Designers of all experience levels are constantly questioning whether they are charging enough for their creative efforts. I've always felt that if they have doubts about their fees the question has already been answered.
Any designer has to remain competitive in the marketplace, especially in smaller communities with the small-town perception of what services are worth. Part of the process is educating the client base about the cost, value and time investment of design services. That's been a twenty-five-year process for me—and it continues on a daily basis.
I break down my fees on my estimate sheets and invoices so clients can see exactly where the time is, on any project—and how much it is costing them. The breakdowns are:
• Art Direction
• Misc. Client Services
I also have expenses broken down as:
• RC Paper/Film/Neg Output
• Scans/Camera Services
• Conversions/Computer Services
• Misc. Materials/Shipping
You also have to educate the client about how costs can go up as a result of their actions or lack of action. If the project is a rush job—most often due to poor planning—I'm going to charge them a premium. If an identity project drags on and on due to the client's multiple revisions or indecision, it is the client who causes the cost of the project to increase—not the designer. When people have legal questions about their business, they expect to pay an attorney who charges them $200 to $350 an hour. Yet, when they place the image of their company in the hands of a professional designer, is that designer's time is worth one-tenth the value of that legal advice? I don't think so.
Many designers undercharge for their work, especially when working in an independent capacity. Part of this is the fault of the designers, who may not assign an adequate value in what they do for a living. Another part of the equation is the perception of many clients that such designers don't have "real" jobs and therefore their time is worth less than that of other professionals. As previously mentioned, that is one reason I don't call myself a "freelance designer." When people ask if I'm a freelancer I say, "No, I have my own design firm." It's odd to see how that statement changes their attitude about me as a businessperson.
The client also needs to understand the average lifetime of a logo—one of the company's most valuable marketing assets for their company—is about ten years. When you pro-rate the cost of an identity project out over that period of time it is a fairly inexpensive investment. It is also worthwhile to have a professional take on the job and do it correctly the first time.
A few years ago, a law firm contacted me in a panic to basically save its rear end. Earlier, the firm had opted to cut corners in designing their identity by utilizing the services of a major client's daughter, who purported to be a graphic designer. Through a difficult process, the partners settled on a design—although nobody really liked it—and the logo was reproduced on all print materials for this fifty-person firm. All materials for a 50-person firm were produced with this logo nobody really liked. When it came time to invest over $3,000 for a bronze sign for the company, however, one of the partners balked.
When I was brought in to redesign the logo, no one ever questioned my rates. I was stunned when I first saw the original design—the initials of the names of the partners were not even in the correct order of the company name. Within a few days I had recreated the identity and the company began the process of reprinting every piece of printed material it used. This identity project ended up being very expensive—especially when they had the privilege of paying for everything twice.
There is this odd perception in the marketplace that if something costs more, it must be better; if the product or service is presented in a professional manner, it must be of higher quality and value. The same phenomenon occurs when people buy clothing with designer labels even though those items are more expensive than similar products made in the same factory for a discount store. Much of this is due to the marketing and promotion of a brand or name.
Often, after I present a potential client with an estimate, the individual will have a bout of initial "sticker shock." Frequently the person comes back to me and says, "The estimate was more than I expected, but you come highly recommended and I want to work with you. If that's what it costs; then that's what it costs." I realize that some smaller companies have severe budget limitations. If the client interests me enough, I explain what the job is worth, based on my estimated investment of time in their proposed project. I then ask what the company budget allows for such a job. If I can work within that budget figure to take on the commission, that's my prerogative as a business owner. I usually just make them swear to never tell anyone what I charged for that specific project. In addition, I usually end up donating five or six projects a year to nonprofit organizations, based on guidelines established for myself.
The bottom line is, if you produce a quality product, work professionally to establish a reputation, market and promote yourself creatively, and take the time to educate potential clients, you should be able to charge clients whatever you feel your time is really worth. If you don't take your business seriously, clients and vendors won't either.
Pricing—The Value of Your Time
If a designer asks "What should I charge for my work?" my immediate sense is they should not be in business. Such a request for information tells me the individual has not done the research and homework necessary to put out his own shingle. Do such designers honestly believe there is one blanket answer to determine the value of one's work?
