Ask Us Anything: Jean Liu on the best way to use credit cards for purchasing

Summary

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Trade Tales: "Ask Us Anything – Jean Liu on the Best Way to Use Credit Cards for Purchasing"

Podcast: Trade Tales
Host: Kaitlin Petersen (Business of Home)
Guests: Jean Liu (Interior Designer), Caroline Burke
Date: August 20, 2025

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Episode Overview

In this installment of the "Ask Us Anything" series, host Kaitlin Petersen dives into the nuances of handling credit card processing fees in interior design purchasing—when to pass them along to clients, how to communicate about them transparently, and how top designers structure their invoicing processes for both protection and client trust. Jean Liu, a designer renowned for her candor and clarity around financial policies, shares detailed insights into her studio’s approach, the value of credit card protections, and best practices for fostering clear, trusting client relationships.

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Key Discussion Points and Insights

1. Should Designers Pass Along Credit Card Fees? How?

• Many designers struggle with whether to absorb credit card processing fees (commonly 3-4% per transaction) or pass them to clients.
• The roundtable begins with a designer asking:
  • "I've always eaten the fees that vendors charge when I've used credit card to place a client's order ... now I’m curious, for those designers who do pass that charge along ... how are they communicating it?" (Unidentified Designer, [00:51])
• Designers often address similar dilemmas with tariffs or surprise shipping costs, sometimes absorbing them but increasingly passing them on due to changing norms (Unidentified Designer, [01:40]).

2. Frameworks for Billing and Transparency

• Most design firms build proposals or estimates detailing all associated costs, such as shipping, markups, tariffs, and occasionally, credit card processing fees.
  • "We create a proposal that has every fee, cost, et cetera, associated with an item ... even prior to the tariffs, when an item shipped, we always verify the shipping invoice with the purchase order..." (Unidentified Designer, [02:21])
• Designers face client "spending fatigue" from frequent, unexpected invoices, especially in large-scale remodels or projects ([03:14]).
• Jean Liu emphasizes creating detailed up-front estimates and invoices, including all possible known costs and caveats:
  • "We put as much information in that estimate as possible ... if we don't quite know what, say, for example, shipping is going to be, we put TBD so that we at least call out a line for it." (Jean Liu, [11:26])

3. Legal & State-Specific Issues

• Designers must know their local laws: In some states (CA, CT, ME, MA, NY, PR), passing on fees is regulated but not always outright banned.
  • "You can absolutely pass along the cost of a vendor's fee to the client as long as you clearly communicate the total price, including that fee, before the transaction is made." (Kaitlin Petersen, [05:48])
• Bottom line: Always communicate total costs up front and consult an accountant if in doubt.

4. Credit Card Protection: Worth the Cost

• Both Jean Liu and others strongly value credit card use for the purchase protection it offers, even if that means incurring fees:
  • "Credit card is definitely my preferred payment method. It offers a good amount of security ... if a vendor has gone bankrupt, the ability to dispute the charge is a lot better scenario." (Unidentified Designer, [03:37])
  • "We are big believers in using the credit card as often as possible ... the credit card company is another layer of consumer protection." (Jean Liu, [16:04])
• American Express (“Amex”) is called out as particularly strong in protecting purchases ([17:03]).

5. When and How to Communicate Fees to Clients

• Jean Liu’s practice is to roll the fee into the “net cost” of the product, not break it out as a line item, but ensure clients see a clear, all-in price up front ([16:04]).
• If clients ask, she openly describes the fee as a cost of doing business—for mutual protection:
  • "If they were to ask, I would explain to them ... it's another layer of insurance ... if they wanted to forego the 3%, we don’t have a problem, but they’d lose that protection." (Jean Liu, [20:01])
• Proactively sending sample invoices and estimates to new clients builds trust and transparency:
  • "I attach [a sample invoice] to our letter of agreement so that when a client signs on ... they have some idea of what those two things will look like." (Jean Liu, [28:20])

6. Strategies to Minimize Invoice Fatigue

• Shifted away from deposit/balance billing—now collects full payment up front to streamline accounting and tone down client frustrations ([21:47]).
• Tries to consolidate smaller, additional invoices so clients aren’t bombarded with frequent, minor requests for payment ([14:28]).
• Clear upfront notes in estimates for anything that’s yet-to-be-determined, like tariffs or shipping ([21:47]).

