Pricing for profit and how to stop undervaluing yourself for good.

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Transcript

Speaker 2: 0:12

Welcome to Designing Success from Study to Studio. I'm your host, Rhiannon Lee, founder of the Oleandra Finch Design Studio. I've lived the transformation from study to studio and then stripped it bare and wrote down the framework so you don't have to overthink it. In this podcast, you can expect real talk with industry friends, community, connection, and actionable tips to help you conquer whatever's holding you back. Now let's get designing your own success.

Speaker 3: 0:37

As we round out the end of the year and I find myself thinking about the podcast next year, I've lined up some guests over the break to bring you more of those interviews back again for next year. Today I really want to talk about pricing because It has to be up there with getting clients as the number one thing that interior designers that I work with people, whether it's private coaching, group coaching, just people in my DM saying, Oh my goodness, I just watched the industry standard pricing webinar on your website and I have these questions and la. So we're always talking about pricing and pricing isn't always evolution. You don't just set and forget your pricing. You don't need a calendar to tell you when to change your price. You don't need a new financial year. You should be keeping across the way your pricing makes you feel. I think it's Richard Branson who says, if your pricing doesn't make you feel uncomfortable, it's like it's wrong. Your pricing should definitely make you feel a little bit ick, but not all the way ick. And when we're talking about pricing, it's also really important to do that sort of self reflection pace that is your money mindset and that is whether or not you feel uncomfortable at the pricing because you can do interior design with your eyes closed and you would never pay someone 20, 000 to do that or 50, 000 to do that. So there are some questions that come up sometimes that can be more about us than they are about our consumer or our client. It's probably likely that in, since you've had your design career, you have asked yourself one of the following three questions. What if I'm charging too much? What if I scare people away with these prices or the big one? What if I'm actually not worth that much money and people can see right through me? And that is a special shout out to our friend imposter syndrome, because that one is not a thing, but it is definitely something you've probably asked her pricing. isn't about what makes you feel comfortable. As I said, it's about making sure that your business is profitable, that it's sustainable. There's longevity. There's no point leaving a job that was paying you 70, 000 comfortably to walk into a business and then go, Oh, look, I really like it and no problems. I'll just pop around and give you some ideas. 10, 000 a year. That's not a business. That's a market stall. So I. Don't want you to feel apologetic about making money because they know what you're delivering is it's a service that you're providing and you're giving them something for the money that they're paying that they cannot do themselves. But I think too much of us feel this sorry, button or sorry, alarm goes off all of the time when we're explaining our scope of work or a fee structure or why extra edits cost extra money or why I can't just change all the finishes in that 3d render without a charge. I want to talk about some of those mindset shifts. I want to talk about the math, what's really involved in getting your pricing right. I do have a pricing calculator named Percy in my AI army that I've mentioned before many times. He's incredible. I'm not talking about Percy today. It's not about him. This is more of the like manual way. If you don't want to get something done fast, accurately, get all the market research done. If you want to take your time and set it up yourself, no shade. I still have respect for people who are not covered in robots like I am. And it's totally fine. So this is going to break down a little bit more of the structure for how we get confident in what we charge and how we charge what we're worth and how we back ourselves in that worth as well because that really takes a lot of practice. I'm going to start by breaking the myth that time equals value. Your clients are not paying you for the amount of hours you work. And I cannot stress this enough because when I first started, it would take me 40 hours to do a mood board. And right now it probably takes me under an hour to do a mood board for a client. So why would I, if I were charging hourly, nobody would hire me at the beginning of my career. Cause they're like, ah, okay. So even if you're a hundred dollars, whoa, 4, 000 for a mood