The Hidden Costs of Discounting Your Interior Design Services: Transcript

Katie Decker-Erickson [00:00:00]:

Do you love interior design but can't make the business side work? You've come to the right place. Welcome to Success by Design. Mastering the business of interior design. Whether you want to elevate in your current interior design firm, start your own firm, or move the needle when it comes to your existing firm's trajectory, this is your masterclass and I'm your host, Katie Erickson. Learn from my mistakes as I built a coast to coast, multi million dollar interior design firm. I share nearly 20 years of serving as a university professor of undergraduate and graduate business courses with you. And best of all, I bring in experts in all things business and interior design. Class starts now.

Katie Decker-Erickson [00:00:45]:

Hello fellow interior designers, and welcome back to Success by Design, where we talk about building an interior design business that truly supports your life, not the other way around. I'm your host, Katie Decker Erickson. And here's the thing. I I'm not just a coach for interior designers. I'm also in the trenches every day as an active interior designer myself. So everything we talk about here isn't theory. It's tested real world strategies that actually work. Today we're continuing our Projects to Profit series with a topic that hits almost every designer I've ever coached.

Katie Decker-Erickson [00:01:18]:

The hidden costs of discounting your design services. Now, I can't tell you how many times I've sat across from a designer on Zoom on the phone in person, and this is a confession. Katie I offered a discount because I wanted the client to be happy or they asked for a deal and I just froze. I didn't know how to say no. I am a people pleaser and I get it. I've been there too. But here's the truth. Discounting is one of the fastest ways to erode not just your profits, but also your confidence and your authority as a designer.

Katie Decker-Erickson [00:01:53]:

But before we dig into that, I want to start with one of my favorite games we do on every episode. Two truths and a Lie. Here we go. One, discounting your design services to please a client usually ends up backfiring. Two, repeat clients deserve automatic discounts because they've worked with you before. And three, clients who ask for discounts are often the ones who give you the most headache later. Nestled in there is Two truths and a lie. And stick around because I'm going to reveal which one is the lie.

Katie Decker-Erickson [00:02:21]:

At the end of today's episode, let's talk about why we feel pulled to discount. Why do we want to do this? And when I coach designers, I hear the same reasons over and over. I didn't want to lose the project or I thought they'd be happier with me if I gave them a deal. Even they asked and I just didn't want to look difficult. This is all rooted in fear. The fear that if you don't say yes, they're going to walk away. But here's the thing. Discounting rarely creates happier clients.

Katie Decker-Erickson [00:02:52]:

In fact, it often does the opposite. Here's the reality. You end up working harder, resenting the project. I know a lot of you can relate to that and questioning your worth. Meanwhile, the client who now sees your pricing as negotiable feels empowered to push boundaries. Also, there's actually research behind this. Dan Ariely, a behavior economist, ran studies that showed that when people received a product at a discount, they valued it less than when they paid full price. Their satisfaction was actually lower, not higher.

Katie Decker-Erickson [00:03:26]:

Why is that? Because our brains tie cost directly to value. So when you slash your rate, you unintentionally tell your client, well, this isn't worth as much. And here's the real kicker. In design, you're not selling sofas and rugs. You're selling transformation. You're selling peace of mind. You're selling the ability for someone to walk into their home or their leasing office or their lobby and feel proud. And that is priceless.

Katie Decker-Erickson [00:03:56]:

And it should never be discounted. Let's do a little math, because sometimes seeing it on paper is what drives it home. Let's say your firm is running at about a 30% profit margin, which is too low. If you give a client just a 10% discount, that's not a 10% loss. It's a 1/3 cut of your profit. And to make that up, you'd have to increase your workload by more than 50% to break even. So it feels like just a small discount is actually a profit killer. And that's where the reason why I use 30%.

Katie Decker-Erickson [00:04:34]:

I see a lot of my coaching clients come in. Now let's step away from the numbers and talk about your brand. Think about all the luxury brands. Hermes, Rolex, even Restoration Hardware. They are not typically running sales, although I will say Restoration Hardware has gone into this with tariffs and a little bit of change in the market. But overall, their standard strategy has been to stay true to the msrp. Why? Because the price is part of the story. The price says, this is exclusive, this is quality, and this is not for everyone.

Katie Decker-Erickson [00:05:11]:

When you discount your services, you dilute your story. Especially as a residential designer, you chip away at the perception of your expertise. You're essentially signaling, I Don't believe in my own value. And trust me, clients pick up on that faster than you might think. Here's another truth I've seen play out countless times in coaching. The clients who push hardest for discounts are often the clients who give you the most trouble. I know you can relate to this, and this is what actually led me to move into commercial design after three years of doing strictly residential back when I started my firm in 2007. Today, I had a coaching client.

