How to Charge for Procurement in Interior Design
· 9 min read
To charge for procurement in interior design, choose one of three models: a flat fee, a percentage of purchases, or hourly billing. Flat fees suit a defined scope, percentages suit large purchase lists where you carry the ordering risk, and hourly billing suits scope that is still unclear. Whichever you pick, write it into the agreement and track the real result per item and per project.
The main ways to charge for procurement
Procurement is the work between an approved specification and an installed item: sourcing, requesting quotes, ordering, paying suppliers, chasing delivery dates, checking goods on arrival and handling claims. This work takes time even when the design is finished, so it needs its own line in your pricing. Most studios use one of the models below or a mix.
| Model | How the fee is calculated | Works best when | Main risk |
|---|---|---|---|
| Flat fee | A fixed amount for a defined scope of sourcing, ordering and tracking | Item count and suppliers are known in advance | Scope grows and the fee does not |
| Percentage fee | A percentage of purchase cost, shown as a separate line | Large budgets; the client wants a simple, visible rule | The fee follows price, not effort, so cheap items that take a lot of work are underpaid |
| Markup on trade price | The studio buys at a trade price and sells to the client at a higher price | The studio buys and resells, and the client pays the studio | The client sees a price gap if the arrangement is not explained |
| Supplier commission or discount share | The supplier pays the studio, or the studio keeps part of a trade discount | You have stable relationships with a few suppliers | Conflict of interest if the client does not know about it |
| Hourly | Tracked hours multiplied by a rate | Scope is unclear or the client changes decisions often | The client fears an open-ended bill; you underbill if hours are not tracked |
Hybrid models
Pure models are rare in practice. Common combinations are a flat fee up to a set number of items with a per-item rate above it, a percentage with a minimum fee, and hourly billing with a cap that needs the client's approval to exceed. The extra rule is usually where the profit is protected.
How to choose a model for a project
Do not choose by habit. Run the same short analysis on every new project, because the right model depends on the project, not on your studio.
- Count what you will handle. Estimate the number of items, suppliers, deliveries and rooms. Ten suppliers with 150 items is a different job from three suppliers with 40 items.
- Decide who pays suppliers. If the client pays suppliers directly, you carry less financial risk and a fee for coordination fits well. If the client pays the studio and the studio pays suppliers, you carry cash flow and error risk, and a markup or percentage is easier to justify.
- Judge how stable the scope is. If the specification is approved and few changes are expected, a flat fee is safe. If decisions are still moving, prefer hourly billing or a flat fee with a defined change-order rate.
- Estimate your hours. Take a typical item mix and estimate the hours for sourcing, ordering, payment follow-up, delivery tracking and acceptance. Multiply by your target rate to get a floor under any model.
- Test each model against that floor. Compute what a flat fee, a percentage and a markup would pay for this project and compare them with your hour-based floor. If a model pays less than the floor, change its parameters or drop it.
- Add one safeguard. A minimum fee, a cap, a limit on revisions or a rate for changes after approval. One clear safeguard is better than five vague ones.
Questions to answer before you quote
- How many items and suppliers are in the current specification?
- Will the client pay suppliers directly or through the studio?
- How many revisions of the specification are included?
- Are returns, replacements and damage claims included in the fee?
- Are there items with long lead times, imports or custom production that need extra follow-up?
- Does the client expect to see supplier prices, or only final prices?
- What is the minimum fee below which the project is not worth taking?
A worked example with numbers
The figures below are an illustration, not a benchmark. Assume a project with a purchase cost of 60,000 EUR, an estimated 110 hours of procurement work, and a target rate of 80 EUR per hour. Then assume the project runs long and the real workload is 150 hours.
| Model | Calculation | Fee | Effective rate at 150 hours |
|---|---|---|---|
| Flat fee | 110 hours plus a buffer, rounded to 125 hours at 80 EUR | 10,000 EUR | about 67 EUR per hour |
| Percentage fee | 12% of 60,000 EUR | 7,200 EUR | 48 EUR per hour |
| Markup on trade price | 20% on 60,000 EUR; client price 72,000 EUR | 12,000 EUR | 80 EUR per hour |
| Hourly | 110 hours at 80 EUR as the estimate; 150 hours billed at 80 EUR | 8,800 EUR estimated, 12,000 EUR actual | 80 EUR per hour |
What the example shows
- A percentage fee looks fine on paper but pays the least when the work takes longer than planned, because the fee does not react to extra effort.