7. Markup Calculation and Fee Inclusion

• The credit card processing fee becomes part of the “net cost” (product + shipping + fees), which is then marked up:
  • "I spent a lot of years working under an accountant ... the 3%, including shipping, would all be considered the net cost." (Jean Liu, [29:12])
• Liu’s markup is “on the lower end of standard by percentage,” balancing out the inclusion of fees in the calculation ([29:12]).

8. Impact on Client Behavior

• When Jean Liu began charging clients the 3% credit card fee, many shifted to slower, fee-free payment methods (e.g., checks or wires), but others appreciated the continued convenience ([31:08]).

9. Workflow, Team Size, and Sustainability

• Liu maintains a “just right” 6-person team, resisting pressures to scale larger:
  • "That is not a temptation I have ... at that point, I'm managing people and not actually focusing on the design." (Jean Liu, [26:42])
• Strong emphasis on maintaining financial security: keeps 6–12 months of payroll set aside for the team ([33:07]).

10. Advice for Financial Security and Focus

• Focus: “Focus on what’s important to you ... even if it means saying no a lot” (Jean Liu, [31:55]).
• Savings cushion: “Any studio should have 6–12 months’ savings set aside ... that gave me the guts to start my own studio” (Jean Liu, [31:55]; [33:07]).

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Notable Quotes & Memorable Moments

• Jean Liu on Credit Card Protection:
  “3% is well worth a peace of mind, if you will ... how much brain damage do you want to have to go chase and fix those things?” ([20:53])
• On Navigating Client Surprises:
  “No, it’s terrible. It’s soul-crushing. Every minute we spend trying to do that ticky-tacky business side ... is a minute we’re not doing what I want, which is the creative aspect.” (Jean Liu, [25:10])
• On Communication:
  “I send a separate email ... I wanted to walk you through it. Here are some things to note. Please feel free to call me.” (Jean Liu, [27:15])
• On Scaling and Team Size:
  “I still stand by [six team members] ... at that point, I’m managing people and personalities and not actually focusing on the design.” (Jean Liu, [26:42])
• On the Discipline of Financial Planning:
  “All six people, their salaries are set aside in my studio at the beginning of every calendar year ... so that if we are on tough times, we at least have some time to pivot or adjust.” (Jean Liu, [33:07])

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Timestamps for Key Segments

• Passing along fees to clients discussion: [00:51]–[01:40]
• Proposal/estimate billing practices: [02:21]–[03:10]; revisited [11:26]
• State law and legal considerations: [04:45]–[05:48]
• Jean Liu on credit card use and protection: [08:12]; [11:26]; [17:03]
• Invoice transparency & communication: [16:04]; [20:01]; [27:15]; [28:20]
• Markup calculations with processing fees: [29:12]
• Client reactions to credit card fee policies: [31:09]; [31:35]
• Financial planning and focus: [31:55]; [33:07]

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Tone & Style Notes

The conversation is candid, practical, and leavened with humor. Jean Liu’s approach is solution-focused and rooted in her experience, with a clear bias toward up-front transparency, mutual trust, and professional boundaries. The episode balances financial nitty-gritty with reminders to prioritize creativity and sustainability in business.

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Useful for Listeners Who:

• Are debating how to manage credit card processing fees with their clients
• Need frameworks and language for handling pass-through costs
• Want to understand how established designers structure invoicing and protect margins
• Value transparency and client trust in business
• Seek strategies for long-term studio sustainability and financial security

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Transcript

[Caitlin Peterson]

Foreign hi, I'm Caitlin Peterson, the editor in chief of Business of Home. Welcome to Ask Us Anything where we're tapping your favorite trade sales guests to answer all of your questions about building a better design business. Some weeks we'll be workshopping a crisis. In others, we'll take a step back to talk about the big picture things like embracing change, hiring, or how to level up. No question is out of bounds. No question is too large or too. And we're keeping it confidential so that this is always a safe space to air your frustrations and share your fears. This week we're talking about credit cards again, this time fielding a question from a designer about whether or not to pass along vendor processing fees to clients.

