How to charge for interior design in the UK: fixed fee, hourly, percentage, mark-up or hybrid
Fixed fee, hourly, percentage of spend, product mark-up or hybrid: the trade-offs for UK studios, how to stop scope creep and how to check project margin.
Most studios do not choose a fee structure so much as inherit one. You charge the way the studio you trained in charged, or the way your first big client expected, and it sticks. That is fine until a project runs long, a client queries an invoice, or you realise the job you were proudest of barely covered its own time.
This guide sets out the five common ways UK interior designers charge, what each one does to your risk, your cash flow and your client’s trust, and how to tell afterwards whether a project actually made money. It does not quote market rates. The rate tables you will find online are often unsourced, and your rate should come from your own costs, not someone else’s average.
The five ways to charge
Almost every fee proposal is built from some combination of these:
- Fixed fee: one agreed sum for a defined scope, usually split by stage.
- Hourly (or daily) rate: you bill the time you spend.
- Percentage of spend: a percentage of the build cost or the FF&E budget.
- Product mark-up: you buy furniture and finishes at trade price and sell them on at a higher price.
- Hybrid: a fixed design fee, then hourly or a procurement fee for everything after.
The BIID-published extract from Jenny Grove’s Interior Design: A Professional Guide (RIBA Publishing) is a useful reference here. It describes hourly, percentage and lump-sum fees, notes that a combination is often used depending on the scope of the project, and recommends working with your accountant, timesheets and management accounts so you have benchmarks to reuse.
How the models compare
| Model | Who carries the risk | Cash flow | What the client sees |
|---|---|---|---|
| Fixed fee | You, if scope grows or you underestimate | Predictable if invoiced by stage | Certainty; easy to approve |
| Hourly | The client, if the project runs long | Follows the work; can lag if billed monthly in arrears | Transparency, but also an open-ended number |
| Percentage of spend | Shared; fee rises with the budget | Tied to when the budget is fixed and spent | Simple, but can look like an incentive to spend more |
| Product mark-up | You, on stock, damage and supplier failure | Strong if you take deposits; weak if you fund orders | Often invisible, which can turn into a trust issue later |
| Hybrid | Split by stage | Steady through design, then tied to procurement | Clear if each part is explained |
Fixed fee
A fixed fee is the easiest number for a client to say yes to. It is also the model that most rewards a well-run studio, because every hour you save is margin you keep.
The risk is scope. Grove’s extract calls the lump sum a potentially dangerous area for the designer, because projects change as they progress, and that matches experience: the fee is rarely lost on the design itself, it is lost on the third round of sofa options and the extra site visit nobody costed. A fixed fee only works if the scope is written down in stages, with a defined number of revisions per stage and a clear rule for what happens outside it.
A typical stage breakdown for a residential project:
- Brief and survey
- Concept design (for example, one concept and two rounds of revisions)
- Developed design and FF&E schedule
- Procurement and order management
- Installation and handover
Invoice at the start of each stage, or split each stage into a deposit and a balance. Grove also recommends invoicing smaller amounts regularly through the project rather than one large bill at the end, which helps cash flow and reduces payment disputes.
Hourly
Hourly billing is honest and low-risk for you. It suits advisory work, small consultations, and the open-ended middle of a project where nobody knows how many decisions there will be.
It has two weaknesses. First, clients dislike open-ended numbers, so you spend time justifying invoices. Second, hourly billing penalises efficiency. If a supplier chase that took twenty minutes now takes five, because your schedule tells you what is late and an assistant drafts the email, you have just billed fifteen minutes less for the same outcome. As admin gets faster, an hourly studio either raises its rate or earns less for the same work. A fixed or staged fee keeps that saving in the studio.
If you do charge hourly, set the rate from your costs, not from a published range. Grove’s extract gives a rule of thumb based on the wage you pay; whatever method you use, the rate has to cover unbillable time (marketing, admin, chasing payment) and overheads as well as the hours on the timesheet.
Percentage of spend
A percentage of the build cost or FF&E budget scales the fee with the size of the job, which suits larger projects. Grove’s extract notes that smaller jobs take proportionally more time, so the percentage usually needs to be higher at the lower end.
The weakness is perception. A client can read a percentage fee as a reason for you to specify more expensive things. Answer that directly in the proposal: fix the percentage against an agreed budget at the end of developed design, and say that the fee does not move if the client later chooses a cheaper option. That keeps your incentive aligned with theirs.
Product mark-up
For some studios, product is a large share of income: buying at trade price and selling at retail, or at trade plus a mark-up. It can be the most profitable line in the business. It is also where disputes can start, because the client finds out the price later.
Three things to get right:
- Disclosure. Say in your terms whether you keep trade discounts, pass them on, or charge a procurement fee instead. We cover the three positions in trade discounts and mark-up.
- Risk. If you buy as principal, you own the supplier relationship, the damage claims and the deposit you paid. Price that in, and take the client’s deposit before you place the order.
