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Considering New Potential Revenue Streams for Commercial Interior Designers

business of interior design interior design small business strategies Aug 17, 2021
how to generate income in interior design

How Offering Additional Services Can Generate More Revenue, stabilize a Design Firm, and Increase Client Loyalty

Many commercial interior designers were battered over the last year due to the pandemic. Although commercial building continued, new projects were halted, and revenue may be down for many commercial design firms. The next couple of years will be a time to rebuild and hopefully get back to the levels before the pandemic hit. One way to grow your firm is by finding new revenue opportunities that will generate income and set you apart from your competitors.

I bet when you entered your interior design study, you thought you would be picking out finishes, selecting furniture, and proposing different materials. Little did you know that an interior designer does so much more. In today’s fast-paced, competitive world, we are seeing clients demand more from their designers. What does this mean for you as an interior designer? It means that you have an opportunity to increase your revenue by offering value-added services.

These additional services can have a significant impact on clients. Think about this. How many clients are you working with that seem disorganized, understaffed, and quite frankly frazzled with their project? How does this affect you and your design team? Most likely, it is slowing your process down significantly. You ask for information, and your client is struggling to answer promptly.

Related Article: "Taking a Closer Look at Customer Experience - What is the Experience You Want to Create?"

Now, let’s look at it a different way. What if you could offer additional services that would help your client overcome their challenges. Wouldn’t that be a game-changer? Rather than being a vendor, you begin elevating your firm to a partnership level. Your client looks to you as an extension of their own business. This will create longstanding loyalty that will increase new project opportunities down the road.

A Fantastic Example of Adding Value for the Client

In 2018 I was working on a multi-family project that was being built in downtown Denver. If you are unfamiliar with downtown Denver, at the time, the area was attracting a high number of young professionals. I think at one point, the Downtown Denver Partnership association said shared the vast majority of those living and moving into Denver were young, college-educated professionals looking to live and work in the same area. Higher-end apartment buildings were going up everywhere. However, the project I was working on was being developed by an out-of-state developer unfamiliar with the market.

The new multi-family building would primarily include small studio and one-bedroom apartments between 650 and 950 square feet. The developer was struggling with understanding the market expectations. For instance, he didn’t realize the importance of the amenities that many competing complexes were offering. He wanted fewer gathering areas and more apartments, but that wasn’t going to be of value to most Denverites. He also did not realize the quality of finishes needed to fetch the higher apartment rental market in Denver. Constant battling with our design team over significant decisions resulted in our firm completing a market analysis for him.

With the help of a couple of architects on the team, we identified and visited ten apartment complexes within a 5-mile radius of his site. I researched each complex before the visit and noted the number of units, floors, LEED-certified, year built, types of units offered, and pricing. I also gathered information on amenities, parking, storage, etc. I grabbed photos from the websites. With each visit, I used a checklist to help track different finish materials such as flooring, appliances, backsplash, counters, cabinets, etc. The architects identified support areas, storage, and community areas such as mailroom/package pick up, business office, community area size, gym, etc.

These visits and subsequently market analysis allowed both the architect and interior designer (me) to evaluate the competitors. The information was used to help the client better understand the market. No longer was I fighting for quartz countertops, as every competitor offered quartz counters.

By completing a detailed analysis, we were able to offer considerable value to our client. He did not have the support staff in Denver to complete a market analysis. We were able to provide that to him for a cost without disruption of his staff or extensive travel costs. He was so excited by the analysis that the cost was minimal to him. Plus, we could use the information for our own benefit, i.e., higher-quality finishes.

Finding the Resources for New Revenue Streams

Luckily for me, I had an extensive background in market analysis from my previous career. Not all design firms have a person on staff with such a broad skill set. However, it doesn’t mean you can’t offer additional services.

There are many ways to offer additional services that can generate income while improving client relations. Think about a partnership. What would it look like if you partnered with a marketing consultant familiar with completing market analysis? The project could be conducted by the partnering business but branded or co-branded under your firm’s name. Many service providers can help you offer additional services without you need to hire more people.

Another suggestion is to look at your current employee abilities and capacities. If you have a marketing person on staff, that person may be able to help with brand evaluation on projects and make suggestions on incorporating brand measures. You may also have someone on staff that is LEED-certified or highly committed to sustainable practices. They may be able to help conduct a sustainability evaluation and recommendation for clients. As you give these folks new responsibilities, you may find they are more highly engaged and enjoy the new challenges.

How to Evaluate New Service Potential

I would not suggest going out and offering all the options above immediately. Instead, I would suggest conducting a little research first to identify what will generate needed income and add value to clients. Before you choose which services to offer, you will need to research and evaluate four specific areas:

Client Value –

By offering an additional service, are you bringing value to your client? And, is it enough of a value for someone to pay for it. Just to add value for the purpose of value doesn’t really help with revenue. The value has to be enough to warrant additional revenue or be considered a loss leader. (A loss leader is a product or service offered that generates very little income but results in higher priced products or services being purchased in addition to the loss leader item.)

Revenue Opportunity –

What can you reasonably charge for this service? How many clients would be willing to purchase over a specific period? The specific time is essential. If you only sell 1 or 2 over the year, it may not be worth the additional hours to offer the service.

Actual Cost -

Cost is tricky because you need to evaluate both time and money. Even if you partner with another service provider, you still need to consider project management time.
Competitive Advantage – Anytime you offer a new service, you want to look at it from a competitive advantage. If 90% of competitors are offering this same service, then you probably need to as well. Whereas, if very few competitors offer the service, but the service is desired by the market, then you may have an opportunity to set yourself apart from your competitors.

These four areas are relatively broad. I want to caution you that you shouldn’t take them lightly. There are many other factors that you can and may want to consider. Take your time evaluating if adding a new service will help grow your firm or put unnecessary stress on your processes. You must make decisions based on filling a market need that will also generate revenue – not just income. By doing a bit of research, you may find that you have a new revenue avenue.

As an industry, we need to look beyond our current services toward additional value and revenue opportunities. By doing so, we will solidify client relationships, increase revenue, and help us withstand future market dips. The industry will continue to evolve, and your ability to evolve with it will help you build a profitable firm.

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