[Unidentified Designer]

I've always eaten the fees that vendors charge when I've used credit card to place a client's order and there's been, let's say, a 3% processing fee, I've then eaten the cost.

[Caitlin Peterson]

Our question asker is used to absorbing the cost of credit card fees, but she's looking for a way to build some of those expenses into the client's final price. Now she's wondering about the best way to explain those additional fees.

[Unidentified Designer]

So I'm curious, for those designers who do pass that charge along to the client or the fee along to the client, how does that work? How are they communicating it? Are they charging it at the time that they're charging for the item itself or, or are they retroactively charging the client?

[Caroline Burke]

Are there other things where that applies, where there are like little fees that you also eat the cost of? Like, oh, this is my cost of doing business.

[Unidentified Designer]

It's been interesting with the tariffs. The first couple instances where we were hit with additional taxes, I ate the cost. But now I think because it's the general state of affairs we're living in now. And I, I think my clients are understanding there's a lot of unpredictability around the tariff. So I've been more open about going back to them and saying, you know, hey, unfortunately we were hit with this additional tax and they've been very receptive to them paying it.

[Caroline Burke]

How are you getting the payment from your clients for the cost of goods, for markup, if you have one, and for taxes, shipping, all of that stuff?

[Unidentified Designer]

Typically we create a proposal that has every fee, cost, et cetera, associated with an item. So not just the cost of the product itself, but also, you know, if we have the information about how much it's going to cost to ship, that's when we also charge for shipping Oftentimes, even prior to the tariffs, when an item shipped, we always verify the shipping invoice with the purchase order that we've created because we want to verify that what we are ultimately charged aligns with what the client was charged. There have been many instances where then retroactively, I have gone back into that previous invoice or created a new invoice just so the client doesn't get very confused that states additional fees that are due.

[Caroline Burke]

What are the pain points in that? Going back to clients with extra bills.

[Unidentified Designer]

I'm completely empathetic to spending fatigue, especially if you're involved in a remodel and clients are hit with unexpected charges, not only from us, but also from their contractor or subcontractors.

[Caroline Burke]

Going back to credit cards for a second, how often are you purchasing from vendors with a credit card? And is that your preferred payment method?

[Unidentified Designer]

Credit card is definitely my preferred payment method. It offers a good amount of security. We've had instances in the past where unfortunately, vendors have gone bankrupt. The ability to go to our credit card company and say, you know, this order wasn't fulfilled and dispute the charge, that's a lot better scenario and outcome. So generally I like to have the protection and use my credit card.

[Caroline Burke]

The credit card fees that or just a cost of doing business for your firm?

[Unidentified Designer]

I'd say generally, as much as I love using credit cards and having that protection, I typically do not use them when there is a processing fee. So if there's the option to pay with a wire or selle or ach, then I pay using those methods and save on the processing fee. However, unless it's absolutely required, I do not pay in full.

[Caroline Burke]

Would that be the best case scenario for you, is to say, okay, whenever possible, I'm going to pay by credit card. The client absorbs that fee and makes maybe that's the cost of doing business for them and protects both of us.

[Unidentified Designer]

Yes, and I think that's something I'm considering doing. I'm so curious to hear when designers bring that up.

[Caitlin Peterson]

Our question asker wants the security that paying for product with a credit card offers, but she's sick of absorbing the processing fees. The vendors often charge those seemingly small fees, 3% here, 4% there. They really add up and they can cut into a firm's margin. So when she called in, she was looking for guidance. And she's in luck because her business is located in a state where she's legally allowed to charge a processing fee without too many strings attached. But a lot of you listening today aren't and I want to make sure you know who you are so that you can take what you're listening to here and proceed thoughtfully. For anyone in California, Connecticut, Maine, Massachusetts, New York, and Puerto Rico, this disclaimer is for you. You can still put a ton of advice from this episode into practice, but you'll want to read the fine print of your state statutes or just talk to your accountant first. I'm belaboring this point a little bit for a reason. I've been having a lot of conversations about credit card fees on Instagram lately.

[Caroline Burke]

And sometimes I'll get a DM from.