- A flat fee protects the client and costs you the overrun. Its buffer and its change-order rule are what protect you.
- A markup pays more here, but it also carries more: you hold supplier payments, handle returns and absorb mistakes. Count that risk as part of the price.
- Hourly billing pays for every hour, but the client sees only an open total unless you agree on an estimate and a cap.
Markup and margin are not the same number
A 20% markup on cost gives 12,000 EUR on 60,000 EUR, but that is only 16.7% of the 72,000 EUR client price. Mixing the two is a common reason studios earn less than they planned. If you need to convert between them quickly, use the markup calculator.
What to put in writing
The model matters less than clarity. Disputes about procurement fees usually come from unwritten assumptions, not from the percentage itself. Put these points into the agreement or the project proposal in plain language.
Terms checklist
- The chosen model and the exact base: percentage of what, hourly rate for which roles, markup on which price.
- What procurement includes: sourcing, quotes, ordering, payment follow-up, delivery tracking, acceptance on site.
- What is excluded or charged separately: returns, replacements, customs issues, repeated orders after a change of mind.
- Who pays suppliers and when, including the advance share and the remaining balance.
- Whether you receive a supplier commission or discount share, and that the client is informed.
- The change-order rule: the rate or fee for changes after approval of the specification.
- The cap or minimum fee, if you use one.
- How and when you invoice: on approval of items, on order, or on delivery.
How to present the fee to a client
- Describe the work first, then the price. Clients accept a fee more easily when they see the list of tasks it covers.
- Offer the main model and explain in one sentence why it fits this project.
- Show one example calculation with the client's own numbers, not a generic one.
- State what happens if the scope changes and who approves the change.
- Ask for written confirmation before the first order is placed.
How to do it in ArchiBoard
Whatever model you choose, you need to see the real result per item and per project. ArchiBoard has the tools for that in project finance and the estimate. The Free plan allows up to 20 items and 2 participants, and plan details are on the pricing page. The estimate tools are described in the estimates help chapter.
- Open the project and go to Project Finances. In the finance settings set your studio role, how you earn (commission, markup or share of supplier discount), who pays whom ("Client → Supplier" or "Client → Studio → Supplier"), the project currency and the approved budget.
- Go to Estimates and switch the estimate view mode to Economics. For every item you see MSRP, supplier discount, procurement price, markup, profit and client price. If you change an amount, the percentage recalculates, and the other way round.
- If your fee is flat or based on hours, keep it in the estimate as a studio fee item. It has its own statuses: Needs approval, Approved, Invoiced to client, Partially paid, Paid by client. After approval, an "Invoice the client" task appears. Log the hours themselves in your own timesheet and enter the resulting amount.
- Record client payments and supplier payments as transactions in Project Finances. Supplier payments are grouped by supplier, so you can see how much has been paid and how much remains.
- If a supplier pays you a commission, track it through the stages accrued, requested and received. ArchiBoard creates the task "Request commission from…" automatically.
- From a payment, generate a PDF: an invoice to the client, an invoice to the supplier for commission, or a report to the client. Studio details are taken from your profile settings.
- When you send the estimate to the client with Export to PDF, your purchase price, markup and profit are not included in the client document.
FAQ
Which model is best for a small studio with its first projects?
A flat fee with a clearly defined scope and a change-order rate is usually the easiest to start with. It gives the client a fixed number and gives you a base for planning. Track your real hours on the first projects, because that data shows whether the fee you set is realistic.
Is it acceptable to combine a design fee with a procurement markup?
Yes, many studios do, as long as both are agreed in writing and the client understands what each one covers. The risk is the client feeling charged twice for the same work. Define the design fee as the creative work and the procurement fee or markup as the ordering, payment and delivery work.
Should I show the client my purchase prices?
It depends on the model. With a separate percentage or flat fee the client usually sees supplier prices, because the fee is visible and honest. With a markup model, the client normally sees the final price only. Either way, explain the arrangement upfront so the price difference is never a surprise.
How do I protect myself when scope keeps growing?
Set the scope in numbers: a fixed number of items, suppliers and revisions included in the fee. Beyond that, apply an hourly rate or a per-item rate that the client approves before work starts. Record every approved change in writing so the final invoice matches what was agreed.
How often should I review my procurement pricing?
After every project, compare the fee you earned with the hours you spent and the problems you handled, such as late deliveries or damaged goods. If one type of project regularly pays below your target rate, change the model, the minimum fee or the included scope for that type, and keep the rest as it is.