Return on Investment and the Value of Design

All that separates you from making a great investment or incurring an annoying expense is your own vision.

Two clients with the same bill for the same interior design project can feel completely different about what they got for their money.   Was the money spent an excellent investment with great future returns or just an annoying expense?

The idea that interior design has an ROI (return on investment) has gotten a lot of interest lately. Check out this article on the subject from the design savy FastCompany.  For those in design, the ROI on design is obvious. We know there is an ROI in terms of lifestyle, value and home re-sale for home owners and increased productivity, worker satisfaction and better branding for commercial clients.

Commercial Space

The true value of good office design is the effectiveness of an office environment, measured in the dollars and cents of an increased profits.  The innovative interior design giant, GENSLER, did a study in 2008 – the Workplace Survey – that found that companies with the most effective workplace environments showed higher profits (28% vs 14% profit growth), better employee engagement and stronger brand position. They found that designs promoting efficiency, creativity, and positive attitudes among workers, resulted in better customer service and higher sales. 

Good commerical interior design also affects a company’s clients.  Color psychology, strategic merchandising, layout and branding are all communication tools with important roles in the way a company ‘talks’ to its clients.  Check out a recent Biz Journal article on this topic.

Residential Builders

Model Homes are an important part of a builder’s branding strategy and one of their greatest sales tool, with a huge influence on buying decisions. If a client doesn’t like the model design- whether it’s the bad room layout, boring backgrounds, or cheap furnishings – that client is gone and not looking back.

 

The first investment a client makes with a builder isn’t their money, it’s their time, and they expect a positive emotional ROI on that time. Without ROI, there will be no further transaction. Good Interior Design sells houses. No question. Not one. Bad interior design will cheapen the product or worse, send future homeowners back to their cars and off to the competition faster than you can say ‘deposit check’.

Despite this information, builders often regard interior design and its costs as necessary but annoying expenses, and unfortunately frequently look for the cheapest solution. Big Mistake! ‘You get what you pay for’ in design. Good design is an investment in the future,  leading to increased sales and increased profits. Again, No question. Not one.

Home Owners

Custom interior design takes time and during that time, design fees and furniture costs will add up.  Good, up-front communications between the designer and the client about what things really cost, is key to a successful project. 

If the client values good design they will feel comfortable with their choices and the money they spend. If they don’t value it, then any price higher than China Cheap will be too high and no design fees will be worth it.  It will be the difference between seeing the money spent as a good investment or an annoying expense.

ROI on a custom home can be measured in a varieties of ways.  The first is Time and it begins before the house has even started construction.  Custom interiors involve literally thousands of decisions and hundreds of hours to make them. Unless a homeowner has a lot of free time and resources on hand, they will quickly become frustrated and overwhelmed.  The best way to see the ROI of Time is to peruse the designer’s time sheets and see first hand the hours it takes to get a custom project underway.

The next return is Expertise. Homeowners are paying  for an expert with years of knowledge and impeccible skill. The expert works expressly for the homeowner and their family, creating a home with the family’s best interest at heart. There are many analogies some more appropriate than others,  but they all work . Who will provide the most valued expertise,  a surgeon with decades of experience and insight into your problem or an intern? A software developer with experience in your industry or your techy brother-in-law? A tile installer who works in million-dollar homes or your neighbor who just installed his deck?… and on and on. 

 Another aspect of ROI for homeowners is that good design is a Lifestyle enhancer.

The term “Lifestyle’ is overused but it is applicable here. Your home is designed for you, everything is where you want it for the enjoyment and efficiency of your own family.   If you don’t value this, you wont value the investment in good design.

The traditional financial ROI for a homeowner comes when the house is sold. Homes created thoughtfully and artfully have better aesthetics, a higher level of finishes, and better layouts than those with bad or no interior design. Which would you pay more for? The interior designed home has more intrinsic value and a higher sales price.

Return on Investment in design is not always about money, but is about your vision. And that is all that separates you from a great investment.