board, I'm not going to do that. And then on the flip side, if it's under an hour, and that's because of my efficiencies, my systems, my, my hours of late nights, my millions of nights, I was still designing for clients at two 30 in the morning with my kids asleep around me on the bed. And I. I did all of that. I worked for all of that. So I could get myself to a skill base that takes less than an hour to pull together selections that I'm confident in and that are right for the client brief. But I shouldn't be penalized for that. So my current pricing would not be less than my, imagine I was a hundred dollars an hour. I'm not, but imagine I was. And so I wanted to go, it only took me 50 minutes. Am I going to be charging 75 percent of my fee and going, okay, so 70 should be fine for that. That whole sentence actually makes me feel a bit itchy. So I want you to remember that they are paying you for all the things that you do to increase that expertise, that creativity, the skill, the outcomes that you deliver. Every time you invest in something like a group coaching program, or when you pay your subscription for SketchUp or AutoCAD, when you go and watch a one hour webinar in your own time to just get a little bit better at something inside of your business, these are all benefits. Things that the client is effectively paying for billing them for you to personally develop, but the fact that you are doing all these things to get better, that means that you're bringing all this value and it doesn't matter how long it takes or how little it takes. So think about a chef. For example, you don't go into a restaurant and say, Oh, I'll just actually pay for the ingredients and the amount of time that the pasta sauce was in the pan while the pasta cooked. Yep. Let's call it 12 to 14 minutes. Okay. Done. No, you're paying for the years of training the quote on blur trip to France that chef took last year to be better in their particular niche or in their particular cuisine, you're paying for their artistry, for their ability to create something that you couldn't make yourself. You're paying for the atmosphere, being in the restaurant and the overall experience and feeling like, Oh, I went to a chef's hat restaurant and I paid this, that, and the other, and for your clients, they're paying for the feeling of Oh, I've. I've engaged a luxury service. I'm working with an interior designer on my home, on my project, because we want to make it amazing. So really feeling that confident shift of Oh yeah, this is good. We're doing it now. Like we're getting out there to clients and we are going to show them that value. And then we can really confidently say, excellent. I'm so excited about a project. Here's what it is that we've discussed. You'll need my help for, and here's what it costs to engage me in this project. The importance of confidence is so underestimated in this industry. You need to believe in your pricing before anyone else will. If you're super unsure and if you totally don't believe in yourself, it shows you're wearing your crazy on the outside. Like people, when you're talking to them yeah. Yeah, yep. I could totally do that. I'm thinking 160 an hour. Listen to that. This girl don't know what she wants. She doesn't know who she is or what she delivers. That's like really, that makes me uncomfortable as well. But I also remember being that girl. So yep, that was a thing. And now it's so much better If you are led with things that you have already modeled, pricing you've already pulled together so that you can really confidently go, look, a package with those inclusions costs x, I am absolutely happy to look at adding in some finishes and fixtures and some, bespoke cabinetry, joinery drawings of this, and la la la, and the overall price is that. And it's not talking about how long it takes, and it's not talking about what your hourly fee is, it's just saying, tell me what you need my help with, and I will tell you a price point that we can start talking about, for me to come and action that scope of work. The next point I'm going to touch on is knowing your numbers, breaking them down, understanding them. I feel strongly that a lot of people hide from this in the first, at least six to nine months, just thinking, Oh, I'll work it all later. I don't have a lot of clients. I don't need to learn these terms, or I don't need to look into finances too much. There's no point only understanding what profit income expenses, what are the differences. when you're already into a business and your accountant is asking for this information. Try to see yourself as the CEO from the beginning if you can, even if you're just a baby CEO, you are a CEO. I've broken it down into four really easy steps so that you can follow along. Pause this podcast if you need, sit down, take your time, get through