Earn Your Worth!
Over the years, we’ve had so many designers come to us and ask, “What should I charge?” Back in 2007, Bill shared A Designer’s Guide to Pricing, one of our most popular posts to date, which shares many of his thoughts on this subject. Since then, our Cleveland Design Firm has learned a lot more about pricing. And as always, we’re happy to share our latest insights with you.
Graphic Design Pricing Guidelines
Determining your fees can be tricky. There’s a fine line between too much and too little. You want to be competitively priced while also ensuring profitability (we are in business to make money, right?).
So, we wanted to not only update Bill’s post, but also share some graphic design pricing insights from our designer friends Jennifer Cirpici, Sophia Chang, Lenny Terenzi, Mike Jones and Scott Fuller.
We’re also eager to share valuable tidbits from Bill’s book, Drawn to Business, and from Go Media’s own Project Manager and Account Manager, Sarah Traxler and Lauren Prebel.
Choose Flat or Hourly Billing.
The first step in determining your fee structure is deciding whether a flat rate or an hourly billing system is right for your business.
Here at Go Media, we work with hourly billing (although we used to work on flat rates). As Bill notes in Drawn to Business, “At its core, our system is hourly billing. I call it “hourly billing with caveats.” If a client asks us: “How do you derive your estimates?” we will tell them: “It’s based on hourly billing rates.” But we no longer give the client a line-by-line breakdown of how we’re adding up those hours. We also stopped showing them the hours we’ve actually worked, which we used to do. Sometimes we eat hours. Clients don’t like it when you go over budget. If a client stays “on scope” and we just go over budget because we misquoted, or the client was a little pickier than we expected, we will eat a number of hours to try and close out the project on budget. I think we would be willing to eat up to 20% of the project’s hours to try and come in on budget. This puts a little pressure back on us to work efficiently and to quote accurately. However, we make sure to let our client know the value they’re getting. We’ll trumpet the fact that they just got X hours of free design services so we could stay on budget. However, if the client is going WAY over budget, then we start billing them again, but at our hourly rate.”
In Drawn to Business, Bill stresses the importance of communicating policies before the project kicks off (even though most clients nod their head and tend to ignore the information). Putting things in writing always helps! At Go Media, that statement looks something like this:
Our quote is an estimate based on an hourly rate. If your project goes over budget we will be billing you at $XX dollars an hour. We are going to work very hard to stay on budget. Our quoting is typically very accurate, but you need to be aware of this policy.’
Now, this isn’t to say that Go Media wouldn’t work with a client who wants a flat rate. Should this be the case, we would be sure to discuss all of the project details and manage expectations at the onset.
Flat Rate Billing
Some of our designer friends who freelance prefer to bill based on a flat rate system.
Here’s a few words from Jennifer Cirpici on her billing system, “I don’t often work with hourly rates, I mostly work with fixed prices. I’ve worked with hourly rates in the past and it usually scares the clients off. They often ask for more hours to put into and in the end it’s a ridiculous amount of money I have to ask them to pay. The amount you know they won’t pay anyway. In my fixed prices I include the amount of rounds of feedback we would do, the copyright (will it be a year, two years, or a buy out? Will it be for a magazine, commercial or the web? Will they sell it to someone else? etc.), how long I think I’ll work on it and the deadline. It’s a different price when they want a project done within 24 hours or when they want me to have a lot of freedom and the deadline is in 3 months.”
Lenny Terenzi, also a freelancer, notes, “I always bill flat rate. It seems to make it easier for my clients to digest. If I go over, I go over and know to charge more next time. If I go under by a large amount I adjust the final bill to reflect that though by the time all phone calls, and email and project management and file prep and all the little things that so many people do not account for come into play, I rarely am under by much.”
On the other hand, Scott Fuller says his billing practices can ebb and flow based on the client. “I want to know, do they need X amount of options? What’s their budget? Will they still be around to pay me?”
He notes, “I’m not above charging a ‘Put Up With You’ fee. It’s important to know exactly what you’re getting into.”