Design Fees

To charge or not to charge? That is the question
By Lisa Furby
October 01, 2010

It’s a heated debate that polarizes kitchen designers very quickly. In one camp are the designers who charge design fees; in the other are those who never do. Here’s how the argument usually shakes out:

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So who’s right? Should you charge a design fee or not?

Before the market slowdown, business was booming and prospects were buying kitchens. “It was like the California Gold Rush,” said John Anderson, owner of Southern Kitchens in Louisville, KY.

“When you have an excess of prospects to deal with, the cabinet sales manager soon realizes a ton of business is out there, but the sales team is spending 90 percent of their time designing instead of selling,” said Brent Jackson, president of CompanionCabinet Software in Charlotte, NC. “That’s a hard pill to swallow as an owner because you can literally see business walking out the door.”

As a result, many dealerships implemented design fees to discourage tire-kickers. “The problem is design fees also send qualified buyers out the door quickly,” Jackson said.

CompanionCabinet Software has analyzed 10 years of aggregate quoting data from cabinet designers using its software. “When design fees are used, we see overall sales revenue drop anywhere from 50 to 75 percent,” said Jackson. “The existence of a design fee is a telltale sign of an ineffective sales process—or worse yet, no sales process at all.”

Looking at a sample size of more than 1,000 designers across a period of two years, the company found that those who used a design fee typically sold $180,000 to $400,000 per year. That’s abysmally low. “The data clearly shows that experienced designers using design fees sold at—or below—the level of less experienced designers typically found at the big box retailers who don’t charge design fees,” said Jackson.

The reality is design fees aren’t really used by the best kitchen designers. In a recent study, CompanionCabinet Software interviewed more than 100 high-performing designers, and not one of them used a design fee. “Even if dealer management required it, they worked around it or ignored it,” said Jackson.

“The clear differentiator in stellar sales production is the use of a sales process. Just that one behavior alone jumps designers into the $720,000 to $1.2 million range,” said Jackson. “Dealers should focus on implementing an easy-to-understand sales process specific to the cabinet industry. Once designers begin qualifying better, the need for a design fee rapidly disappears.”

So why are dealers still charging design fees? “You have this philosophy in the cabinet industry that the longer you’ve been doing something, the more it becomes a badge of honor,” said Anderson. “Salespeople tell me all the time they’ve been doing something for 30 years, which makes it legit. These are the same people who usually complain that no one is buying, yet right down the street I know of other kitchen designers who are killing it.”

In addition, charging a design fee has somehow become linked to the ongoing struggle for designers to be perceived as professionals. “That’s really the root of the problem,” said Jackson. “If charging a design fee is synonymous with being a professional, then not charging a design fee is telling your peers that you’re no longer professional. That’s really the wrong way to think about it.”

Most of the time designers charge fees to prevent a prospect from walking away. Even after the fee is paid, they won’t release the designs unless the entire kitchen is purchased. However, as Jackson noted, “From the prospect’s viewpoint, you’re asking them to make a nonrefundable pre-deposit because you, the designer, are afraid they’ll walk. That’s the worst way to start off a new relationship.”

So which is more professional: Demanding payment from someone before he or she has committed to buying a kitchen from you or learning a sales process that helps you correctly qualify a prospect up front?”

—Lisa Furby is marketing manager at CompanionCabinet Software, which helps cabinet dealers become more profitable using Aurora software, sales training and best practices. For information on a sales process specific to the cabinet industry, visit http://kbb.thinkcompanion.com.
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