Katie Decker-Erickson [00:05:52]:

We're going to call her Sarah, who gave a dream client 15% off her full service design package. Guess what happened? And you can probably relate to this too. I had this story happen a number of times to me back in my residential days. That client nitpicked every detail. They asked for endless revisions and ultimately left a scathing review when Sarah held her ground on scope creep. Now let's compare that with another of her clients. Same package, no discount. They paid in full.

Katie Decker-Erickson [00:06:21]:

Along the way, they trusted her completely and they even referred her to three friends. Same designer, same services, totally different experience. All tied to the psychology of price. Now, let's talk about one of the common exceptions. I hear repeat clients. Designers tell me, Katie, they've already worked with me before. Shouldn't I give them a break? My loving answer is no. Repeat clients don't get a discount.

Katie Decker-Erickson [00:06:48]:

They need recognition. The fact that they came back means they already value your work at full price. If you give them a discount now, you're undermining the very thing that brought them back, which was their trust in your value. There are other ways to acknowledge this repeat business, as we mentioned, recognition. Send a handwritten thank you note or deliver a small thoughtful gift tied to the project. Or prioritize their timeline so they feel like a vip. That way you're celebrating their loyalty without cheapening your brand. Another biggie.

Katie Decker-Erickson [00:07:24]:

I get referrals. Designers often ask, should I offer discounts for referrals? Well, by now you've probably picked up what my answer is going to be. No. If you reward referrals with discounts, you train clients to think of your pricing as flexible and over time, that erodes your positioning. Just like we talked about when it comes to repeat clients, referral clients are looking for a different type of reward system. It doesn't have to include discounting. Think about a gift card to their favorite restaurant, a beautiful coffee table book, or a personal shout out on your social media. Of course, with permission.

Katie Decker-Erickson [00:08:02]:

Again, it's about gratitude and relationship, not devaluing your services. So what do you do Instead of discounting, here are three strategies you can put into practice today. First of all, adjust the scope, not the price. If the budget is tight, offer a scaled down service, maybe a design day instead of full service. Also, you could add value creatively. Give them something that costs you little but feels very meaningful, like a styling checklist, a resource guide, or a bonus Q and a call. And stand firm with confidence. Practicing out loud in front of the mirror.

Katie Decker-Erickson [00:08:41]:

I don't discount my services, but I can adjust the scope to fit your budget. I promise you, the more you practice this, the easier it gets and the more respect you'll earn. What I've also found a lot of times the clients find the money for the things that they want. Because that's true of all of us in life. So here's your homework for the week. I want you to go back and audit your last five projects. Did you discount? Write down the true cost, not just financial, but time and energy. Get with your accountant if you have questions about this.

Katie Decker-Erickson [00:09:14]:

Decide on your repeat client policy. What is your way of honoring them without lowering your fee? Make it concrete. Set your referral reward. Pick one meaningful way to thank people. No discounts allowed. And then finally, practice your no discount script. Say it out loud until it feels second nature. All right, let's circle back to our game.

Katie Decker-Erickson [00:09:37]:

Two truths and a lie. Number one, discounting your services to please a client usually ends up backfiring. True. What happens is they come back to you for more discounts, not only on the project you're working on, but any future projects as well. We've started creating a monster and it's going to be hard to tame it once they get a taste of discounts. 2. Repeat clients deserve automatic discounts. Oh, here's our lie.

Katie Decker-Erickson [00:10:04]:

They deserve recognition, not reduced pricing. Very different. 3. Clients who ask for discounts are often the ones who give you the most headaches later. And I'm sure if you are driving along listening to this podcast or in your office with it playing in the background, you are nodding your head right now. Because we all know that we have had that client who ends up creating so many headaches down the road once they feel that they can take over the client and designer relationship. So the lie was number two, right? Repeat clients don't need discounts. They already showed you the value.

Katie Decker-Erickson [00:10:38]:

Yes, honor them, but do not do it while undervaluing yourself. Here's the bottom line. Every time you discount, you're telling yourself and your clients that your value is negotiable. But you, my friend, are not negotiable. If you have been stuck in the cycle of discounting and you're ready to break free, I'd love to help. I offer a free 15 minute problem solving session where we can talk about your exact situation and and craft a strategy that feels aligned. Head on over to SuccessByDesign Coach and snag a spot on my calendar. Until next time, Remember, your business should be working for you, not you working for it.

Katie Decker-Erickson [00:11:18]:

Take care.