior
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Interior Firm: Renolux Interior

What are your thoughts on renovation packages, are they worth it?

For Renolux, we don’t do packages. While they do give you an idea of how things are being charged, what you get may not be a good fit for your home.

For us, we prefer to work based on a clear measurement or design as shown in a 3D model, which we’ll provide even before giving a quote. Let’s say we’re building a wardrobe and the details or dimensions change along the way, we’ll draw up a new 3D model to give you a clear idea of what you’re paying for.

Is there a reason why some interior firms charge a design fee for their creative work, while others don't?

I can’t speak for others, but for myself, I don’t believe in charging a design fee for 3D drawings or renders because of the difficulty of quantifying the value of such work. Instead, I see them as a way to facilitate the renovation process and even clarify any budget/work issues – which brings value for homeowners, contractors and myself.

For homeowners, they’ll know what they are paying for because these drawings give context to prices and quotes for different items. As for myself, they make it easier to iron out any potential misunderstandings between Renolux and my clients. And finally, for the contractors, they’ll get a clearer picture to base their work on.


To sum up...

Changi Road by Renolux Interior
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Interior Firm: Renolux Interior

Through these interviews, we realised that renovation firms in Singapore have different ways of quoting their prices and charging homeowners.

To find an interior design firm that offers a payment schedule and/or quotation that you're comfortable with, we recommend meeting more firms – and that's where we can help.

Submit a request for interior designer recommendations, and we'll help you find one that suits your budget, style, needs, and more!

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