- VAT. HMRC’s guidance sets out eight conditions that must all be met for a payment to be a disbursement, one of which is that the amount you recover from the client is exactly what you paid the third party. Add a mark-up and it cannot be a disbursement: it becomes part of your own supply and is taxed as such. Read VAT for interior designers and speak to your accountant before you set this up.
Hybrid: design fixed, delivery flexible
A defensible structure is a fixed fee for design stages, where scope can be defined, followed by hourly or a percentage for procurement and site work, where it cannot. Product is then either sold at a disclosed mark-up or bought on the client’s account with a procurement fee.
The hybrid works because it puts each risk with the party best placed to manage it. You carry the design risk, because you control the process. The client carries the risk of their own changes and of supplier delays, because neither is in your hands.
Stopping scope creep on a fixed fee
Scope creep is rarely one big request. It is ten small ones. The fix is administrative rather than diplomatic:
- Write the revision allowance into each stage. “Two rounds of revisions to the concept” is enforceable. “Revisions as required” is not.
- Use a change request. Any request outside the agreed stage gets a short written note: what is being asked, the extra fee or hourly estimate, and the effect on the programme. The client approves it before you start.
- Close stages formally. Get the concept signed off in writing before developed design starts. Reopening a closed stage is a change.
- Keep approvals dated. A dated record of which fabric and finish the client approved settles most arguments before they start. See client approvals.
How to tell whether a project made money
Whatever the model, you only learn if it works by measuring it. For each project you need three numbers:
- Fee income: everything invoiced for design and management time.
- Product margin: sale price minus cost, line by line, after delivery and any damage write-offs.
- Time cost: hours spent multiplied by an internal cost rate for each person.
Fee income plus product margin, minus time cost, is the project’s contribution. Compare it with what you expected when you quoted.
Practical setup:
- Record time against stages, not just projects. You want to know that concept design ran well over, not just that the project did. That tells you what to charge next time.
- Code income separately. In your accounts, keep design fees and product sales on separate income codes, and product costs in cost of sales, so product margin is visible.
- Tag by project. If you use Xero, its UK pricing page lists project time and cost tracking on the Ultimate plan only. On other plans, check what your plan offers for splitting transactions by project, or keep that split in your own records. See Xero for interior designers.
- Review at each stage, not at the end. A project that is over on time at concept stage can still be rescued with a change request. By installation it cannot.
Techstyles keeps FF&E lines, purchase orders and invoices together per project, with UK VAT on each line, and sends invoices and POs to Xero so you are not re-keying them. It is one way to keep product margin in view; a well-kept spreadsheet and disciplined Xero coding also work.
Working internationally
If you work for overseas clients or buy from overseas suppliers, decide which currency the fee is in before the proposal goes out, and say who carries the exchange risk on product. Quoting in sterling and buying in euros means a currency swing comes out of your margin. Either build a buffer into the product price or state that product is invoiced at the rate on the day of invoice. Studios using Techstyles can keep each purchase order in the supplier’s currency while the client invoice converts at that day’s rate, frozen on the invoice (see finance). For the sourcing side, see buying furniture from overseas suppliers.
Putting it in the proposal
Whichever model you choose, a good fee proposal answers the same questions:
- What is included at each stage, and how many revisions
- How the fee is calculated and when each invoice is raised
- How product is priced, and whether trade discounts are kept or passed on
- What happens outside scope, and how changes are approved
- Which currency, and who carries exchange risk
- Whether figures are shown with or without VAT
The right structure is the one where your post-project numbers look like your quote.
If you want to see how Techstyles handles schedules, POs and Xero for your studio, there is a 30-day free trial with no card on our pricing page.
Questions
- How do UK interior designers charge?
- Usually through a fixed fee, an hourly or daily rate, a percentage of the build or FF&E budget, a mark-up on products, or a hybrid of these. Many proposals combine a fixed design fee with hourly or percentage fees for procurement and site work.
- Is a percentage fee better than a fixed fee?
- Neither is better in general. A percentage scales with project size but can look like an incentive to spend more. A fixed fee gives the client certainty and rewards efficiency, but you carry the risk if scope grows, so it needs clearly defined stages and revisions.
- Should I charge hourly?
- Hourly suits consultations and open-ended work, and puts the risk of overruns on the client. It also penalises efficiency: as admin gets faster you bill fewer hours for the same outcome, so staged fixed fees often suit defined work better.
- Do I charge VAT on a product mark-up?
- A marked-up cost cannot be treated as a disbursement, because HMRC requires the amount recovered from the client to equal exactly what was paid to the third party. It becomes part of your own supply and is taxed as such. Check your position with your accountant.
- How do I know if a project made money?
- Add fee income and product margin, then subtract time cost (hours multiplied by an internal cost rate). Record time against stages, keep fees and product sales on separate income codes, and compare the result with your original quote at each stage.