[Caitlin Peterson]

A designer that just says it's illegal in my state. I can't A lot of the times they've opted out of using credit cards, they've opted out of that protection credit cards provide their firm because they don't want to absorb those fees and they don't think they have another option. I went poking through some of your state laws and it's actually not quite that simple in a good way. In a lot of cases, the laws in those states prohibit you from tacking on your own convenience fee or from adding markup to a processing fee you've paid. But you can absolutely pass along the cost of a vendor's fee to the client as long as you clearly communicate the total price, including that fee, before the transaction is made. In short, there's still a ton of opportunity to use those credit cards and to deploy the great advice about billing that you'll find in this episodeall without breaking the rules. Disclaimers and state laws aside, our question asker was also tapping into something so much bigger a yearning for pricing that offers clarity rather than leaving clients feeling nickeled and dimed. I knew just who to connect with to help her find those answers, someone who offers total transparency about quoted prices and the cost to come when her firm sends its estimate. All that and more in just a moment. I know an exciting introduction when I see one, and I know you do too. What's catching my eye this week is the new Made to Order upholstery program from four Hands Designers take note. For the first time, dozens of your favorite forehand seating styles will be customizable with an array of fabric options, including a selection of Crypton's performance textiles. You can design a look that's uniquely yours and without the wait. Because many of these styles are on reserve and ready for immediate shipment, others will ship in eight to 10 weeks, which means you're always getting the pieces you need fast. And if you're really in a pinch, you can even sort by lead time to make sure you're selecting the best fit for your project. Take the stress out of specifying and explore the benefits of shopping with Four Hands for your next [e-mail] Tradetales.

[Caroline Burke]

Today.

[Caitlin Peterson]

I'm joined by Jean Liu. As a guest on Trade Tales last year, she explained how certain spending policies, like charging an upfront retainer, can help gauge a client's level of commitment. I thought she'd be the perfect person to answer today's question.

[Caroline Burke]

Trade Tales listeners heard from you last fall. One of my favorite moments in that conversation was when you talked about wanting clients who are all in. And it sounds like you've got a lot of those now who are coming back online after the summer away. How's it going?

[Jean Liu]

Thanks for asking. Yeah, it's pretty busy. Summer's generally a quieter time for us as clients go out of town with their families and they all came back last week. And so you can definitely feel the difference in the mood and in the pace of our studio this week versus last week.

[Caroline Burke]

How do you prepare for that in advance? Like, what does it take to sort of ramp up and be ready for everybody to sort of say, oh, I'm checking my inbox again.

[Jean Liu]

I think my way of getting ready is to make sure that my whole studio takes the most advantage of those slower weeks leading up to clients arrival. I also, I know I'm probably one of the last studios out there, but we don't really do summer Fridays. I know everyone in my studio doesn't love me for that, but we take it down a notch, but we're still definitely working so that that going back is not as painful.

[Caroline Burke]

I like that you're like, we don't decelerate all the way.

[Jean Liu]

No. That climb back to full days can be rather hard if we fully let go of any kind of discipline.

[Caroline Burke]

What else is going on these days or what are you most excited about when you walk into work?

[Jean Liu]

I think there are a couple of fun projects going on right now. If I may. I think it's nice to note that Kips Bay Dallas will be coming back as well. Fall I am a co chair. I'm very excited that we are going to be able to use the same location as we had last year. So that was a huge success and I'm involved in making sure that this year's show house is equally successful. I'm also involved in a pretty fun collaboration with Kravit at the moment that will launch sometime later. This fall. And so that's been a really interesting, fun, and creative project for us thus far.

[Caroline Burke]

Are you ready to give some advice?

[Jean Liu]

I'm ready to give it. I'm not sure if I'm willing to take my own advice.

[Caroline Burke]

I like that honesty. So this week, we are fielding a question from a designer who wants to start billing clients for the credit card fees that vendors charge rather than eating those costs. What she's looking for, I think first and foremost is really a framework for how to explain why those fees are simply a cost of doing business. And I thought maybe to start, we could zoom out a little. Can you talk to me about your purchasing process and when you would choose to use a credit card to purchase something on a client's behalf?

