Business Overview

Interior designers have a deep understanding of human psychology, especially as it relates to how people react with a specific interpretation of interior design and physical space. An interior design firm may work on many different types of environments that can be created inside a building. Examples are office spaces in a corporate skyscraper, luxury hotels, fine homes, museums, and even churches. Typically, designers will specialize in either commercial or residential interior design, though some firms do both.

Who is this business right for?

The people who work as interior designers have an in-depth understanding of color usage, textures, furniture styles, artwork, lighting, fashion trends, eco-materials, indoor plants, and a whole range of other things that can be used as design elements for interior spaces. They need to be very good at dealing with people, including clients that can be quite difficult and workers that make mistakes on occasion. Their main talent is aligning their own view of what the interior space will be made to look like with the client’s preferences and needs, so that both are very satisfied with the results.

What happens during a typical day at an interior design business?

There are three main activities of an interior design firm owner. They are: 1) constantly learning about new elements of design and current trends, 2) seeking new clients to work for, and: 3) managing the ongoing projects and staff.

What is the target market?

The best type of client is one that is easy to get along with, has good taste, enjoys the finer things in life, is open to suggestions, and has a project where “money is no object” with an almost unlimited budget. Of course, no one just starting out in this business will find clients like that.

The second best type of client is the “bread and butter” client. These clients have a reasonable budget to spend on the interior design work and ask the interior designer to work on a specific space. When they are pleased with the results, they give the same interior designer another project to work on. They also tell their friends how happy they are with the work and invite them over to see what was done.

Most of the successful interior design firms have plenty of this second type of client. By making these clients happy, the business grows in an almost organic, automatic way. One successful project leads to another and then another.

How does an interior design business make money?

Interior design firms can be paid in a variety of ways. The American Society of Interior Designers notes these are the most common ways to charge for interior design services:

  • Charging a flat or fixed fee – After discussing the project with the client and agreeing on the detailed specifics of the project scope, the interior designer proposes a complete fee (expense reimbursement of actual out-of-pocket costs is additional) to take the project through all the stages from concept development, specifications, layout, and installation.
  • Time-based fee – The interior designer proposes a compensation rate based on hours, weeks, or months of service.
  • Project percentage fee – The interior designer earns a markup percentage of the cost of the total project including any items, artwork, furniture, or services purchased to complete the project for the client.
  • Retainer with balance paid upon completion – An initial deposit is paid by the client, which is a portion of the interior designer’s fee that is agreed by signed written contract. The balance of this fee is paid upon successful completion of the project.
  • Cost plus – Using this method, the interior designer buys things at wholesale for the project and then charges the client the retail price or a slightly discounted price from regular retail.
  • Cost per square foot – The fee for the interior designer is calculated based on the total square footage involved in the project.

What is the growth potential for an interior design business?

Interior Design publishes an annual list of the 100 top designs firms in the world.

The list for 2016 shows these firms are the top ten with these earnings:

  1. Gensler from San Francisco earned $527 million in design fees.
  2. HOK from St. Louis earned $151 million in design fees.
  3. Perkins + Will from Chicago earned $149 million in design fees.
  4. Jacobs from Pasadena earned $145 million in design fees.
  5. HBA/Hirsch Bedner Associates from Los Angeles earned $132 million in design fees.
  6. IA Interior Architects from San Francisco earned $95 million in design fees.
  7. Stantec from Edmonton earned $92 million in design fees.
  8. CallisonRTKL from Dallas earned $83 million in design fees.
  9. Nelson from Philadelphia earned $79 million in design fees.
  10. HKS from Dallas earned $77 million in design fees.