Understanding Design Fee vs. Markup
Design Fee
There are many different methods to base a Fee on. Below are only a few examples and links on how to do each method in Design Manager.
- Concept, Value and Fixed Fees: This design fee is generally a fixed or lump sum you assign for the value of your design. It is not directly based on cost of goods, hours spent, overhead, etc. It may simply be the amount you believe you deserve to create the art of the design for your client. Experienced designers, who have already worked on certain types of jobs numerous times and are able to provide a solid basis for estimating their cost, commonly use this method. See here for how to enter the Concept, Value, Fixed Fee method in Design Manager.
- Cost + Fee: Clients have become more increasingly able to purchase items themselves, however, they cannot do the creative design and planning themselves. Cost + Fee allows the designer to a show and bill the merchandise cost and add a design fee based on that cost. This design fee is directly based on the cost of goods. Example: your Fee is 15%, you purchase a table at $1,000 cost. The client price shown and billed for the table will be $1,000 with a separate line to show the design fee for the table is $150. See the article here for how to enter the Cost + Fee method in Design Manager.
Markup
Cost + Markup: A markup is not much different from the Cost + Fee method. However, when using markup, you generally are not breaking out your cost to show to the client. Here you will set a markup percentage for each item?s cost. The client will see the item price as a total of your Cost + Markup. This method is directly based on the cost of goods. Example: your Markup is 30%, you purchase a table at $1,000 cost. The client price shown and billed will be $1,300 for the table (you include the markup in the price to the client).
See the article here for how to enter the Cost + Markup method in Design Manager.