Featured on this episode:

• Grab Your Free Script Guide here
• Access the full video interview with Elana Steele of Steele Appliance here

What you will learn from this episode:

• Why hourly billing penalizes expertise

• The 6-input framework for building a flat fee

• How to present your fee as its own line item

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There was a morning when everything shifted for me about how I charge for my work.

I had billed hourly for my entire career.

And I want to say right from the start: hourly made complete sense in the beginning. I was building my practice. I was still refining my process, finding my vendors, figuring out which contractors I could trust and which ones I couldn’t. Projects took longer than they should have because I was still learning.

Billing by the hour felt honest. Transparent. Fair. You charge for the time you spend. Nothing more. Nothing less.

If you’re earlier in your career and that’s where you are, I am not here to tell you that you’re doing anything wrong.

But something changes as you grow. And I resisted that change for longer than I should have.

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The Morning I Said “Bullshit” Out Loud

I was sitting at my desk working on a project with a podcast playing in the background. I genuinely cannot remember who was speaking, but I remember exactly what they said.

They were talking about the fundamental flaw in hourly billing for experienced professionals. The better you get, the more efficient you become. And under an hourly model, the more efficient you become, the less you make.

I literally said “bullshit” out loud at my desk.

And then I froze.

Because an hour earlier, I had just texted my longtime faux painter for a quick estimate. He happened to be near his phone. I sent rough information. Within ten minutes, I had a number and his availability.

Ten minutes. I didn’t even bill it. And even if I had, it would have been one fifteen-minute increment. Nothing.

But what hit me in that moment was this: my earlier clients paid me to find that painter. They funded the trial and error, the vetting, the awkward early projects where we figured each other out. They paid for the years of relationship-building that made that ten-minute estimate possible.

Now my current clients were benefiting from all of that — for fifteen minutes on an invoice.

Why was I being penalized for having the right people one text away? Why were my earlier clients paying more for the same outcome simply because I wasn’t as efficient yet?

That was the moment. That was the day I decided to stop charging hourly.

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Why Hourly Starts Working Against You

Hourly billing works beautifully at the beginning of a career. You’re learning. You’re slower. You’re building instincts. Clients understand it. It feels clean.

But as you become more experienced, everything changes. You stop second-guessing decisions that used to take hours of research. You have trusted trades who respond quickly. You anticipate issues before they escalate. You know which questions to ask before anyone else sees the problem.

All of that takes less time. Under an hourly model, that improvement costs you money.

There’s also something that doesn’t get talked about enough: regional ceilings. Every market has a rate cap. There is a number above which clients simply won’t go, no matter how experienced you are. So as you get faster and more efficient, you can’t endlessly raise your rate to compensate. And if you can’t raise the rate and you’re spending less time, you’re earning less for more expertise.

That’s the trap.

And then there’s the quiet part no one admits to. Invoice trimming.

I did it. I suspect most hourly designers do. You sit down to prepare the invoice and start editing yourself. You shave an hour here. Drop a line item there. Round down because it “felt like a quick call.” You tell yourself it’s only your time.

You have the pushback conversation in your own head before your client has ever seen the number. And you lose it.

Every hour you trim is money you earned and chose not to collect. Over the course of a year across multiple projects, that adds up to a number that would genuinely make you angry if you calculated it.

Flat fee eliminates that entirely. There is no monthly trimming. No self-negotiation. No ceiling. No penalty for being excellent at what you do.

You build the fee once, based on the value and scope of the project, and then you do the work.

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“But Construction Is Unpredictable”

This is the biggest fear I hear, especially around construction management. “I don’t know how long it’s going to take.”

That’s real. Construction is unpredictable by nature.

But let me ask you something. When something unexpected happens mid-project on an hourly job, do you bill every single hour it takes to resolve it? Or do you soften it because it feels uncomfortable to send a large invoice for something no one anticipated?

Hourly doesn’t remove unpredictability. It just moves the discomfort to a different place.

Flat fee handles unpredictability by building buffer in from the start. You don’t price the ideal version of the project. You price the real one. The one where something will absolutely go sideways at least once. Probably more.

If you don’t use the buffer, that’s your reward for strong project management. If you do, you’re covered.

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Why I Don’t Believe in Flat Fee Formulas

There are formulas everywhere. Multiply the budget by a percentage. Use square footage. Add projected hours times your rate.

I understand why designers gravitate toward them. They feel safe. Defensible. Mathematical.

But no two projects are the same. Not in thirty-plus years have I ever had two identical projects.

A formula cannot capture client complexity. Or contractor dynamics. Or how much emotional management a particular homeowner will require.

When designers rely on formulas, they often undercharge on complex projects and overcharge on straightforward ones, hoping it balances out over the year. That’s not precise billing. That’s averaging.

I would much rather you price each project for what it actually is.

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How to Build a Flat Fee (Without a Formula)

It’s not a formula. It’s a framework. There are six inputs I run every project through.

First: Scope of work. What is actually included? How many rooms? How many trades? How much coordination? A single bathroom renovation and a full-floor gut are entirely different conversations, even if the budgets look similar. You cannot build a fee without a clear scope.