[Jean Liu]

I am a big fan of using credit cards as often as possible, even when a processing fee is part of the equation. So, to answer your first question, we put together what a client would look at, and we would call an estimate. So we've been through the design presentation process. We've shown them what potential chair or sofa we would recommend. They say, yes, we like it. We like it with this fabric. And so we say, great. We go and seek all of the hard pricing, which is we actually call up a showroom or a maker, and we say, please submit an actual quote. So when we get all that information back, we turn it around and we create an invoice that's presented to the client, if they sign off on, becomes an invoice. So the estimate is really not something that they pay off of, even if the numbers don't actually change between the time that they look at it for the first time and the time they actually approve it. And we put as much information in that estimate as possible. And if we don't quite know what, say, for example, shipping is going to be, we put TPD so that we at least call out a line for it. We also use the estimate as a way to add any kind of notes and disclaimers that we foresee coming or that we won't know until at some point in time later, such as this estimate does not include installation or. Or production does not begin until sample finish is approved. So that's a place for us to make a lot of notes so that the client feels good about what they're about to say yes to or not. From there, if it's approved, we turn it into an invoice, we collect the payment, and then we actually place the order. And we try to have those two things happen within as close of A proximity to each other as possible, especially today, given the fluctuation in prices we see, namely because of tariffs.

[Caroline Burke]

How are you handling things like fluctuation of prices or, you know, turning that estimate into an invoice? When there are some TBD line items.

[Jean Liu]

We also talk about a line item for tariffs if and when they apply. That's generally standard language now in our estimate. And then when we are invoiced for them, we actually go back and invoice are actual or what that number really is, and we tie it back to whatever that estimate or invoice number was so that a client understands, oh, yeah, that was the shipping for that table, or this is the installation fee now that the. The window treatments are ready and they've been installed.

[Caroline Burke]

Are those smaller things that come later? Are you collecting them into kind of one invoice and sending that periodically, or clients seeing sort of a steady stream of the small charges as they come in later?

[Jean Liu]

We've done it different ways. Sometimes we the client an option to pay them as we get invoiced for them by whatever the vendor or the installer or the trade is. And then sometimes if I've built up a pretty good relationship with the client and I feel like I'm not worried they're going to not pay, you know, a couple hundred dollars here and there, we will sit on it until it is a larger, more substantial amount and try to invoice it all at one time. Because I do think that there is fatigue that happens when clients just get hit with endless invoices, even if the actual number amount is not huge.

[Caroline Burke]

You know, going back to credit cards, how often are there credit card fees that are unexpected, or is that something you're typically able to anticipate and fold into that early estimate and invoice?

[Jean Liu]

I don't think that I can recall a time when a credit card processing fee came to us as a surprise. I think we know about it on the front end, which is why I think it's important for at least our studio to go out and get the hard quote, because that's what we will know if a vendor or a workroom intends on charging a 3% or whatever percentage processing fee. And then that way we are building it into and including it in the way that we talk to our clients about what the cost is.

[Caroline Burke]

Do clients see those fees, you know, when they're looking at that invoice? They do know, okay, this is a tariff. This is a credit card processing fee. This is markup. Are they seeing all of Those things itemized out.

[Jean Liu]

You know, I have to say that we don't actually call out the processing fee. We do call out what we're line iteming, actually describing as a tariff surcharge. We view the processing fee as part of the net cost of the actual product or fabric that we're purchasing. We are big believers in using the credit card as often as possible. Because I think that sometimes when we're making so many purchases, that credit card company is another layer of consumer protection that we don't have otherwise. And in my experience, the credit card companies have been extremely helpful in trying to resolve and or advocate for us as a small business when we've needed their help.

[Caitlin Peterson]

Can you give me an example?

[Caroline Burke]

Like one of you had to go back to the credit card company and say like we need your help here.

[Jean Liu]

Yes, we almost exclusively use American Express and I have found them to be the most robust in their consumer protection. I'm not really sure if they just have a team of people on the other end or they're willing to eat more than another company. I. I don't really know. But we have had fabric show up stained, short shipped fabric. We have had product lighting fixtures show up that were not anywhere close to the finish that we signed off on. And we obviously try to work those differences out with the manufacturer or the vendor first. But when we are getting nowhere, that's when we say, hey, I have no choice but to file this claim. I've also used it in rare instances when the vendor or maker is not actually shipping to the timeline that they actually promised. You know, we obviously understand a lot of these things are handmade and they're not stamped out by a machine. But there becomes a point and it's different depending on what it is. Where you do start wondering, have I just been scammed? Are they going to take the money and never deliver? So that's when I say, hey guys, I need either confirmation with a tracking number or I'm going to have no choice but to turn it over to the credit card company.

