Thursday, August 05, 2010

Aiming At Affluence

Mike attended a very valuable seminar at World Market Center presented by Lorts Manufacturing. Steve Nobel explored the state of the market for interior designers and looked at the efforts underway to promote value of design to the affluent population. Nobel "...has specialized in the markets for luxury at home, assisting his clients to build home furnishings brands, and advance the market for interior design and decoration."

Nobel told us that the affluent suffered like the rest of us and worked to preserve what they owned. They did not trade down, they just bought less. Now, except for the recent Chelsea Clinton wedding, the affluent are passionate about what they spend money on, but they are into inconspicuous consumption except on their homes.

Who are the affluent? Eighty percent of the wealth is first generation money; they made it themselves. The idea of using an interior designer is new to them, because most came from households where using an interior designer was uncommon. About half of the affluent know they need a guide for their homes. Are unfamiliar with how the wealthy live and really need an advisor or advocate on their behalf.

Interior designers have a real opportunity with the affluent. They need your services and they don't have the time to do it on their own and they don't have the confidence. However, you may have to change your business model for delivering services. The affluent are smart and want the service you provide to be fair and transparent and understandable. That means the hourly way of charging or the hourly plus markups is not transparent, but fee based is. Steve Nobel advocates charging for your services the same way at attorney or architect or contractor bills for services.

You can learn more about Steve Nobel at www.nobelinks.com.

Bev & Mike
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2 comments:

Terri L. Maurer said...

But, Mike, attorneys DO charge by the hour...or by ten or fifteen minute increments. Anyone who bills by the hour limits their income potential by the clock and the calendar. There are only so many hours in a day and days in a week. I advise designer clients to consider billing based on a value-based fee. Designers may come up with a brilliant concept for a business that could net the company millions. But, by charging only for an hour or two of their time is not a fair compensation for the value they brought the client.

I do agree, however, that designers need to learn more about the affluent consumer and how they spend their money. As we are seeing with our government, there is a wide, wide range to 'affluence'...those who make $100,000 a year, $1,000,000,000 or $100,000,000,000 are all defined as 'affluent'. Obviously these people are not all at the same level and their lifestyles are vastly different as well.

Bev & Mike said...

Ok maybe that was a bad example. I think attorneys will tell you up front how much it's going to cost for a defense or and it's based on the hours they expect to put in.

I do think interior designers may undervalue their talent and undercharge for their services compared to the other professionals.