it. So the first thing you want to do is calculate your business expenses. What does it actually cost to run your business? Now, some businesses are really lean. Mine's extremely lean. It's a digital based business with no staff. Mine are all robots. I just made them one time and I don't pay them. It's terrible. Thank goodness. They don't have a union because I don't pay them for all the work that they do. And you add up everything that you spend. So that could be everything from just like extra Apple cloud storage to a pro version of Canva, pro version of Zoom, if you have it. If you have a few AI transcription programs, if you pay for ChatGPT paid version, like whatever all those subscriptions are, you might be surprised. This is somewhere where often when I do this exercise, we can save a lot of money. Cause you're like, Oh my gosh. Yeah. I forgot I was still subscribed to this or I did a trial of this and then it went into the paid one without my knowledge and I've just picked up on it. So this is a good place to also save money. Don't forget to include your own personal salary here because you did not start to work for free. I don't believe in the idea of like we work for free for the first two years. I definitely believe in seasons in business. Sometimes I'm in a wage season. Yep. Yep. Let's go. The money's coming to me. And other times I'm like, Nope, I'm in a reinvest season, putting it back in. I'm going to, work with some some people who have stronger skills than me, I might outsource some paid advertising or look at where I can get help in areas that I feel the business needs more of, and I'm going to spend money in those areas. So that's when I'm in my investment season. So have a little think about your personal salary. Will that be the same fortnightly all the way through? Even if it's just 20 a fortnight, because you are in this like full on season or you're not making a lot of money, do factor it in because it makes you feel less resentful of your business if you take home something. Okay, now let's factor in taxes and savings. So a general rule is to add 30, 40 ish percent to your salary over in another account for taxes and profit savings. Now what's profit savings? It's exactly what it sounds like. It's like a little bit of cream on the top that you're, you don't have to pay to the government, even though you keep it in your GST account making interest, but it is money that your business has made. That is a profit. It doesn't go out to expenses and it doesn't go to taxes, but it's not going to you as a wage. It's sitting in there and it's accumulating wealth. Okay. And again, I don't care if that's 20. How good does it feel to see profit growing in your accounts? I love that for you. So have a think about taxes and savings. Step number three, determine your billable hours because it might actually surprise you as an interior designer, how often your, the work that you're doing is not billable. You're running some marketing campaigns. You're prepping for something. You're doing some something that someone hasn't paid you to do. That's not billable. So you're You're not working 40 client facing hours a week. After you do admin, marketing, all the other things, you probably only have if you're new, maybe 10 to 25 hours available for client work. And so you need to be calculating your rates based on that billable time and not on I work 40 hours a week because you don't charge people. You're not being paid to work 40 hours a week. You're working 40 hours a week because you are a business owner. And so that is something that. If you haven't got your systems in place, if you don't have AI, if you don't have boundaries around working really strictly, school hours four days a week or anything like that, then you could find yourself very much looking at a large number of hours, but you can't be charging for every one of them. Okay, and once you've done that, I want you to do the maths. So you've calculated your business expenses, you've factored in taxes and savings, in some personal salary and some profit, determined what are the billable hours, and then you have to set your pricing. So that is how you price to stay profitable. You set your prices based on X amount of hours worked per week, and then you can even look at that, reverse engineer that from a goal. Say you wanted to make 100, six figures. It's the buzzword for everyone. Say you want six figures. You can say if a client average booking with me is two and a half thousand dollars, then you can divide that 100, 000 by two and a half and how many clients would I need to work with in order to get that goal. So that's how you see that and think, Oh God, think I'll up my prices or I'll have a premium service that I offered to three or four people this year. This is how you model pricing and make decisions.