Second: Estimated hours as a floor, not a ceiling. I still think through each phase — design development, specification, site visits, contractor management, client communication, revisions. That gives me the minimum number below which I know I’m losing money. The flat fee always sits above that floor. Hours alone do not capture the value of expertise.

Third: Client complexity. Not all clients require the same amount of you. Some are decisive and trusting. Others require more hand-holding, more reassurance, more explanation. That is real labor. It should influence your number. By the time you’re building the fee, you’ve had discovery calls, meetings, and emails. You know something about who they are. Price accordingly.

Fourth: Project size and complexity. Size matters, but complexity matters more. A smaller project with intricate detailing can demand more than a larger but straightforward one. Think about the full picture of what this project will ask of you, not just square footage.

Fifth: The team. Working with unknown contractors requires more oversight. But working with longtime collaborators, people you’ve spent years building trust with, carries value too. That shorthand is the result of investment. You shouldn’t be penalized for it. Flat fee captures that value regardless of which direction team complexity runs.

Sixth: Budget as a complexity signal. A larger budget often means higher-end finishes, custom elements, greater client emotion, higher stakes. It doesn’t determine your fee, but it informs the level of involvement the project will require.

You run all of that through judgment. Then you land on a number. That number is not pulled from a calculator. It’s built.

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Presenting Your Design Fee Clearly

This part matters more than designers realize. Your fee should be its own line item. Not buried inside the total project cost.

When you fold it into one large number, you make it impossible to separate questions about construction from questions about your services. Everything becomes one tangled conversation.

When your fee stands alone, it stands on its own merit. Clients appreciate knowing their all-in number upfront. They can plan for it. They’re not bracing for fluctuating invoices month to month.

And from a business perspective, flat fee improves your cash flow dramatically. You’re funded in advance or in structured installments, not chasing time already spent.

More importantly, presenting your fee separately sends a message. It says this is a professional service with defined value. It does not need to hide.

Your fee is not a line item to apologize for. It is the cost of the most valuable thing on the project. You. The person who’s going to hold it all together. The one who knows which contractor to call and gets an answer in ten minutes. The one who catches the problem before it becomes a change order. The one who translates between what the client wants and what the contractor needs to execute it. The one who has spent years building the expertise and relationships that make this project run.

That deserves its own line. Present it that way.

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What Happens When Clients Push Back

Pushback is normal. It does not automatically mean your fee is wrong.

Sometimes clients just want clarity. Sometimes they’re comparing proposals. Sometimes they’re testing boundaries.

Pushback comes in different forms. There’s the genuine question: “Can you help me understand what this covers?” That’s not resistance. That’s a client who wants context. Walk them through the scope of work and your involvement. Most of the time, this conversation ends with the client more confident in the fee, not less.

Then there’s the comparison: “Another designer quoted us less.” You don’t know what their fee covers or how they work. The only thing you know is what yours covers. Redirect to the specifics of your engagement rather than defending against an unknown comparison.

And then there’s the negotiation: “Is there any flexibility?” This is the moment where a lot of designers cave. The silence feels uncomfortable. The easiest thing to do is drop the number.

Don’t do that. At least not immediately. You need time to think clearly. Don’t be afraid to say, “Let me think about whether there’s a way to structure this differently.”

But here’s what I want to be very clear about. If a client wants the total number to come down, that conversation is about scope of work. Not singularly about your fee.

Scope reduction is the only lever that makes sense when a fee has been built properly. Your fee reflects what this project is going to require of you. If the project changes, if you take a room out, simplify a phase, go from custom to standard, then yes, your fee will change with that.

But discounting your fee for the same scope of work tells the client your original number wasn’t real. It erodes your credibility in that moment and for every future conversation about money. It teaches your client that your fee, your time, your expertise are negotiable. And that’s a lesson they will apply to every project you ever do together.

If you built your numbers accurately, you created a floor. Anything below that floor means you’re losing money on this project.

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The Moment That Changed Everything

I think many designers have their own version of that morning at my desk. That moment when you realize something fundamental isn’t adding up.

If you’re earlier in your career and hourly still serves you, keep building. Keep tracking your time. That data will matter when you transition. Just keep an eye on the moment when the model starts working against you rather than for you. You’ll feel it before you fully understand it.

And for those of you who are more experienced and have been on the fence the way I was, I hope something today cracked it open just a little.

You have spent years becoming who you are professionally. The expertise, the relationships, the judgment you bring to every project — none of that shows up on a timesheet.

You need to price for all of it. Your fee is the cost of the most valuable thing on the project. You.

Build it thoughtfully. Present it clearly. Stand behind it without apology.

You have earned that number. You just need to own it now.

Like this Episode?

Be sure to check out Episode #236: “What Will This Cost?” The Budget Talk Designers Dread

Be sure to check out Episode #203: Your Scope of Work is the Key to Profitability

Be sure to check out Episode #191: Unlocking Profitability: Michele Williams on Mastering Your Financials