[Caroline Burke]

What happens then? Does that tend to yield a quick result from the vendor or is it really that you've had to file that claim with Amex?

[Jean Liu]

Knock on wood. So far it has resulted in some kind of action. Thus far, I think only one or two times we just turned it over and let American Express handle it. And every single time we were immediately refunded the actual amount that was charged and honestly never heard about it again.

[Caroline Burke]

That's amazing. Peace of mind too.

[Jean Liu]

Yes. I think it's important too, because, you know, despite the fact that our clients intellectually understand that we're relying on another brand to deliver their product, I think we are still the ones that are going to get the black eye for something either not showing up on time or showing up completely damaged. So for me, in our studio, American Express or another credit card company helps preserve the integrity of our brand and lets us continue to do what we want to be doing, which is doing the design piece of it.

[Caroline Burke]

One thing I think our question asker really wanted help with was, you know, I think she wants to move into working this way, but she wants to know how to talk about it with clients. Do you ever have a moment where you say to them, you know, look, that credit card fee is going to be part of the cost of the item, even when there's a fee free option for purchasing? Like, we just believe that this is a better way to protect your investment and to protect our business.

[Jean Liu]

Sure. I think, to be totally honest, I've never had a client thus far question that fee. We do pride ourselves on trying to operate a very transparent and as open business process and model as possible. I don't think clients necessarily ask. If they were to, I would explain to them exactly what I just said. Hey, it's another layer of insurance. It's up to them. If they wanted to forego the 3%, we don't have a problem doing it. I think what I would just say is you run the risk of something coming in and having to deal with whatever headaches on the back end that might happen. And to be also completely frank, we run into problems a lot more these days than we did in previous years.

[Caroline Burke]

Just in terms of unreliability of vendors.

[Jean Liu]

Or things getting damaged in shipping, things not coming in on time, things coming in not the color that we signed off on compared to the strike off or the cutting. So that I feel like is 3% is well worth a peace of mind, if you will. I mean, again, we're not talking about buying a house and having another layer of insurance, but it really boils down to how much brain damage do you want to have to go chase and fix those things?

[Caroline Burke]

Our question asker also wanted to know when you're charging those fees and I feel like, you know, you've explained when those come in the process. But how do you help get clients ready for those after the fact bills? And is there any language you're using to diminish that spending fatigue or that, you know, invoice fatigue that can kind of set in at the end of the project.

[Jean Liu]

So I think the estimate is where we try to bake in as much of the fine print as we can, if possible. So all the language that we just talked about, this does not include any kind of applied or applicable tariff FEES. Shipping is TPD. This estimate is only valid for 30 days, mainly because a lot of our vendors will only hold pricing for a period of time. So we try to get all of that on paper at the estimate phase. One of the things that I've also gotten away from doing is charging a deposit and then collecting a balance. We now have moved to collecting the entire amount on the front end because it got to be a lot more work for our studio to try and collect a balance. And then I felt like the clients were also equally growing tired because they felt like they had already paid for something in the beginning. So obviously we understand if from a cash standpoint people feel like, hey, it's easier to have a balance and a deposit, but nobody's pushed back. And then they also generally are ready to have their things because a lot of the pieces we're ordering these days have a 20 week lead time. So by week 22, they really want that sofa. And so when we say, okay, we'll deliver the sofa, we'll schedule for delivery after the deposit's been paid, you know, rather than, oh, it hit the warehouse, it looks great, let's go ahead and set up a time for delivery.

[Caitlin Peterson]

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[Caroline Burke]

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[Caitlin Peterson]

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[Jean Liu]

Can.

[Caroline Burke]

I ask a really cynical question? Do clients read the fine print in that document?

