My top 3 strategies for Estimating Project Costs

Let’s dive into the age-old question that troubles every interior designer from the very beginning of their business journey: how do I accurately estimate project costs?

In this episode, I provide 3 key ways to help you with this common issue so that you don’t make the same mistakes I used to. Follow the thoughtful internal exercises I share to prepare your client for the financial commitment. Remember, doing the real research to get real numbers will provide you and your clients with a more accurate, and lucrative, project estimate.

Listen to episode 142 to learn more about calculating project costs before clients hire you.

This episode is sponsored by Devix Kitchens.

Read the Full Transcript ⬇️

Hey, hey, hey, it’s Rebecca and you’re listening to Resilient by Design. Today is a shorty episode all about project budgets. I get this question all the time inside my workshops, inside Designers Room, inside Power of Process, and via DMs on Instagram. Oftentimes, because I constantly am telling designers, you need to know what things cost.

[00:00:21] Point blank, you just do. So today’s episode is going to dive into all things, maybe not all things, but a lot of things surrounding project budgets. Because this is a shorty episode, I’m going to focus on just a few key principles or concepts that I think are really important when it comes to creating a budget. So I’m going to talk about three non-essentials to help you create a project budget or estimate project costs for your clients. First of all, you need to know the fundamentals. Before we dive into anything, you need to know and understand the concepts that are specific to interior design budgets. What elements does a budget entail? Right. So if you’re going to budget for a project, you need to consider your design fees, any construction-related costs, or labor costs like installation of wallpaper.

[00:01:10] You need to consider the cost of supplied materials. They could be hard materials like tile and flooring. They could be decorative elements like lighting, or fabric. Furniture, drapery, you name it. And you need to think about what is the cost associated with all of those things. I used to just give clients a rough idea.

[00:01:29] I was like, yeah, you could probably do it for 50, 000. But the reality was I wasn’t actually considering all the elements. I was never considering end tables, lamps, accessories, cabinets, hardware, or door hardware. Those were not things that I thought about. I just kind of would ballpark. The big items, the construction, maybe my fee, and that was it.

[00:01:52] So you really need to first understand all of the items that would go into putting together a client budget. Now, I’m going to say [00:02:00] one thing, you don’t have to share this with your client. This is an internal exercise. This is an exercise for you so that when you are talking to a client on the phone or when you’re at their house in a consultation, you’re able to educate the client on what things cost.

[00:02:16] I’m going to create a budget that you share with the client. Some of you will want to do that at some point in your process and again, depending on what your process is, you want to be super intentional about that. The last thing I want to see you do is spending all your time creating a budget for a client or a project that you don’t actually have.

[00:02:39] Please stop doing this. Stop spending hours upon hours. Please. estimating the cost of absolutely everything to only find out that the client has no intention of hiring you. You’re not getting paid for your work likely and they’re probably taking that either to another designer or to do it themselves.

[00:02:56] Make sure that you are working on budgets once you know that you have the job or if you’re getting paid handsomely for the consultation and you want to include that as part of it, make sure you’re getting paid. It is a very time-consuming part of running a business, running a design project, and running a business.

[00:03:13] And so I think it’s really important to not do that for free. That’s part of what they’re paying you for, right? Is to do that research and to come up with very specific line items to their project that are budget amounts like estimated costs. The second thing you need to create. The budget. So what I mean by that is figure out how you want to enter in the information.

[00:03:39] I recommend that you use a Google sheet. That’s what we use in our organization. We use Google. That way anyone can access it. And in theory, I suppose you could give a view version to your clients if you really wanted to. We don’t do that. But we do share it internally and you want to make sure you’re including every single room in that template.

[00:03:59] So in [00:04:00] that budget. Actually, if you guys are listening today, I have a free template for you that you can use as a guide. It’s a PDF to show you how you could start the foundation of creating a budget. You guys can take that for free. Just go to rebeccahay.com/budget.