Speaker 4: 13:48

I'm interrupting this episode for just a teeny tiny minute because Black Friday, it's everywhere, right? But I have bundles of my AI assistants right now with 149 US dollars off and you can get four of them for 247 US dollars. And so they could take care of content planning, Instagram writing, writing all your client emails. And writing standard operating procedures for your interior design business in minutes you can get them all bundled up like that just until Friday at midnight. So you're listening to this in real time. It's Thursday. There's basically 48 hours to go, but I wanted to make sure that you knew about it because after that, they go back to 99 US dollars each, which is still a lot. amazing given you only ever pay for them once. They're not subscription and you use them every day. I would say that I use Clancy about 36 times a day because he writes my emails, all my emails. I would say that I use Sylvie three times a week for content planning and tweaking my seven day plan and Marius does my pins every single day and I just always go to Otis to ask him things because he's a way better copywriter than I am. Anyway, I'll let you get back to pricing but I just wanted you to know that those bundles are on sale until midnight and this is a once a year sale. This will not be repeated this year.

Speaker 3: 15:01

Okay. Let's get into some common pricing mistakes. Mistake number one, underpricing to get your foot in the door. I hear everyone going, didn't you say that you were only charging different times? It was a global pandemic people. Now I definitely have changed my tune and I definitely talked to girls mentorship about the idea that, you've come out, you're fully qualified. People who get graduate jobs don't say, oh, I'll just do it for one tenth of the salary though, because I just like the experience. They're getting the experience, but they're also getting paid. And if you're under pricing, you're going, it's a volume problem. You're going to work with a lot of People but they're clients who undervalue you, and that leads to burnout. I say this in so many other facets of my life, but start as you mean to go on. There's no need for you to start really low. It's great to do one or two like that for experience and to get some confidence and to test your processes end to end. I'm all for it. Do the free job for one or two people, fine. But when you go in, go in at the price that you mean to go in at. When you get repeat clients later, it is actually hard to say, Oh, look, Susan, I know that you only paid me 26 last time we did a full house renovation, but I actually cost a lot more now a year later. Future you will actually thank you. So mistake number one, underpricing to get your foot in the door. Don't do it. Mistake number two, Over delivering to make up for feeling too expensive or to make up for imposter syndrome. So set really clear inclusion boundaries and deliver exactly what's in your package. No more, no less. I love under promise over deliver. I play around all the time with timelines. I sometimes steer people into thinking that the budget is going to be much larger and then send the quote that I'm happy with. And then they're all of a sudden quite happy with that because it's under what I ballparked it when I was chatting to them. So in that sense, great. I love to wow clients. I'm all about the client experience. I want all of my clients to be telling everybody that it was the best thing ever, but I don't over deliver because I think I'm priced too expensively and I don't over deliver because I'm nervous or concerned that I can't bring the goods when it comes to coaching or otherwise. I have actually factored in those full Trello boards and full business plans and everything as part of the offering for that payment. So it's part of the service delivery, but I do see this one all the time. So I wanted to bring it up. Mistake number two, over delivering to make up for feeling too expensive or underqualified. Mistake number three. Pricing based on your competition, not your own business needs or your household's needs. It's really easy to get stuck in comparison or to be doing your market research. So then thinking excellent. Most people about the same experience as me and about the same skill level as me as perceived by you, not somebody else working with you to do this, they are charging this so I'll just charge the same or I'll charge the same but a little bit less so I get the work or I'll charge the same but a little bit more because I think I'm a little bit more skilled, etc. And this is not how we set pricing. This is how you follow. This is how you imitate, not innovate. This is how you don't get noticed, you don't build a sustainable business with longevity that you love, this is how you just show up and clock in and clock out. It's not very inspired at all. And hopefully that isn't how you've set your prices or if it is, I hope today's episode really helps you go, do you know what? I'm going to go back and I'm really going to have a think about what it is that I want to feel I'm contributing into my household. What do I need to contribute to feel like I am part of it? And what would it look like if there was more cream or more profit being put into that savings account? And how do I get to that point? Here's a little tip for you. Add value, not extra hours to your higher tiered packages or service offerings. So think faster turnaround times, more revisions, exclusive perks. So we're not doubling our work time. We're saying I've got these, pre saved PDFs that help you to do X, Y, and Zed They normally retail at 49. 