How Should Interior Designers Charge for Procurement?

Procurement is frequently the highest-friction area of an interior design business. While design fees cover the creative vision, procurement fees cover the logistics, financial risk, and administrative burden of bringing that vision to life. If your [FF&E procurement process](FF&E procurement process) isn't priced to cover these operational realities, you are likely subsidizing your clients’ furnishings.

Understanding Procurement: Why Buying FF&E Is Distinct from Design

Design is intellectual property; procurement is supply chain management. Procurement encompasses sourcing, order placement, tracking, freight coordination, receiving, warehouse management, and resolving damages. Charging only for 'design' while performing procurement is a common trap that erodes net profit. Firms successful at scaling often treat procurement as a distinct line item in their [interior design pricing guide](interior design pricing guide).

The Most Common Procurement Pricing Models

• Cost-Plus Markup: You purchase items at the trade price and apply a percentage markup (typically 10%–35%) to the cost.
• Hourly Admin: You bill your hourly design rate for every minute spent tracking orders, calling vendors, and managing logistics.
• Flat Purchasing Fee: A fixed percentage of the total FF&E budget is billed as a management fee, regardless of the individual item margins.
• Percentage of Total Spend: A sliding scale percentage applied to the final invoice of all goods purchased.

Cost-Plus vs. Passing Trade Discounts

When using a cost-plus model, the question of transparency is paramount. Some designers choose to show clients the retail price and take the difference, while others disclose the trade cost and add a clear markup. How you handle [designer trade discounts](designer trade discounts) should be explicitly stated in your contract. Transparency builds trust, but ensure your contract clearly defines how those savings are categorized to avoid "fee shock" during the checkout phase.

Can You Double Dip? Combining Markups with Hourly Coordination Rates

Yes, provided you are clear about the work being billed. A common approach is to apply a standard markup (to cover the financial risk of holding inventory or managing liability) while billing hourly for administrative tasks like expedited shipping research or client-requested changes. Clear [interior design contract terms](interior design contract terms) that separate 'Design Services' from 'Procurement Coordination' prevent disputes over billable hours.

The Hidden Costs: Freight, Storage, and Damages

Procurement is not just about placing orders. Freight, receiving, and warehousing fees are often treated as pass-through expenses. However, you must decide if you will add a percentage to these costs to cover the management of those third-party vendors. For damaged items, you must charge for the time spent filing claims and re-ordering, or you will lose money on every mistake.

How to Set Contract Terms That Protect Your Profit

Your contract must stipulate that the procurement fee is non-refundable and that the client is responsible for all shipping and handling costs. Set expectations regarding payment schedules—procurement should always be paid in full before orders are released to the vendor.

Checklist: Choosing the Right Procurement Fee Structure

• Assess your administrative capacity: Can you track 50+ items simultaneously? If not, bill hourly.
• Determine your risk tolerance: If you are liable for damages, ensure your markup covers insurance and replacement time.
• Audit your client base: Are they budget-conscious or convenience-focused? Premium clients usually prefer a flat percentage for ease of billing, while budget-conscious clients may prefer total transparency through an hourly model.