[00:04:17] So. You want to make sure that you put in every single area. Is it by room? Do you want to do a budget by category? Some people will do categories like lighting, plumbing, tile, furniture, and fabrics, while others like to do it by room. You need to decide what works for you. There isn’t one way that works for everybody.

[00:04:37] And there is no right or wrong either. I just want to make sure that that’s super clear. So many designers are just looking for like the way, like just tell me how to do it. Unfortunately, there are multiple ways that you can do it. Try one way. If you don’t like it, switch it up. I used to always do everything by room.

[00:04:54] And then I started to find that it was a little bit complicated for specifications. And sometimes the client wanted to see like, how much are we spending on lighting? And so more recently we’ve been breaking things out, at least for hard materials, into categories. So plumbing, millwork, but when it comes to furniture, we do it by room.

[00:05:11] So find out the best way that works for you. Tip number three. I want you to build your budget with a plan.

[00:05:20] Real numbers. So please do not fill in the budget or your estimated or your spreadsheet where you’re estimating costs with numbers from a past project or numbers that you’ve picked out of the top of your head. That might go without saying, but I can’t tell you how many times I would do that. I would sit at the table with my design team.

[00:05:43] I would be like, okay, let’s get this budget down. What do you think? 150 for a lamp? Yeah, that sounds about right. Okay. Toilet. 300 for toilet? Yep, that sounds good. Nightstands? 500, you think? Yeah, maybe 600. Okay, we’ll put 600. Like where did I come up with these numbers? Like, [00:06:00] seriously! It was so crazy.

[00:06:02] It was based on numbers that maybe I’d seen a decade prior. We were always under in our estimations. So what that meant is anytime we started to source items, we were like, shoot, I can’t find the nightstand to fit in that price. Okay. Well, let’s get a more expensive nightstand, but where can we cut somewhere else?

[00:06:20] And then we were doing this like dance. Save versus splurge, but it was a lot more saving and not a lot of room for splurging. So make sure you are putting in accurate numbers. This is why you need to get paid for this because I want you to do the research. I want you to go to the appliance store or look online.

[00:06:38] What is the cost of an integrated fridge? What is the cost of a pair of lamps that is something that you would want to put in someone’s house? What is the cost of a custom sofa? Or what is the cost of a sectional from crate and barrel? Like, please check the numbers and make sure that they’re accurate.

[00:06:56] If you have someone on your team, who can easily help you with this, you guys can continually update it. So you always have kind of like a templated budget. And I, that’s where I hope you can get to, you know, once you start creating estimating and creating project budget estimates for projects, what you can do is then Sort of collate all of them and you can kind of have like estimates for living room estimates for main floor Estimates that you can look at from project to project and tweak But you always you’re not starting from ground zero with every project and that’s ideally where I’d love for you to be and that’s Really a nice sweet spot to be and then of course You need to communicate the costs with your client And that is a whole other session.

[00:07:43] I do hope though, that this is just giving you that kickstart to take the time to look at the numbers. Until you know your numbers, it’s going to be hard for clients to really take you seriously and see you as a professional like they’re hiring you because they expect that you know what things cost.

[00:08:02] What I am not saying, and I just want to make sure it’s super clear, I am not saying that you can tell them exactly what their home reno will cost, or you can tell them exactly what their living room decor and millwork will cost. None of us has a magic wand that can see into the future or knows because we haven’t picked it yet.

[00:08:22] But when you have estimates that give you an idea of past projects or even more or less what a living room costs nowadays at the level you want to do it, it’s going to make it a lot easier for you to then create a specified budget for that client and get them on the road to saying yes. I hope you guys found this helpful.

[00:08:45] I am working on a new training that is going to be very detailed on estimating and creating client budgets. So stay tuned for that. In the meantime, go grab our free template at rebeccahay.com/budget. Take it, use that as a starting point. Start to do your research, and get the numbers on paper.

[00:09:05] Don’t miss the tiny details. So identify the areas that you need in the budget, do real research to get real numbers, and then we can talk about how you approach this with your client. All right. I hope you guys enjoyed that shortie episode. Good luck estimating project costs. See you soon