[Jean Liu]

Yeah, you actually touched on a really good question, because I'm not entirely sure. I have had some clients who I think are impeccable business people and I feel like all the information is there and I come to find out that they clearly didn't read it or didn't know that these things weren't actually part of the original cost. So one wonders. But I think as a designer trying to run a business, I think all we can do is try to put as much information out there for them as possible. I don't think it's reasonable to think that any of us can anticipate everything that they would or wouldn't know or read.

[Caroline Burke]

Has it been pretty easy to navigate when you find a client who maybe hasn't read all of the documentation?

[Jean Liu]

No, it's terrible. It's soul crushing. Because I think every minute we spend trying to do that ticky, tacky business side of the work is a minute or a second that we're not actually doing what I want to be doing, which is the creative aspect of our job. And it's by the way, that transition going from the business side of it to the creative side of it to the client management side of it, those are all things that don't just. You don't flip a switch and all of a sudden you're thinking in that frame of mind.

[Caroline Burke]

I think that's so important to acknowledge like that there's a transition period for each of those things.

[Jean Liu]

Yes. And my studio is of a size where while I'm not day in and day out putting together quotes asking for showrooms and workrooms to send me pricing, I still do look at it because I feel like it's my responsibility. So while it's being minimized, I'm still involved in the financial piece of the business.

[Caroline Burke]

Do you still have six team members?

[Jean Liu]

Yes.

[Caroline Burke]

I will forever remember that from our interview last fall that you were like, this is it, this is perfect. I'm done growing.

[Jean Liu]

Yes. And I think it's interesting since I last spoke to you because several people have mentioned to me that they listened to the podcast and they thought that was interesting that I didn't want to be this 10, 12, 30 person firm.

[Caroline Burke]

Is there ever temptation or are you very firmly committed?

[Jean Liu]

That is not a temptation I have experienced since we last spoke and or something I foresee happening in the future. I still stand by at that point. I'm managing and managing people and personalities and not actually focusing on the design.

[Caroline Burke]

Speaking of managing people and personalities, what does it take to navigate that client conversation about unexpected bills or unexpected to them bills? What are some of the secrets you found that sort of ease those conversations?

[Jean Liu]

I don't know if I've found a secret per se, but if I'm working with a new client and I'm sending or studio is sending the first billable time invoice and or sending the first invoice or estimate for anything they're about to purchase. I will send a separate email and I will say, dear so and so you're about to get this. I wanted to walk you through it. Here are some things to note. Please feel free to call me if you have any questions after you see it. And sometimes I'll follow up with a phone call because I also am a believer that today people email and text so often that it's still really a nice thing to pick up the phone and talk to someone. Yeah. And I think that's a perfect opportunity for them to raise any kind of questions they might have after having received the first set of bills, if you will.

[Caroline Burke]

Is that more in the beginning when people just like, don't know what that bill is going to look like and may sort of be still getting used to seeing those invoices?

[Jean Liu]

Yes. And I will say that I've also generally attach a sample of what a billable time invoice and a sample of what an. What we call an FF&E invoice. I attach it to our quote, unquote letter of agreement so that when a client signs on to work with us, they have some idea of what those two things will look like.

[Caitlin Peterson]

That's amazing.

[Jean Liu]

I think it goes back to saying to that belief that we try to be as transparent as possible. And I'm not somebody who likes surprises, so I try to anticipate what a client may or may not appreciate as well.

[Caroline Burke]

When you add that, let's say 3% processing fee to the price of an item of a piece of furniture, are you then adding markup on the entire net price, including that 3% fee?

[Jean Liu]

Yes. So I think I spent a lot of years working under an accountant. So at the risk of getting very technical, he would argue that 3%, including the shipping, would all be considered the net cost. Because if I were buying it for myself or you were buying it for yourself, theoretically those are all costs that you would incur just to get the widget or the piece of furniture to you. So technically, the price of the piece of furniture or fabric, the shipping, the processing fee, it's arguable. Even the tax would be all considered net. So I don't have any problems with the 3% being part of the net. Now, I will say the offset, in case clients are listening to this is that our markup is on the lower end of standard by percentage. So I feel like that's sort of the equalizer. If you will now to maybe drive this conversation in a slightly different direction. There was a time when I would even allow my clients to pay with credit cards, their hourly or their billable time, and their furniture, and I would not charge the 3%. And I think the philosophy back then was, hey, we want to try and make it easy for our clients. We're not trying to make it painful for them to part with even more money. Right. That changed when my bookkeeper came to me at the end of one year and said, I just want you to know this is the amount of money and you either ate or gave up in processing fees. And that number was so large, it really, it shocked me. So from that point on, I did say to clients, hey, we will still take a credit card. There is this fee. You let me know if you want to use it.