There is so much more to establishing a pricing structure than just pulling a number out of the air. A designer must seriously consider every factor that determines one's hourly worth. What is your level of experience? What are the going rates in the market or area? What are clients in that market willing to pay? What fee structure is going to give you an edge in soliciting clients—without hurting your ability to make a living?
When it comes to the pricing of design work, most in the profession seem to have greater concern for the dollar amount attached to the completed project than for the real issue of importance. Your major consideration should be whether you are adequately compensated for one of your most limited commodities: time. As a designer you only have a limited number of hours each day, week, month or year. You can't collect or obtain any additional time. When charging clients for work, every designer should seek the greatest value in the marketplace for that limited commodity. It's the old business principle of supply and demand. Your supply of time is predetermined and limited, so the demand for that commodity should help you determine its values.
"I'm a big believer in project rates versus hourly rates. Of course the project rate relies on an estimate of hours needed, but clients appreciate a known investment," says Michelle Elwell, creative director of SolutionMasters, Inc. "I don't feel a designer needs to worry about being the lowest-priced designer in the area. When you do, you start selling a commodity versus a service. That becomes a trap. Sell your service, sell your experience, no one else out there has you to offer."
"Figure out what your overhead is. Figure out what your time is worth," suggests Rebecca Kilde of Windmill Graphics. "Don't under-estimate the time it takes to do all the non-design aspects of maintaining a business. Figure out how much you want to work during the year. Make a pretty good guess."
"Pricing is really tricky. It really depends on the client and their budget and the size of the client," according to TNTOM Design's Travis Tom. "I would suggest going with a figure that the designer feels comfortable making a profit from."
"The only way I see to set rates is though a solid calculation that addresses the designer's specific salary and associated personnel costs (taxes, FICA, insurance, etc), overhead and a profit," says Neil Tortorella, "Without doing the math, you'll never know what your bottom line is—the minimum you can charge and still make money."
One Designer's Humble Suggestion on Pricing
Designer Charles Hinshaw, of [r]evolve, gave many designers a lot to consider when he posted his ideas on pricing on the HOW Design discussion forum. He has allowed his comments to be "posted" here as well.
"The entire concept is built around a single idea: It doesn't matter what I charge for an ad, it doesn't matter what the guy down the street charges for a brochure, it doesn't matter what the GAG Handbook says about the going rate for that logo and it certainly doesn't matter for what fee your potential client's nephew will design a Web site—you have your own business, your own expenses, and you are offering something completely different from any of us. Why would your rates match any of ours?
"It is my humble suggestion that when it comes to the description of 'creative professional', the word professional is the more important of the two. That is to say that, despite what your art school education may have taught you, you are running a business, not being an artist.
"What does this have to do with pricing? My experience in business tells me that I have monthly expenses, and there are only so many hours I can work in a month. So, if I take those expenses and divide them by my maximum hours, I have a minimum amount that I can charge—because I don't enjoy paying to design, and if I charge less than that, I'm in the red.
"How much would I advise someone to charge for something? It really depends on the situation, the market, your needs, your desires, and how much shiny things demand your money. Being able to justify your asking price and having clients that can afford you are two different things entirely. If the kids next door wanted me to do an annual report for their lemonade stand business, I could easily 'justify' a large fee. The fact they only have 75 cents to pay me just means that I am looking at the wrong market."
No One Ever Said it Would Be Easy
In The Graphic Designer's Guide to Pricing, Estimating & Budgeting, Theo Stephan Williams sums it all up. She writes, "I promise you that the three hardest things you will ever do in the business of graphic design is figure out how much to charge for your services, how to do an estimate and how to manage project budgets completely and efficiently."
The only thing worse than a potential client who does not value the efforts of a professional graphic designer is a designer who doesn't appreciate the value of their own time and work.
Williams, Theo Stephan. The Graphic Designer's Guide to Pricing, Estimating & Budgeting. New York: Allworth Press, 2001.
Note: This excerpt from my book, The Savvy Designer's Guide to Success: Ideas and tactics for a killer career, originally appeared on the Graphics.com website.
The Savvy Designer's Guide to Success was released in 2009 as a PDF on CD from HOWBookstore.com
© 2009 Jeff Fisher LogoMotives