We are building a new home and have been shopping for an interior design firm to help with the process. Several designers whose work I like aren't accepting new clients right now. (We are building in the suburbs of a big and growing city.) I did manage to get prices from three, though.

Firm A: Experienced big-city full-service designer with a large portfolio and lots of published design work who charges a flat fee per square foot to do materials selection for new builds.

Firm B: Affiliated with a local-to-the-big-city independent furnishings retailer but also works on new construction, they charge an hourly rate for materials selection. I get the impression they are less full-service in that there didn't seem to be a mechanism to create a "plan" for the whole house. But I do like their portfolio of work.

Firm C: Two young designers who’ve recently opened a full-service firm in the small town where we live. They have a much smaller portfolio and (I get the impression) fewer connections to the trade. But I really like the work they've done, their philosophy of design, and feel the most "connection" with them when I talk about the project. Plus, supporting local to our small town businesses is important to me and my husband. When I asked about pricing, it seemed like they are still figuring out how to price their work, but they initially quoted me a percentage of building costs.

I want to work with Firm C, but based on our building budget, Firm C’s quoted price is approximately 50% higher than the quote from Firm A and double the cost of the maximum estimated hours quoted to me by Firm B. I’ve told Firm C that I want to work with them, but their price is comparatively high. They are willing to negotiate their fees, but now what do I ask for?

I don’t know how much I should ethically disclose about the other two bids, and I want a price that is fair. I’m not looking to pay rock-bottom rates. However, if I propose an hourly rate, I'm afraid some of their hours for my project would be spent on finding/building relationships with vendors I need for my house—time that would be saved by Firm A and Firm B because they already have those connections. However, if Firm C is working on my house—even indirectly—I feel they should be compensated somehow.

Thoughts about how to handle this? Best practices in pricing for new construction design?