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 University of Michigan trained licensed practitioner. Soon after the establishment of the firm, 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.
Architecture synthesizes and provides the framework for many linked disciplines from the artistic to the logistic. Engineers use math and formulas to calculate and design structural, electrical, and mechanical systems, ensuring our buildings withstand earthquakes and hurricanes, and that we enjoy proper heating and air conditioning. Yet engineering decisions are largely unseen, always 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 working with the black-and-white sensibility of the engineer, and the nuanced sensibility of the interior designer.
Engineering is essential to the creative process, yet specialization and liability concerns have occasioned small and mid-size architectural firms to use and rely upon outside consultants for most engineering services. Our consulting engineers have become long-term friends and extensions of our family, even if they work from separate offices and are largely unknown to our mutual clients. Interior design, on the other hand, is founded on a direct and intimate relationship with a homeowner. The many interior designers with whom we have collaborated have afforded 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 is obvious to us that great synergy is created when we bring 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 that differentiate the professions. Below are a few of our observations on the Interior design business:
To-The-Trade Retailing:
The conventional interior design model, 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 fared 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, Chairish, and overstock.com, homeowners can now buy a wide variety of new and vintage 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 without complaint.
In addition to concealed economics, the to-the-trade model also challenges the designer’s cash flow management. In the to-the-trade arrangement, the designer typically 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 situations frequently arise.
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 and with beautiful photographs and editorial copy showcase 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 all 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 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 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.
Pretty Pictures:
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 each project to have its unique elements; and we convey the individuality of design solutions rather than promoting a specific design look or brand. Each of our design compositions is specific to the individual needs and tastes of the client rather than a formulaic repetition of our portfolio. In this manner, our work is more substantive than superficial, coupling the subjective with the objective.
Interior Design = Contracting:
Architecture and interior design differ dramatically in the delivery of services. While architects provide professional services, essentially operating as uber-consultants, interior designers and decorators, on the other hand, typically design AND 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. 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 underappreciated. 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, mediating between contractors and owners, whereas designers are more prone to find themselves in direct dispute since they fill both creative and project management roles.
Towards a New Transparency:
Somewhat remarkably, brand name designers (celebrity designers) often still follow market pricing – if you must ask the price, you can’t afford it. Other designers provide services on an hourly basis, or as a mark-up upon 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). 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. Along with many other firms, we have settled on the transparent net-cost-plus-fee model as the best available to us and most importantly, to the client.
While recognizing that the model has drawbacks, we are committed to the transparent net-cost-plus fee-model. 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 (our standard rate is twenty percent), construction budgets tend to be larger and less subjective as they can be easily confirmed through competitive bidding. Upselling, and the perception of upselling, 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. First, the designer would struggle financially, and secondly, the client would be certain they had commissioned a cut-rate 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. While beneficial to the client, open source vendor relationships 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.
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.
We have also noted a sharp decrease in homeowner enthusiasm for hiring a celebrity designer. 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 satisfaction. 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 exceptions, most notably curated and one-of-a-kind and provenanced items, clients seem to prefer spending less than more. Strange, right?