Should Interior Designers Pass On Trade Discounts to Clients?

Pricing

28 Apr

Trade discounts are one of the most misunderstood parts of running an interior design business. Designers hedge, avoid the question, or copy what someone else does without knowing why. Then a client asks "can I have your trade discount?" and the whole conversation falls apart.

There is also an element of confusion as the way designers deal with design discounts and charge for design discounts vary from location to location.

There is no universal right answer. But there is a right answer for your business. The problem isn't which approach you choose. It's that most designers haven't chosen deliberately, and haven't written it down.

What is a trade discount?

When you open trade accounts with suppliers, you access below-retail pricing. That pricing belongs to you, not your client. Most trade programs are contracts between the supplier and the designer. The client has no legal entitlement to it.

What you do with it is a business decision.

In Australia and the UK, trade discounts typically sit between 15% and 40% off retail, with most mainstream programs around 20-30%. US-based trade pricing generally runs 20-35% below retail. Designers then typically apply a markup of 30-50% above trade cost when charging clients, which usually brings the client price back close to retail. European factory-direct pricing on Italian, Scandinavian, and Portuguese pieces can come in at 40-60% below UK retail.

The three models that actually work

There are three approaches, and designers successfully use all of them. The key is choosing one deliberately.

1. Keep the full discount

You buy at trade and charge the client retail or a set selling price. The margin covers your sourcing time, procurement admin, and the risk of managing orders.

This is a product-margin model. It works well in commercial contexts and for designers whose revenue depends on product volume. The risk: if a client discovers the margin without being told upfront, trust takes a hit. Disclosure in your contract is non-negotiable.

2. Share the discount

You keep part of the margin and pass some savings to the client. A common structure: your supplier gives you 20-30% off retail; you pass 10% and keep the rest.

Some coaches describe this as the worst of both worlds. You carry the full admin and risk of procurement, but you've cut your margin without simplifying your model. It can work, but only if the numbers are deliberate and the structure is clear in your contract.

3. Pass it on in full

You give clients your trade price, often having them pay suppliers directly. Your income comes entirely from design and procurement fees. No product margin.

This is a fee-driven model. It's clean, easy to explain, and increasingly common among residential designers who want to compete on transparency. The trade discount becomes a visible benefit of working with you, not a revenue stream.

What the law says (AU, UK, and US)

I'm not a lawyer so do check the information in this article & and check with a lawyer before acting on any of it.

This isn't just a business question. There are legal considerations in every market, and they matter.

In Australia, if you buy and on-sell goods, you may be legally treated as the supplier under Australian Consumer Law. That brings obligations around refunds, repairs, and warranties. Solicitor Sharon Givoni, who specialises in interior design law, is specific about this: designers who on-sell furniture carry supplier obligations under ACL, including statutory guarantees. Your contract needs to make clear whether clients are contracting with you or directly with the supplier.

In the UK, professional contract frameworks like the RIBA/BIID joint contracts are widely used in the industry. UK industry guidance broadly emphasises documenting how procurement income is handled, and it's considered best practice to state clearly in your contract whether trade pricing is retained, shared, or passed through.

In the US, disclosure requirements vary by state. California has explicit requirements that markup percentages must be documented in written contracts. Courts in Virginia have found designers liable for damages where markups were not disclosed. The ASID Code of Ethics requires members to fully disclose all compensation received in connection with a project.

One thing applies across all three markets: the specifics of your obligations depend on exactly how you structure your business. If you're buying goods and on-selling them to clients, you may be legally treated as the supplier in the eyes of consumer law, not just a designer. That carries real obligations around refunds, warranties, and defects. Before you finalise your trade discount policy, get a local lawyer to review your contract and your model. Not a generic template you found online. Your contract, your jurisdiction, your structure. It's a one-off investment that protects you from a much more expensive problem later.

As someone who used to own a interior design store and sold furniture and decorative items as part of my business model, the legal obligations are significant and not to be taken lightly.

The business case for a fee-driven model

Here is what changes depending on which model you choose.

When you keep trade margin, your revenue is tied to product volume. To earn more, you need clients to buy more, spend more, and replace more. Your business is, in part, a product business.

When you pass discounts on and charge a transparent procurement fee instead, your revenue reflects your time and expertise. Not the volume of orders you push through. That is a fundamentally different business to run.

And it is a much easier conversation to have.

You can say to a client: "My fees cover my expertise and your project management. The trade pricing I access is a benefit of working with me. You get better-than-retail pricing, and I get paid for what I actually do." That sentence is easy to say with confidence. It aligns your interests with theirs. It makes the "can I have your discount?" question largely irrelevant because you have already addressed it.

How to document your policy

Pick your model. Then write it into two places: your contract and your welcome guide.

Both need to cover:

Whether you receive trade pricing, discounts, or commissions from suppliers
Whether you keep, share, or pass those on
Who pays the supplier directly
Who carries responsibility when an order goes wrong

If you are fee-based and passing discounts on, something like this works:

"I access trade pricing through my supplier accounts. Any savings below retail are passed directly to you. You pay suppliers at trade price. My design and procurement fees cover sourcing, ordering, coordination, and issue resolution."

If you are running a margin-based model, disclose it clearly:

"Products are priced at a rate that includes a procurement allowance. This covers sourcing, ordering, quality checks, and delivery management. Trade pricing received from suppliers is retained as part of this service."

Neither approach is wrong. Both need to be in writing before you start a project. Not after a client asks.

Use AI to write your trade discount policy

If you want to get this documented quickly so that you can show your lawyer, this prompt in Claude gets you three usable first drafts in under five minutes:

"I'm an interior designer with a [fee-based/margin-based/hybrid] business model. I currently [keep/share/pass on] trade discounts from suppliers. Write me: (1) a one-paragraph explanation for my client welcome guide, (2) a short contract clause disclosing how I handle trade pricing, and (3) a verbal one-sentence response I can use when a client asks about my trade discount."

Add a line about your market and your typical client type. You'll have three solid drafts to work from immediately.

Final thought

The trade discount question is a business model question. Not a morality question.

Designers across Australia, the UK, and the US build profitable practices with all three approaches. What separates the ones who handle it well from the ones who get caught out every time a client asks isn't which model they chose. It's whether they chose deliberately, documented it clearly, and briefed it upfront.

Decide your model. Write it into your contract. Cover it in your first client conversation. Then the next time someone asks, you have already answered.

Hi 👋🏽 I’m Joanne!

I’m an interior designer, content creator, educator, and business coach. After studying Economics and Education at uni, the design world beckoned, drawing me to Christie’s in London, where I completed post-grad studies in art & design, and then to Hong Kong, where I founded Eclectic Cool, a design firm and design store. Eclectic Cool represented international brands such as Gubi, &tradition, HAY, Armadillo Rugs & Dinosaur Designs to name a few. My work and store have been featured in Monocle, Conde Nast Traveller, Elle Decor, Expat Living, Cathay Pacific inflight magazines, South China Morning Post, and the ABC (Australia) network and more. I live between on the south coast of Australia and Hong Kong with my husband and cavoodle. I’m the mum of three adult children.

Don’t forget to grab the free stuff! For Interior Designers!

Want a free investment guide you can use in your interior design business?

This 24-page investment guide, made in Canva, is yours to customize with your logo and branding. Fill out the form to download now!