Emerging from graduate school, I found myself fascinated and frustrated by the exploitation culture of both academia and professional practice. Students pay a high price in hours and expense (school), and entry-level employees, referred to as interns, put in eighty-hour weeks for nominal or non-existent compensation (work). With a heavy chip on my shoulder, and knowing there must be a life-answer that would be a better fit, I founded DFA with two partners who felt similarly. My first partners were trained as architects, one had studied with me at Columbia, and the other, my cousin, was a UofM trained licensed practitioner. Soon after the establishment of the firm, then known as LFC (Lesser-Frisch-Cabot), it became clear that both of my partners were more charmed by the possibilities of interior design than by architectural practice. In many ways, I was as well, even though I was hesitant to admit or share these feelings. In their own manner, they each taught me the value and beauty of decoration and lifestyle, sensibilities the more rigid discipline of architecture often regards as arbitrary and frivolous. Their infectious passion and love of design and materiality affirmatively affected my work, and does to this day.
At its essence, architecture synthesizes and provides the framework for many linked disciplines, ranging from the objective to the subjective. Engineers use math and formulas to calculate structural, electrical and mechanical systems, ensuring our buildings withstand earthquakes and hurricanes, and also that we enjoy proper heating and air conditioning; but engineering decisions are largely unseen, working in support of a broader design vision. At the other end of the spectrum, interior design and decoration determine how people relate to a space through tactility, materiality and color – the most visible and accessible of all design components. For architecture to succeed, architects must be equally comfortable in working with the black-and-white sensibility of the engineer, as well as with the nuanced sensibility of the interior designer.
While engineering is essential to the creative process, specialization and liability concerns have occasioned small and mid-size architectural firms to use and rely upon outside consultants for engineering services. Over the years, our engineers have become long-term friends and extensions of our family, yet they work from separate offices and are largely unknown to and shielded from our clients. Interior design, on the other hand, is founded on a direct and intimate relationship with a homeowner. We’ve collaborated with many interior designers and decorators, affording us a behind-the-scenes look at the varied attitudes and different business models. Given the high impact of interior design on the homeowner’s enjoyment of a completed project, it seems obvious to us that great synergy is created by bringing interior design in-house – offering our clients design services with the same level of professionalism and transparency as we do within our architectural practice. Through careful study of the economics and mechanics of our shared industry, we have come to understand the business practices and relationship characteristics that differentiate the professions. Below are a few of our observations on the Interiors business:
1. To-The-Trade Retailing:
The conventional interior design model, as predominately practiced in the previous generation is known as ‘to-the-trade,’ wherein the interior designer ‘shops’ at to-the-trade establishments, purchases goods at wholesale (at the most favorable discount available to the designer), and in turn, sells the goods to the client at retail or market price. This model is easier to embrace when decorator goods are solely available to-the-trade and can not be purchased directly by the end-user, granting an effective monopoly to the designer on the goods and services of the industry. The sales pitch is that the designer ‘gives away’ their services, selling goods and services to the client at the published retail price, thereby working for ‘free’ – an arrangement which sounds pretty darn fair. Discounts to designers by the to-the-trade vendors are (or, were) fairly predictable at or about forty percent, which, when marked up by the designer, becomes a sixty-seven percent mark-up. Yes, a forty percent discount equals a sixty-seven percent mark-up, not a bad return to the design professional. Designers did quite well during the strict to-the-trade era, when access to design goods and services was so severely limited to the end user. With the emergence of retail stores like Restoration Hardware and Mitchell Gold, and Internet players like One Kings Lane, Wayfair and Charish, homeowners can now buy a wide variety of goods directly and at better prices than from to-the-trade vendors. While most clients now seek greater transparency and resist the old model, one of our recent clients did elect to retain the ‘family decorator’ and pay retail. Even though the client was a Wall Street veteran, and could easily calculate the decorator’s promote, working with the family decorator and not rocking the boat outweighed simple economics, and the sixty-seven percent vigorish was paid.
In addition to concealed economics, the to-the-trade model also suffers from the challenges presented to the designer in managing cash flow. In the to-the-trade arrangement, the designer invoices the client for the full cost of an item, inclusive of fees and taxes, and makes a deposit to the vendor or fabricator. Some number of months later, often many months later, when it is time to deliver the product, the designer must remit the balance from his/her accounts to the vendor or fabricator. For young designers in particular, cash flow and credit-worthiness problems frequently arise.
2. Design as Commodity; Celebrities, and Status:
Pick up any shelter magazine, especially “Architectural Digest,” and you will see the same designers featured every month; so much so, that the designer has become an equal celebrity to the client whose home is being featured. The projects in the major magazines are both beautiful and aspirational, showcasing the lives of the rich and famous. When projects are being considered for publication, they are evaluated with regard to a number of criteria, with the most significant being the wealth and media recognizability of the homeowner, coupled with a willingness to allow the magazine editors, writers, and photographers – and in the end, the reader – a look behind the walls. Pairing with an equally recognizable designer ensures prominent placement, a win-win for both parties. Should the designer incorporate materials whose vendors advertise in the magazine, all the better.
