Luxury interior designers charge in four models: (1) hourly + procurement markup ($350–$650/hr + 15–35% on goods), (2) cost-plus (you pay net + designer margin, typically 25–40%), (3) fixed-fee design ($25k–$300k+ for design alone, you procure separately), and (4) percentage of construction (10–18% of construction cost). Hourly + markup is most common at the trophy tier. Fixed-fee is most transparent for the client. Cost-plus is the easiest for designers to over-earn on, and the hardest to police. Read every proposal for which line items are billed at retail vs net.
The four fee models in plain English
1. Hourly + procurement markup
You pay the firm hourly for design hours ($350–$650/hr at the senior-principal level in LA, junior staff $180–$320/hr). Furniture, lighting, fabric, and rugs are priced at list less designer's discount, plus a markup back to the client. Markup is typically 15–35% over net (designer cost) on hard goods.
This is the dominant model at the trophy tier and at most signature firms.
2. Cost-plus
You pay actual designer cost (net) plus a fixed percentage - usually 25–40%. Designer hours are sometimes billed separately at hourly, sometimes folded into the percentage.
"Cost-plus" sounds transparent because you "see the net." But unless you also see invoices and demand auditing rights, the math gets fuzzy. This is the easiest model to over-earn on and the hardest to police.
3. Fixed-fee design
The firm quotes a fixed dollar fee for the design phase - typically $25k–$300k+ on luxury work depending on scope. You then procure goods independently (or through the firm at a separate, usually lower, markup).
This is the most transparent model for the client. It's also the model most designers resist on full-luxury jobs because procurement margin is where the real revenue lives.
4. Percentage of construction
A flat 10–18% of construction cost is charged as the all-in design fee. Goods may be at net or marked up modestly. Common with architect-led teams that include interior design as part of a fully integrated service.
Real fee numbers on a $14M luxury custom home (2026)
| Model | Likely fee total | Variability |
|---|---|---|
| Hourly + 25% markup | $1.4M–$2.5M | High - depends on FF&E volume. |
| Cost-plus 30% | $1.6M–$2.8M | High - same reason. |
| Fixed-fee design $180k + procure separately | $1.0M–$1.8M total | Lower - client controls procurement. |
| 15% of construction | $2.1M flat | Predictable - good or bad. |
On luxury LA work, total design + procurement spend on a $14M build is usually $1.6M–$2.6M regardless of advertised model. The model determines who absorbs the variance and how transparent the line items are - not really how much you pay. The honest question isn't "which model is cheapest." It's "which model is cleanest to track and which firm is willing to put their numbers on the line."
Which model favors you - genuinely
| Your situation | Best fee model |
|---|---|
| You want maximum design talent and don't mind paying retail for goods | Hourly + markup |
| You're sophisticated, want trade-discount visibility, and will audit | Cost-plus with audit rights |
| You want a clean number for the design itself and prefer to procure separately | Fixed-fee design |
| You want predictability and the firm is integrated with the architect | Percentage of construction |
Red flags in fee proposals - things to push back on
- "Markup confidential" or "markup proprietary." If they won't tell you the margin, you can't manage it. Walk.
- No cap on design hours. Open-ended hourly with no estimate or cap is a budget hole.
- No audit rights on cost-plus. You should be able to inspect supplier invoices on request, even if rarely exercised.
- "Receiving and warehousing" billed as a separate line item with no caps. This becomes a 4–8% silent surcharge on goods.
- Fee escalators tied to "scope" without scope definition. Define scope in writing first.
- Reimbursable expenses billed at "cost + 15%." Reimbursables should be at cost, period.
- Termination clauses that lock you in. Watch for "all furniture orders placed remain client obligations" - true on signed POs only.
Hybrid models - what most luxury firms actually run
Pure models are rare. Most signature firms run a hybrid:
- Hourly billing for design phases up to a soft cap
- Procurement markup on goods at a transparent percentage
- Fixed fee for specific deliverables (presentations, sample boards, drawings)
- Pass-through for outside consultants
The right approach is to demand a single line-itemized proposal that names the model used for every revenue stream - not "we'll figure it out as we go." Anyone unwilling to do this on a $1M+ design fee isn't running a serious shop.
Common follow-up questions
Is cost-plus 30% better for me than retail markup?
It depends on the firm's actual trade discounts. A 30% markup over a 50%-off net is much better than a 25% markup over a 30%-off net. Without seeing real invoices, you can't tell which you're getting. Hence audit rights.
Why do designers resist fixed-fee on luxury work?
Because procurement margin is the unpredictable revenue lever - and unpredictable in the firm's favor on bigger FF&E budgets. A $300k fixed-fee proposal might earn the firm half what an hourly + markup arrangement would on the same project.
Should I demand to see the trade discount?
You can ask. Many firms decline because trade pricing is confidential per their vendor agreements. A reasonable middle path: agree to a transparent markup over net, with an audit right exercised through a third-party CPA at the client's cost.
How do interior design fees compare to architect fees?
Roughly comparable on percentage terms - both run 10–18% of construction in luxury work - but interior design fees often add procurement margin on top, which architects don't have. So total interior design + procurement spend is usually higher than total architect spend on the same project.