95. I'll include four of them or, value add, that's just a little tip for me. Always look at a way that you can pack more value in rather than add additional time on. Okay. I said it before, but pricing is one of the biggest challenges for new designers and it. is overwhelming and we do second guess it. And even in the second year, third year, fourth year, fifth year pricing is something we always go back to. And then we're like, Oh, am I getting a bit too big for my boots here? Is this pricing? Okay. And then you look at someone else's. I did some inadvertently did some market research recently because a few people were telling me about another group mentorship that they had been in. And it was three times the amount of mine. And I knew it delivered one third, if that of what I'm delivering. So I'm like, okay, there's Obviously a pricing opportunity, like I could change my pricing, but I don't want to price people out of that. I can see that people are emerging. We don't have a lot to invest in the first place. I want to invest in you, you invest financially in me, and I'm invested in getting you the result. And I just feel like even though I'm aware of other people's programs and I know that I could absolutely just triple my pricing tomorrow and still deliver so much more. That doesn't align with my ethics, it doesn't align with my business values and it's not something that I would do. The framework is taking the last intake and closes this weekend. It's 4. 47 enrolment fee and 99 a month. Um, I've been working with you constantly for 12 months. There's weekly group calls and so much coaching. The notion resource library that I give you is five years worth of everything that you possibly need to get set up. It's grown and it's grown and I'm actually very proud of it. And I think that price point makes me feel like way more interior designers could actually start their business. If all they're spending is 99 a month to get proper high touch coaching for me, it's a no brainer. And yes, I don't have plans to change that pricing model in any way, because I just want it to be accessible to everybody. If they're passionate about starting an interior design business, I don't want them to have to do it the hard way. And I have written a course already. It's all sitting there. I just think Everyone should just get someone to in their corner who will support them and a team of girls around them who will just be like, let's get it done. And so I'm really excited for 2025, really excited to see who will be joining me. This is the last intake. I do not know what is in the future for the emerging designers course in terms of what will happen next year around. intakes and when and how and what that looks like. So if you have been sitting there thinking, Oh, I'm just going to finish my IDI course and all my design school and then I'm going to go and join the framework. My biggest advice to you is do not wait. All the girls who join me while they're still studying find it really supports their study because they're starting to do it. talk to designers who are working so they get a much better understanding of the industry as a whole. Anyway, I don't need to workshop my pricing. I'm very happy with it. This is about workshopping your pricing. So please do not price hourly, especially if you're going to be underpricing at the beginning. Start with knowing your numbers. Avoid those mistakes I spoke about. Structure your offers in a way that works for exactly what you need for your business and what works for your clients and have fun doing it and know that nothing's locked in. If, You're not sure, change it, track it for 30 days. Did you hear more yeses? Did you get more pushback? What happened? You've got to, what is the saying? You've got to like mess around, find out. You've got to do that in business. You cannot just go, Oh no, I set my pricing when I first started. And I'll change it every year at the, at. The end of tax time or once a calendar year, or maybe never. Now is the time to sit and do the work and understand your pricing and know when, even seasonally, sometimes you might want to move up and sometimes you move down. A bit like I talked about those other financial things, like when you're in a wage season or an investment season, you could find that you want to dip down a little bit in pricing when the months are quieter, and then, lift up a little when you've got a lot of inquiry. If this episode resonated with you, please, can you share it with a friend? Can you share it to your stories on Instagram? Can you leave me a review? I haven't had one in ages. I feel like I might be shouting into the void again. It's something that I listened to a lot of podcasts and I've really been conscious of leaving reviews now that I am a podcaster because before I didn't even intend to, but I feel like I just took so much. amazing content from these creators who don't get paid to make the podcast and who want to share it. And the only way people can know about it is if you rate it, if you review it, if you share it on your stories or you tell someone else or send it to a friend. So please, if you could do any of those things, one, all of them, I would just be so forever grateful because I really do want to help as many interior designers as possible. Really master the business and marketing skills that it takes to make sure that when they go out and run a design business, it's not just a cluster. Be myself because they don't have that support or knowledge base. All right. Thanks for tuning in this week. I'll be back in your ears on Tuesday. Bye for now.

Speaker: 24:23

That wraps up another episode of Designing Success from Study to Studio. Thanks for lending me your ears. Remember, progress over perfection is the key. If you found value in today's episode, go ahead and hit subscribe or share it with a friend. Your feedback means so much to me and it helps me improve, but it also helps this podcast reach more emerging and evolving designers. For your daily dose of design business tips and to get a closer look at what goes on behind the scenes, follow at oleander underscore and underscore finch on Instagram. You'll find tons of resources available at www. oleanderandfinch. com to support you on your journey. Remember, this is your path, your vision, your future, and your business. Now let's get out there and start designing your success.