Profitability
Stop guessing your flat fees: pricing design work with data you already have
Ask a room of design principals how they price a flat fee and you’ll hear some version of the same method: estimate the hours, add a cushion, gut-check it against the last similar project, and hope. Sometimes the gut is right. The problem is you usually find out whether it was right a year later — if ever.
Here’s the uncomfortable truth buried in most firms’ books: a handful of project types quietly subsidize the rest. Full-service new builds might earn twice the effective rate of your furnishing-only refreshes — or the reverse — and without data, you’re renewing the losing bets every year.
The only two numbers that matter
For every flat-fee project, you need exactly two numbers:
- The fee (you know this one).
- The hours your team actually spent, by person, at their cost and billing rates.
Divide, and you get your effective hourly rate per project. Compare it across project types, client types, and team leads, and pricing stops being philosophy and becomes pattern recognition:
- If small projects consistently land at 60% of your target rate, your minimum fee is too low — or small projects need a leaner process.
- If one project type always overruns in the same phase, that phase is underscoped in your proposals, not underperformed by your team.
- If a “great client” produces your three lowest-rate projects, that relationship is a marketing expense. Price it like one, knowingly, or fix it.
Why firms don’t do this
Not because the analysis is hard — it’s division. Because the data capture fails. Time tracking that lives in a separate app, disconnected from projects and billing, decays within a month: people forget, backfill, or quietly stop. And time data that’s 60% complete is worse than none, because it lies with confidence.
The fix is to make time capture part of the work itself:
- Log time from the task or project you’re already in — not a separate tool with a separate login.
- Track against phases, because “we overran design development by 30%” is actionable and “we overran” is not.
- Surface unbilled hours weekly, so hourly work turns into invoices while it’s fresh — this alone typically pays for the entire system.
A 90-day experiment
You don’t need a year of history to start. Track completely for one quarter, then run the division on every project that closed. Most principals find at least one genuine surprise — a project type to raise by 20%, a service to productize, or a client tier to sunset. That single decision usually outweighs a year of new business effort, because it repeats on every future project.
You can’t price what you can’t see. And you’ve been generating the data all along — it’s just been evaporating.
Workroom ties time tracking to projects, phases, and billing, and rolls it into live profitability per project — so the analysis in this post is a report you open, not a spreadsheet you build. Book a demo and we’ll run it on your numbers.