Money! Have I got your attention?
For a lot of people, that word is always followed by an exclamation point, because money makes them so happy. For designers, it’s followed by an exclamation point, a dot dot dot, and about six crying emojis and the one that looks like he’s about to explode. So, if you’re a fellow designer, consider this post a sympathizing pat on the back and a calming voice saying, “Chin up, buddy. There’s a light at the end of the tunnel.” And if you’re a client on the hunt for a designer, take this as a backstage pass to the circus of a freelancer’s life. Talking about money doesn’t have to be scary or stressful, so let’s delve into the world of pricing and maybe come out of it breathing a sigh of relief.
Many clients experience frustration because while scouring the Internet for designers, they realize almost none of them have their prices on their website. It may feel like a glaring oversight, or the foundation for a scam. But there’s a reason why it’s not common, and that reason is a huge part why talking design prices is such a daunting task.
No two projects are the same.
Therefore, no two projects should be priced the same.
This is important for both designer and client to understand. A designer can feel pressure to find the secret formula of pricing all their projects ahead of time. A client can be puzzled why one designer will charge them $100 for a logo, and another will quote $6,000.
The first step is a point of controversy in the design world, but I think it’s the ideal way to bring about stress-free price talks, and to always be fairly compensated for your work.
1. Decide on charging hourly or flat rates.
Many clients balk at the idea of an hourly rate. They like knowing what the price is upfront, and find it hard to justify paying a designer a rather large hourly rate. But when starting out, designers have a hard time pulling out quotes for an entire project.
In my experience, it’s a good idea to start by charging hourly rates, until you’ve gained enough experience to charge a flat rate. An hourly rate ensures that you are compensated fairly for your time. Finding the formula for your hourly rate is quite simple. Calculate how much money you need to make a month, as well as how many hours you spend designing, and divide those to find out your operating costs. Then increase that price to result in a profit margin that reflects your talent and experience. Research what your competitors are charging and make sure your hourly rate fits in the range. Then you can give an estimate for how many hours you think it will take. (Always account for extra wiggle room in the estimate.)
Once you have some projects under your belt and you can pretty accurately guess how many hours a project will take, I suggest you move on to charging flat rates. The reason for this is simple: it allows you to make more money. The more experienced you become, the faster and more efficiently you work, and continuing to charge hourly means you’ll suffer as a result. By charging flat rates for projects means there isn’t a limit on how much money you can bring in every month. Many designers are hesitant to make the switch, because they’re scared that they’ll end up working more hours than planned and not be compensated for it. If you still can’t closely guess how long a project will take, then keep charging hourly, gaining experience and tracking your time until you can do so confidently.
No matter how you charge, it’s an exciting feeling once you’ve landed the project and you’ve gotten the go-ahead. You sink those late-night hours into the project to deliver beautiful designs. But then a nightmare unfolds and you find out that your “perfect client” isn’t as forthcoming with the payment as you believed they would be. Sadly, you are not alone in your experience. Nearly any designer who’s dabbled in freelance has experienced a gut-wrenching realization that you just got burned.
This happened to me fairly early on in my business. And I learned an expensive lesson:
2. Always work under contract and require a down payment.
You might think taking someone to court over a little money is a daunting thing, but a contract is a wonderful way to weed out the honest clients from those who just want free work. A contract and down payment do three things:
a.) A contract outlines and clarifies the agreed upon aspects of the project. Be as thorough as possible, because emails and phone conversations can be loosely interpreted. My contract outlines the price, the deliverables, the distribution of rights, any deadlines, and a release in case things go sour. I send it over to the client and it has to be signed and returned before a minute of work is invested.
b.) Down payments ensure the client has access to money and values your time and skill. I’ll be honest, I’ve gotten too excited by the prospect of a cool project, or the promise of exposure, and have ended up doing some work for someone before they pay me. And even if it’s watermarked to high heavens, it does nothing to guarantee I’ll later be compensated for my time. So I’m still reminding myself that the most valuable clients are the ones that value me. Which leads to:
c.) Both a contract and down payment show that you know your worth. Plain and simple. Take yourself seriously and your clients will have to do the same. This is a very important aspect for someone who wants to take their business from a hobby to a steady source of income.
Rates, contracts, and down payments are the perfect start to saying goodbye to stressful price talks. Now I can attest that it doesn’t prevent you from ever having to think twice about your prices. It will eliminate the dark cloud that often looms over a frazzled designer’s head.
Next week, we’ll swing over to the client’s side of the pricing battle and talk about how a designer’s way of handling money can be a huge indicator of things to come!
