Product Markups and Client Trust: How Transparent Should Designers Be?

Here is a situation most designers can picture. A prospective client sits across from you, your letter of agreement on the table, and asks, almost casually, “What do you mark up product?”

The question lands differently depending on the day. Sometimes it feels like a reasonable request from someone trying to understand how you work. Sometimes it feels like a challenge, a hint that they have been Googling and have decided they want to do the math on their own.

What you say next, and how you have structured your business to support that answer, shapes a lot. Not just this client conversation, but the kind of clients you tend to attract, the profitability of your product revenue, and the long-term health of the business.

Interior Design Community put this question to the community: when a client or potential client asks about your product markup, do you tell them? The responses reveal something more useful than a simple yes or no. They reveal that the markup question is really a pricing philosophy question, and your answer should reflect a deliberate business position, not just a reaction in the moment.

Why Clients Ask About Markup in the First Place

Before you can answer the markup question well, it helps to understand where it comes from.

Interior design is one of the few professional services where billing models vary so widely that clients genuinely do not know what to expect. Hourly, flat fee, cost-plus, retail pricing, procurement management fee, trade pricing only the industry has developed dozens of approaches, and most clients have encountered more than one. When they ask about markup, they often are not asking to negotiate. They are asking because they do not have a framework for understanding how you make money.

That inconsistency is a structural problem for the industry, but it is also an opportunity for each individual designer.

“Clients ask that question, because the industry taught them that they should ask, so let’s take responsibility and change. We are not all consistent in structure and pricing, which is confusing to the client, and some designers think giving them the ‘designer discount’ will get you the job, but it only gets you the cheap clients who want a deal. I say it matter-of-fact, this exact way: ‘Our trade agreements with our trade partners pay for the responsibility we incur and work we do after you approve the design presentation, such as procurement, managing delivery, dealing with any issues that arise etc. That is someone’s full time job just to do that and it pays those salaries.’ My response helps them understand that we are EARNING it. Every time they just say ‘ok’ and we move on.”

— @deborahgregg.interiors

Two things stand out in that response. First, the framing: instead of an explanation that sounds defensive, this reads as a matter-of-fact business statement. Second, the result: the client moves on. A clear answer, delivered without apology or over-qualification, usually does not invite further negotiation.

For more on explaining your fee structure clearly from the very first conversation, see IDC’s guide on how to confidently answer the “what is your markup?” question.

The Word “Markup” May Be the Actual Problem

For many designers, the issue is not whether to disclose a number. It is the vocabulary surrounding the conversation.

“Markup” carries associations that do not accurately describe what procurement actually involves. It suggests a simple transaction: buy low, sell higher, pocket the difference. That framing leaves out the weeks of tracking, the vendor advocacy, the claims management, the coordination with receivers, and the liability exposure that comes with every purchase placed on a client’s behalf.

Some firms have moved away from the word entirely, and found that the conversation changes when they do.

“We provide our procurement management fee % (PMF) in our Letter of Agreement. We never refer to it as a markup nor should the industry continue to perpetuate this terminology. Our PMF includes the process of procurement, tracking, scheduling delivery, advocacy for clients is something goes wrong. A markup signals something for nothing & we all know the time, details and accuracy needed for this phase.”

— @kaminteriordesignny

PMF, procurement fee, sourcing fee, product service fee the specific term matters less than what it communicates. “Markup” invites the client to think about the gap between your cost and their cost. A procurement management fee invites them to think about a service they are receiving. Same revenue, very different conversation.

If your contracts, invoices, and verbal explanations all use the same precise language, clients are much less likely to reframe the conversation on their own terms. Consistency across every client-facing document is what makes the terminology stick.

One Model That Answers the Question Before It Gets Asked

For some designers, the cleanest solution is a billing structure that is fully disclosed from the start, so the markup question never arrives in a charged or ambiguous moment.

“If you have a store, they shouldn’t ask. But this question arises because one industry has a million ways to bill. I’m never surprised when client have to ask seemingly simple questions we’re so confusing! To not receive this question, we refuse the idea that we are retailers. We’re consultants, we offer services. We don’t have a store. Instead, goods = Net $ is charged fully transparent. Procurement and install oversight: paid via a procurement fee calculated on the net cost of goods. One percentage across all categories easy. Nothing to hide, trust builds fast. Win-win.”

— @kathleendwalsh

The approach works because it eliminates the conceptual gap between “what I paid” and “what you’re paying.” When clients see net goods cost alongside a clearly labeled procurement fee on a single invoice, there is nothing to calculate and nothing to wonder about. The transparency is built into the invoice structure, not delivered as a speech after someone asks an uncomfortable question.

Not every business model will accommodate this exact structure, but the principle applies broadly. When pricing is explained proactively through onboarding materials, contract language, and early conversations, the likelihood of the markup question arising in a charged moment decreases significantly.

For a deeper look at how transparent purchasing and procurement fees work in practice, To-The-Trade‘s episode with Phyllis Harbinger on pricing strategies and project ops breaks down a cost-plus structure clients can actually follow.