While the celebrity-promotion model works seamlessly for those who gain entree, the model isn’t a natural fit for DFA. The first barrier is the absolute desire of the majority of our friends and clients to maintain their privacy, irrespective of their wealth or the beauty of their home. Equally important, is our client’s typical desire to live in a home materially influenced by their own design sensibilities, not wishing to be deferential to current trends, or to work in the service of the celebrity designer. The final reason our clients choose DFA is our dedication to transparency and economic efficiency, qualities for which celebrity designers are not well known. An illustration of the difference is a specific project we took over from a celebrity designer whose work is well enough known for his monograph to be on my shelf. When considering changing teams, the homeowner brought to us an adding machine tape (truly) given to him by the designer with a column of dollar amounts totaling in the low seven figures, and no back-up other than the numbers printed out on the adding machine’s thermal paper. The celebrity designer also recommended that the client pay a contractor a deposit on construction work based on a quote that looked like it was prepared on a guest check pad from a diner. I could only imagine the designer licking his pencil as he worked. When we took over the project we prepared a proper set of drawings for the architectural work, and collaborated with a young (unknown) designer to bring in the project at less than half of the celebrity designer’s estimate. Although Architectural Digest did not come calling, we became good friends with the client, and have worked with them subsequently.
3. Pretty Pictures;
Following from above, the currency of interior design is pretty pictures. Like all design professionals, we meticulously manage our portfolio, website, and social media presence, yet most of our new client pitches revolve around the less photogenic aspects of management, professional qualification, process, and experience. As architects (starchitects, notwithstanding), we tend towards reinvention, allowing that each project deserves unique solutions; and we try to convey the individuality of design solutions more than a specific design look or brand. In this manner we convey that out work is more about substance than surface. When we decided to offer design services, we hoped we could couple the subjective with the more objective aspects of professional services. Pretty pictures and professionalism combined.
4. Interior Design and Contracting:
Architecture and interior design differ dramatically in the manner in which services are performed. Architects provide professional services, essentially operating as uber-consultants; whereas interior designers and decorators also frequently wear a contractor’s hat. One of the things I admire most about designers and decorators is the direct responsibility taken for the implementation and execution of the work, unlike architects who rely on a support system of independent consultants, engineers, and contractors. In this manner, interior design firms parrot a design-build structure, with more freedom and responsibility, but fewer checks and balances. While both systems have their plusses and minuses, I believe the distinction between the two systems is under appreciated. The architect’s work is largely complete, or at least is meant to be, before work on site begins, whereas a designer’s work runs seamlessly from the preliminary phases all the way through installation. When disputes arise, architects act as arbiters, most frequently mediating between contractors and owners, whereas designers are more prone to find themselves in direct dispute, as they fill both creative and execution roles.
5. Towards a New Transparency:
Today, interior designers and decorators are struggling to find consensus as to whether to offer service to-the-trade (market-price), or more transparently and based on the cost of goods or services. Name designers (celebrity designers) can, and often do, still follow market pricing – if you have to ask the price, you can’t afford it – while others provide services on an hourly basis, or as a mark-up of goods purchased, transparently extending to clients their net price, otherwise known as a designer discount. We have found that hourly compensation arrangements rarely succeed, as design is fundamentally inefficient, both in its preparation (blind alleys and false solutions) and in its execution (waiting on deliveries and resolving problems). Clearly, hours spent working on a large item (sofas, rugs, millwork) may be expended cost effectively, while the hours spent specifying or sourcing small items (a pillow or a lamp) may result in fees greater than the item itself. We believe that anything more than cursory consultations necessitate a structure other than an hourly fee basis. In an effort to work transparently, DFA – along with many other firms – have settled on the net-cost-plus-fee model as the best available to us, and to the client.
DFA is committed to this transparent net-cost-plus fee-model, while recognizing that even this model has drawbacks. The first challenge of working on a net-cost-plus-fee model (usually thirty or thirty-five percent) comes from thin margins and underperforming top-line revenue. While architects typically also work on a percentage-of-construction basis (DFA’s standard rate is twenty percent), construction budgets tend to be larger and less subjective as they can be easily checked through competitive bidding. Up-selling, and the perception of up-selling, is both the lifeblood and scourge of interior design and decoration, as clients are given multiple choices at different prices, but not different prices for the same item. If designers were to recommend the least expensive choice consistently, or, if clients were to select the least expensive option at every turn, two things would happen: 1) the designer would go broke, and 2) the client would be certain they had commissioned a second-class project.
The second drawback to the designer is that a transparent net-cost-plus-fee arrangement gives the owner a greater level of control and increased authority over the relationship. Open source vendor relationships, while good for the client, diminish the cache and access of the designer, and often plants seeds of doubt as to the value-add proposition so essential to a healthy client-designer relationship.
Based on the above observations and assessments, we recognize the interior design industry is undergoing a tectonic shift. New retail offerings and the internet have made home goods ever more available and affordable, and the designer no longer enjoys a monopoly on design advice and the sourcing of goods. Since the homeowner is no longer captive, the value proposition has reset.
Relatedly, we have also noted a sharp decrease in homeowner enthusiasm for hiring a designer for status purposes. Many affluent homeowners are instead electing a simple, less decorated approach to home design, and are less inclined to hire a designer for status or social purposes. It seems we are experiencing a less frivolous and indulgent era. Our clients carefully study the cost of goods and services, and negatively react to the cost of many designer-sourced goods. While there are certainly exceptions, most notably curated and one-of-a-kind pieces as well as items with provenance, clients seem to prefer spending less than more. Strange, right?
For DFA, this shift presents an opportunity. The need for professional design consulting is no less today, and DFA can be even more successful in providing a suite of services tailored to our clients’ sensibilities. Just as we created our Studio Program of prix-fixe apartment renovations, the flexibility and transparency of our design support services offering is a perfect fit for today’s client.