Freight | Including Freight on a Proposal

Including Freight on a Proposal

How to Process Freight Estimates in DesignSmart

Because different design firms process freight differently, DesignSmart has been refined over the years to provide firms with the ability to deal with the freight a number of different ways. While this is to a design firm's advantage, it does require that new DesignSmart clients spend some time in this section to fully understand the various options. Then it is best to discuss with your project manager how you intend to process freight. Below are some of the more common methods.

Note: all the methods explained below are based on the assumption that the design firm has created a sub-charge in DesignSmart called "Freight". 

1. Estimate Freight for Proposals and Bill Actual Freight Charges

This is probably the most common way we see our design clients deal with freight.

Freight can be estimated two different ways in DesignSmart: item based and aggregate based.

Item Based Freight Estimates

Residential design firms will typically estimate freight at the item level. This means that each item in a project (each lamp, chair, rug...) will have a freight charge which is typically 12% - 15% of the cost of the item.  

Then, when the freight for the item is billed, the actual amount is entered into DesignSmart and invoiced.

Aggregate Based Freight Estimates

Commercial design firms will typically estimate freight at the aggregate level. This means that rather than estimate freight for each item in a project, they will sum the total of all of the items and then add one line item in the project for freight.  This amount will be equal to the total estimate cost, or price, of all of the items times the freight percentage. Again we see commercial firms often use the same 12% - 15% used by residential firms.

When the actual freight for the item is billed, that amount is entered into DesignSmart and invoiced.

2. Get Freight Quotes for Proposals and Bill Proposed Freight

Some commercial design firms that do large projects will get freight quotes from their vendors before they create a proposal. This requires more work in order to create a proposal, but some firms will go to this effort if they have to provide a "not to exceed" amount on the proposal.

3. Don't Estimate Freight and Bill Actual Freight

A small number of firms have decided not to estimate freight and they tell their clients that they will be billed the actual freight amounts. This method has the distinct advantages of being easier to produce and of the proposals being lower than they would be with estimated freight, but it runs the risk of clients experiencing sticker shock when they receive the actual freight invoices. For this reason most firms will estimate freight conservatively so that the estimated freight on the proposal is usually higher than what the actual freight will be.

4. Estimate Freight and Bill Estimated Freight

Some firms have decided that the time and energy required to deal with freight as described by the two methods above is simply not worth the effort so they will estimate freight and then bill the client that estimated freight.

These firm's philosophy is that, while they might underestimate some freight charges and overestimate others, in the long run the undercharges and overcharges will balance out. Even if there is the occasional net loss on freight charges on a project, the time they save not dealing with tracking fright expenses will make up for these infrequent losses.