Interior Design Markups: What You Must Disclose
A designer bought a dining table for $2,878.80 and allegedly charged her client $4,750. When the client found out, they sued. And the court allowed claims of fraud and deceptive trade practices to proceed. This is a real case, Marcus v. Dennis, decided in a Virginia federal court in 2022.
This isn't about one unethical designer. It's about what happens when your pricing model, your contract language, and your actual invoices don't tell the same story. If you're running a studio with any form of procurement markup, cost-plus agreement, or trade discount, this case matters to you.
What Actually Happened
The designer was working on a cost-plus agreement. The clients would pay trade prices for furnishings plus professional fees. The designer agreed to provide supplier invoices.
Instead, the clients saw significantly higher numbers on their invoices:
A dining table purchased for $2,878.80 was allegedly billed at $4,750.
Artwork bought for $14,000 was allegedly invoiced at $18,000.
In a separate federal case with near-identical facts (Johnson v. Robert Shields Interiors, E.D. Va. 2016), undisclosed markups on furniture ranged from 35% to 100%, with hidden commissions never disclosed to the client.
The designer's defence was that markups are "industry standard." The court wasn't persuaded. Your written agreement governs, not common practice in the trade. When your contract promises cost-plus, that's the standard you're held to.
One important note before we go further: both of these are American cases, heard in Virginia. The principle travels anywhere. Your written contract governs, and undisclosed markups are dangerous. But the specific consumer laws that turn a billing dispute into a fraud claim differ by country, and even by state. I work across Australia and Hong Kong, and the rules here aren't identical to those in the US. Wherever you practise, check the contract and consumer regulations in your part of the world, and have your agreement reviewed by a professional familiar with your jurisdiction.
The Four Pricing Models (And Which One You're Actually Using)
Most studios are operating in a pricing grey zone that hasn't been clearly defined in writing. That's the real risk here. There are four workable models:
Pure cost-plus. You charge the exact vendor invoice price plus your professional fees. No margin on goods. Full invoice transparency.
Cost-plus with disclosed markup. You charge trade cost plus an agreed, stated procurement fee. Both parties know the margin exists and what it is.
Retail/resale model. You buy at trade and sell at retail. Your profit margin is your business. You're not promising cost-plus, and your contract makes that clear.
Fee-only. You charge entirely for your time and expertise. Trade discounts are either passed through to the client or retained as part of a documented fee structure.
The legal exposure isn't tied to which model you choose. It's tied to whether your contract says one thing and your invoices show another. Pick your model. Make sure every document in your studio matches it.
What Your Contract Must Actually Say
If you're operating cost-plus, vague language won't protect you. Here's what courts have focused on in these cases:
How "cost" is defined. Does it include shipping? Taxes? Handling? If it's not in the contract, it's open to interpretation in a dispute. Define it specifically.
Whether markups or procurement fees are disclosed. A clause like: "Client will be charged the net cost plus a procurement fee of X% on approved furnishings. Trade discounts, if any, are retained by the designer as part of studio compensation" is defensible. "Industry-standard markup" is not.
What documentation you'll provide. If your contract says you'll share supplier invoices, you must share them. Withholding them is exactly what escalated both Virginia cases from a billing disagreement into potential fraud claims.
Get a lawyer to review your current contract with fresh eyes, specifically around procurement, fee structures, and documentation. One review now is far cheaper than a dispute later.
The Documentation System That Protects You
Most disputes don't start in court. They start when a client Googles the SKU on a sofa you just invoiced, finds it for less, and asks questions.
Build your paper trail as you work:
Use a consistent invoice template. Every invoice should show the vendor name, item description, your cost, any agreed-upon markup or procurement fee, and the amount the client pays. Same format, every project.
Attach supplier invoices if your contract says you will. Make this a non-negotiable step in your procurement process, not an afterthought.
Document approvals in writing. A quick email confirming the item, the cost, and your fee creates a record. No written approval, no order.
Flag pricing changes before you invoice. If something costs more than quoted, tell the client first. Not after.
This isn't about distrust. It's how studios that can survive scrutiny operate.
The Myths Courts Don't Care About
These are beliefs circulating in the industry that the case law flatly contradicts.
"Markups are industry standard, so they're automatically fine." Courts care about your written agreement, not trade norms. If your contract promises cost-plus and your invoices show hidden margins, the contract is what counts.
"It's a small amount. No one will actually sue over a dining table." The dollar value of one item may be modest. But once a client suspects a pattern, they may pursue broader claims, including fraud and consumer protection violations that extend far beyond the cost of a single piece of furniture.
"I don't need a written contract for regular or friendly clients." Professional bodies are explicit on this: a written agreement for every project, every time. Verbal understandings are nearly impossible to enforce and leave too much room for misinterpretation.
"Transparency will scare clients away." It won't. The clients who are right for your studio want to understand how you work. Clarity builds trust. Opacity creates suspicion.
What to Do When a Client Questions a Charge
If a client raises a concern about pricing, here's how to handle it before it escalates:
Move the conversation to writing immediately. Respond calmly. Point back to the relevant clause in your contract. Keep a record of every exchange.
Provide documentation you're already obligated to share. Don't make them ask twice for something your contract promised.
Offer a review meeting. Walking through the financials together, with the contract in hand, demonstrates good faith. This step alone resolves most disputes before they go further.
Weigh the cost of escalating. Legal action takes time, money, and energy. For a relatively minor disputed amount, a negotiated resolution is often the better call for your studio.
Only escalate with evidence. If it does go further, you want a clear paper trail showing you followed your contract and made every effort to resolve the issue.
Use AI to Review Your Contract Language
Before your next project, run your contract's procurement and pricing clause through Claude or another model with this prompt:
"I run an interior design studio. Review this clause on procurement and pricing. Flag any language that could create ambiguity about whether my fees are disclosed, whether trade discounts are retained or passed through, and whether I've committed to providing supplier invoices. Suggest clearer alternatives."
This isn't a substitute for legal review-please do see a lawyer!! It's a fast way to catch vague language before you rely on it in a dispute.
Final thought
The $4,750 table case isn't really about one designer making a bad call. It's about what happens when a pricing model that works perfectly well in practice isn't supported by a contract that can withstand scrutiny.
Your pricing model matters. Your contract language matters more. Your documentation system is what actually keeps you safe when a client or a court asks questions.
If you're not sure whether your current contract is clear enough, that's your answer. Get it reviewed. Tighten the language. Build a billing process you can explain without hesitation. That's not admin overhead. That's how you run a business.
About me
Hi 👋🏽 I'm Joanne Pereira, an interior designer and business coach for designers who are ready to run a profitable studio.
My path here was anything but straight: Economics degree, post-grad studies at Christie's London, a Masters in Education, and 25 years running design practices across Hong Kong and Australia. I founded Eclectic Cool in Hong Kong, representing brands like Gubi, HAY, and &tradition, and my work has been featured in Monocle, Elle Decor, Conde Nast Traveller, the South China Morning Post, and the ABC Australia network.
Today I run Design Ink Co, where I coach established interior designers through Design for Success, my 12-week 1:1 program. It's where talented designers stop running on chaos and start running a real business.
I live between Hong Kong and the south coast of Australia with my husband, three adult children, and a cavoodle.
Ready to work together? Book a free Design Business Clarity Call.
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