Two Revenue Streams, One Coherent Story

One of the most effective ways to handle the markup question is to position your business clearly as having two distinct revenue streams: professional fees for your expertise and product sales for the goods your clients purchase through you.

“We are very transparent from the very beginning that our studio has two revenue streams: professional fees and product sales. Like any healthy business, both need to be profitable. Our clients understand that we become the storefront for their project. We invest time sourcing, curating, negotiating, ordering, tracking, receiving, resolving issues, and standing behind every purchase. A good business should be profitable. Otherwise, everyone ends up frustrated, and nobody wants to work with a miserable business.”

— @francisinteriors

The storefront framing is useful because it recontextualizes the product side of your business. You are not a personal shopper who charges for sourcing time. You are a business that carries goods, takes on supplier relationships, absorbs logistical risk, and stands behind every purchase if something goes wrong. That is a retail function, and retail functions have margin built in.

When you frame it that way, calmly and early, most clients accept it without debate. They are not usually asking because they object to you making money. They are asking because they do not understand the model. Your job is to give them a model they can understand, delivered before they have a reason to be skeptical.

Context Before Numbers

There is a specific sequence that experienced designers follow when the markup question does come up. They do not lead with the percentage. They lead with the business context.

“The amount you mark up is a part of your total payment. That type of question needs some explanation. It depends if you have a fixed price + markup and the markup is for handling, ordering and tracking goods then tell them what the markup is for and then the percentage. If you do markup only, you first have to explain that you are running a business (not a hobby or charity) and the markup is what pays all your software, insurances, rent etc and then tell them. Don’t just tell them your markup without a thorough explanation about your business model. They need to understand that you are running a business just like their contractor that puts 20% on to the drywall and paint.”

— @christinarichardsoninteriors

The contractor comparison lands because it is one most clients have already accepted without question. No one calls their general contractor to demand the margin on subcontractor labor or materials. The expectation is set through industry norms and years of established practice. Interior design simply has not established those norms as consistently, which is why the education piece still falls on the individual designer.

Educational content, not legal advice.

The practical implication: before you disclose a number, give the answer a container. Explain what the fee covers, what service it corresponds to, and what the client receives in exchange. Then, if you share the percentage, it lands as a reasonable business figure rather than an invitation to negotiate. Context first, number second. That sequence is what keeps the disclosure from opening a longer conversation than you want to have.

Your contract language should reinforce that same context. IDC’s rundown of essential interior design contract clauses covers the specific terms that protect this conversation before it starts.

The Case for Making Value, Not Pricing, the Whole Conversation

There is a perspective in the community that frames this entire discussion differently. Instead of developing better answers to the markup question, some designers argue the goal should be to build a business where clients rarely think to ask it.

“In 16 years, a client has never asked us this question. As an industry, we need to stop obsessing over the topic of ‘transparency’ in pricing and discussing mark up and margins with clients. When cost alone becomes the focus of the designer, it becomes the focus for the clients they attract vs the value, benefits, experience, results, quality, trustworthy trades, etc. How we build relationships, personalize the experience, save clients from making costly mistakes, ease the stress with our professional guidance, deliver results that’s got to be the focus in our messaging and there’s a premium price attached to that.”

— @clairejefford

This perspective is worth sitting with. If the markup question feels like a recurring friction point in your business, that pattern may be pointing to something about how you are positioning yourself before the first meeting, what clients you are attracting, and how clearly your value is being communicated before anyone sits down with a letter of agreement.

The designers who rarely field this question tend to have built relationships and reputations that make pricing a secondary concern. A client who trusts your judgment completely, who was referred by someone who raved about the experience, who has followed your work and understands what you bring to a project, is often not thinking about percentages at all. They are thinking about the result.

That does not mean you skip the contract language or avoid a clear pricing structure. It means the structure supports trust rather than substituting for it. The question “do you tell them?” becomes much less fraught when the answer, whatever it is, fits naturally inside a relationship that is already built on demonstrated value.

What Your Business Needs in Place Before the Question Comes Up

Wherever you land on disclosure, a few things should be consistent across your operation.

Your contract should clearly identify how product compensation is structured. Whether that is a PMF percentage, a cost-plus arrangement, or a retail pricing model, the terminology in your contract, your invoices, and your verbal explanations should all match. Discrepancies create questions. Consistency creates confidence.

Your onboarding materials should address this topic before clients have a chance to wonder about it. A brief, clear explanation of how you are compensated across both fees and product, delivered in a welcome document, initial consultation, or client guide, eliminates most uncomfortable moments before they happen.

If your business relies significantly on product compensation, make sure your design fees are calibrated so you are not under pressure to maximize margin on every sourcing decision. The flexibility to find the right piece rather than the most profitable one is a real business advantage, and it shows in the quality of the final project.

The markup question is not going away. It gets asked because clients are curious, because the industry has not standardized, and because some clients have done enough research to be more cost-aware than they might have been a decade ago. Your answer, and the business you have built around it, is the variable you control.

The designers who field this question without anxiety are not the ones who have memorized the perfect script. They are the ones who have made a deliberate decision about how they charge, built their operations around that decision, and can explain it clearly from first contact through final invoice. That alignment, more than any specific answer, is what keeps the conversation short.