If you run an interior design studio, procurement can quietly drain your time and your margin. One minute you're specifying the perfect sofa—the next, you're three emails deep with a vendor, trying to pin down a freight quote while your client asks for an updated budget. Most of us find ourselves absorbing these small costs and hours without a clear way to account for them.
Apply markup guidance tied to project context.
You find a great trade-only piece. You get the trade price. You add your markup. It seems simple. But between that initial quote and install day, a dozen small costs can show up. Chasing down specs, managing backorders, coordinating with the receiving warehouse—it all adds up. The spreadsheet you use to track everything is a monument to your hard work, but it can’t always tell you if a specific item is still profitable after three shipping delays. Knowing that procurement is real, valuable work is the first step to pricing it right.
Beyond the trade price—calculating your true landed cost
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Before you can set a profitable markup, you need to know what an item truly costs your firm to get it to the client's door. This is your landed cost. It’s more than just the number on the vendor’s price list—it's the all-in cost of a product.
The landed cost includes:
- The trade price of the item itself.
- Freight and shipping charges from the vendor.
- Any local delivery fees from a warehouse to the project site.
- Receiving, inspection, and warehousing fees.
If you miss one of these, you’re calculating your markup on the wrong number. Your margin will be thinner than you think.
A worked example
Let's say you're sourcing a custom-upholstered armchair for a living room project.
Your vendor—let's call them "Carolina Textiles & Frame"—gives you a trade price of $2,800. That’s your starting point.
- Freight: The chair is oversized and needs LTL freight from North Carolina to your receiving warehouse in California. The freight quote is $450.
- Receiving & Inspection: Your local warehouse charges a standard fee to receive the item, uncrate it, inspect it for damage, and hold it for you. Let's say that's $125.
Your true landed cost isn't $2,800. It is:
$2,800 (Trade Price) + $450 (Freight) + $125 (Receiving) = $3,375
This is the number you should use to calculate your markup and the final price for your client. If you had only marked up the $2,800 trade price, you would have personally absorbed $575 in costs.
Choosing your markup strategy—flat fees, percentages, or a mix?
There is no single correct way to price procurement. The best strategy depends on your business model, your clients, and the project's complexity. Most studios I have worked with use one of three common models.
Percentage markup
This is the most common method. You add a set percentage to the landed cost of each item. A typical markup might be 25-35%, but this can vary widely by region and by the types of products you sell. This model is straightforward and scales directly with the cost of the goods.
Flat fee
Some designers charge a flat fee for all procurement on a project. This can work well for clients who prefer a single, predictable cost. It also makes sense for projects where your procurement effort is high but the total cost of goods is relatively low—for example, a project with many small, custom-sourced accessories.
Hybrid model
A hybrid approach combines methods. You might apply a standard percentage markup to most furnishings but charge a separate hourly or flat fee for managing complex procurement tasks—like sourcing vintage pieces or managing a difficult custom fabrication process. This gives you flexibility and ensures you’re compensated for your time and expertise, especially on more demanding projects.
Your time is money—valuing the procurement process
Procurement is not a passive activity. It’s a professional service. You aren't just a reseller—you are a project manager, a logistics coordinator, and a quality control expert.
Think about the hours you and your team spend on:
- Sourcing and vetting products and vendors.
- Requesting quotes and confirming specifications.
- Placing orders and managing payments.
- Tracking lead times and navigating backorders.
- Coordinating with freight carriers and receiving warehouses.
- Overseeing final installation and resolving any issues.
Your markup or procurement fee needs to cover this labor. Whether you build it into your percentage or charge for it separately, don't give this work away for free. Your expertise in managing this whole process is a huge part of the value you bring to your clients.
Presenting your procurement fees—clarity builds client confidence
How you talk about pricing is just as important as the numbers. Clients are more likely to be comfortable with your fees when they understand what they’re paying for. Most designers already use tools like QuickBooks or Houzz Pro to generate proposals—the key is to be clear and consistent.
When you present a proposal, frame your procurement services as a benefit. You’re providing access to trade-only sources, managing complex logistics, and making sure everything arrives correctly and on time. Be transparent. Your proposal should clearly state how you handle product pricing, markup, and shipping costs.
Instead of just showing a final number, consider adding a line that explains what your service includes. For example: "Product pricing includes cost of goods, freight, receiving, and full-service procurement management from order to installation." This one sentence explains the markup as a service, not just a fee. It helps build trust and makes the conversation easier.
From spreadsheets to systems—tools for margin clarity
Most of us started our studios with a collection of spreadsheets, email folders, and Pinterest boards. Those tools are flexible and familiar. But as your projects grow, tracking every cost and calculating margins by hand for hundreds of items becomes a real drag on your time. It’s also where small errors can quietly eat into your profit.
This is where a system built for procurement helps. Alcove calculates your landed cost and margin for every single item, giving you a real-time view of project profitability without the manual math. It gives your team one organized system for specs, quotes, POs, and financials—so you're no longer digging through emails to find a freight charge or confirm a markup.
Price with clarity. Install with confidence.
See how we do it at alcove.co.
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FAQs
Should I charge a flat procurement fee or a percentage markup?
Both can work, and the best choice really depends on the project's scope and your client's preferences. A percentage markup is common for product sales. A flat fee or hourly rate might be better for complex, custom procurement services where the product value is less relevant than the time you put in. Many designers find a hybrid approach works well, combining a standard markup with a separate fee for extensive procurement management.
How do I handle shipping, freight, and receiving costs in my pricing?
These costs are part of your landed cost, so don't absorb them. You can either build them into the item's price before you apply your markup, or you can show them as separate line items on your client proposals. Just be transparent about these charges. Explain that they cover the logistics of getting the product safely from the vendor to their home, including any necessary receiving and inspection services.
What if a client pushes back on my procurement fees or markup?
If a client questions your fees, it's usually because they don't see the work involved. Be ready to explain the work that goes into procurement—sourcing, vetting vendors, managing lead times, coordinating logistics, and fixing backorders. Explain that your fee covers a service that ensures a smooth, well-managed project and gives them access to trade-only resources.
How often should I review my procurement pricing strategy?
I'd recommend reviewing your pricing at least once a year, or after you complete a few big projects. This lets you check your actual profitability, account for changes in your overhead or market conditions, and adjust your approach. Look closely at your time tracking and project financials to see where you might need to make changes to stay competitive and profitable.
See how Alcove does this
See how we do it at alcove.co.
