billing rates for research & design

i have been approached by an overseas investor who would like to get into the US furniture market to establish a company and design the collection. (i’ve never done this before.) i am planning on two work contracts - one for everything related to actually making the company happen (competition/market research, advertising, etc.) and one for the actual design work.

for the design work contract, i’m planning on asking for an upfront fee, per design, with a stipulation that rights be returned to me if the designs are not taken to market after a certain number of years.

can anyone help me out with ballpark figures? i’ve tallied all my expenses, figured out my break-even rate, profit margin calculations, etc., so i know what works for me, but i feel like i’m throwing a blind number out there when it comes to industry figures. also, is it fair to charge the same rate for both contracts?

thanks in advance.

i’m sure you’ll get some responses such as “how long is a piece of string?” but let me share an example just from the research billing portion - mostly a consumer research perspective:

a well known, major U.S. city based, qualitative/design focused/consumer research consultancy might charge blue chip clients about US$100,000 for the following:
–basic secondary research, call it ‘market orientation’ (and the presentation/documentation of this info)
–series of focus groups with consumers, perhaps 4-6 groups spread over a couple days in the same location (and the presentation/ " " ) (please, no need for condescending comments about focus groups, that’s another thread!)
–series of observational research/faux ethnography with about 8-12 users ( " " " )
–mid-point check-up/meeting/sharing/presentation/manage expectations
–consumer segmentation model, mostly on the lifestyle side - not a lot of population size, expenditure, potential profitability info with this small sample, some generalizations based on secondary info perhaps, but nothing an MBA or left-brain marketer would take seriously ( " " " )
–recommendations/strategy based on the findings above ( " " " likely in a workshop format at client HQ)
–follow-up including q & a and review of later client decisions to check if they are in line with recommendations

–this project would take about 2-3 months and have 1.5 - 3 people dedicated to the effort at various times. these consultants would have prior experience within the same industry, likely masters degrees, good presenters, would outsource focus group logistics. keep in mind a portion of the 2-3 months is setting up consumer research - it’s not like consultants are on your project solid during this whole time.

–in my opinion, this does not cover the competition very thoroughly, nor would it address advertising. it would primarily cover consumer research, segmentation, and recommendations on what to offer those segments.

–word of caution since you mentioned “overseas investor” - depending on where overseas, i’ve found some cultures do not see value in the “intangible” of research. be prepared for questions, push-back, outright scoffs, and abandoning this portion of your project/billing if necessary/possible

others can add (a lot), subtract (a lot), disagree, but this is the ‘ballpark’ i’m familiar with on the research side. good luck.

thanks for all the info - the investor isn’t quite blue chip, but at least it’s a benchmark of sorts and that is helpful.

i’ve noticed in a lot threads on this site that people are afraid/not willing to talk about rates/money. is that a fear of competition thing?

Another thought is that after you have run the numbers and figured out what the cost and Roi should be, get some distance and decide if the final number achieves the “value” you believe you are adding. Alter the number finally with that thought in mind.