[Caroline Burke]

How did that change their behavior?

[Jean Liu]

It didn't work. I mean, for us. I felt like if it took clients probably three days, four days to pay an invoice, if I had a credit card option with no additional charge, and then sometimes it can take upwards of a month now if clients are sending a physical check or wire.

[Caroline Burke]

But it changed their behavior. Like more people opted for the fee free version.

[Jean Liu]

Yes. So maybe I'm the only outlier that I feel like 3% is. You know, there's a convenience factor there that I, I am on board with.

[Caitlin Peterson]

Can you tell us the best piece.

[Caroline Burke]

Of advice you've received? Something that made a difference for you and your business?

[Jean Liu]

I think there are two pieces of advice. One was actually put back on my radar by a client I adore. And it's the reminder to focus. Just the importance of focusing on what's important to you, focusing on what your goals are for that year and trying actively remove yourself from situations or things that might be distractions, even if it means saying no a lot. So focus is at the forefront of my mind these days. And I think if there was a financial piece of advice, this was given to me early on. I think any design studio, any young person or anybody, we should all have anywhere between six months to a year's worth of savings set aside in case something happened. Actually having, having that was what gave me the guts, if you will, to start my own studio. I thought, okay, saved up enough. If it totally flops, I can. At least I've got a six month path Runway to figure out something else.

[Caroline Burke]

Does that still kind of sit in the back of your mind when you're thinking about taking business risks today?

[Jean Liu]

Absolutely. This takes doing and I'M somewhat proud of it. So I will tell you that all six people, their salaries are set aside in my studio at the beginning of every calendar year so that I know that if we are on tough times, we at least have some time to pivot or adjust, whatever, and however we need to.

[Caitlin Peterson]

Matt, I have a million questions about this.

[Caroline Burke]

I'm going to keep myself to one.

[Jean Liu]

Okay.

[Caroline Burke]

What is the saving mechanism that you're using throughout the year to kind of make that possible? Because I feel like you can't just start thinking about that in December for January.

[Jean Liu]

No, I have a pretty tough bookkeeper, and she definitely. She comes in every Monday and she. I know it's a little bit like going to a trainer where they're just going to beat you down. And her job is to really ride me about numbers. And so I think that it's a really relationship out of respect, and so I ask her to be really tough. And so we actually have accruals that we just set. I mean, it's taken years to be able to get to this point, but we have a budget or we have a loose idea of what we can and can't do. And I try to be very timely with letting her know anything that I see on the horizon that we want to participate in or that may be an oop. And so I think just having the. Not. I don't want to say discipline, but just being able to look out and go, okay, I think this is what the year is going to look like. We need to set aside xyz. I think I'm going to do a show house. I think I'm going to do two photo shoots. I'm going to. And we start putting numbers aside. And then I think it's really just. You just got to do it. So there's no. There's no, like, method or magic.

[Caroline Burke]

Yeah. Most painful the first year to kind of get those numbers down on paper. Yeah.

[Jean Liu]

Because I think the first year you're really just taking the. We call it swag. I don't know. Do you know what that stands for? No, it's silly. Wild. A. And you can guess. The other two letters. Guess. So we're just making the first year and then we kind of get better and we refine it every subsequent.

[Caitlin Peterson]

That's our show for today. Thank you so much for being here and for everyone listening with a question of your own. I'd love for you to ask us anything. Don't worry, we'll keep it anonymous. Please start the conversation by sending me an [e-mail] if you're enjoying Trade Tales, please leave a review on Apple Podcasts to help others discover the show. And if you're looking for even more great business advice, head on over to businessofhome.com Trade Tales is produced by me, Katelyn Peterson and Caroline Burke. This episode was edited by Carolyn Burke and Michael Castaneda. Our theme music is by Kyle Scott Wilson. Thanks again for listening and I'll see you here next week.