A large portion of designers ask “what should I charge for my services?” This is something no one else can truthfully answer, you’ll have to find out how versatile you need your pricing to be. Before you can set prices that not only benefit you, you must also consider your clients as well. When it comes to pricing, perception plays a large role, and if the services you offer don’t align with your level of skill and asking pay, then clients will move on to another designer who’s pricing structure makes sense.
This is why, we’ve tailored (yes that’s right) this post to designers that may need a bit of help with finding the right “architecture” for their pricing. You’ll also find how to restructure your prices to increase financially stability.
Evaluating Your Experience
In our line of work, you don’t need any formidable education such as a degree. Most agencies will hire you without a degree or dedicated time to university schooling, however, one thing everyone looks for is the level ofexperience you have. Experience is everything and your portfolio will reflect this. The more experience you have, the more you’re able to quote for a project.
I’ve classified everyone into 3 categories: The “Cub Scout” whose just beginning to work with clients and probably has one or two personal projects in their portfolio. The “Junior Exec” whose had a few rough times dealing with clients, and still has a long way to go, but has managed to build up a reputable portfolio that lands them at last one to two steady projects per month. And the “Guru”, these are the seasoned designers and developers we’ve heard of or have worked with. They have great talent (just as the cub scouts and junior execs), but the difference is they’ve learned how to maximize their potential. Their portfolio speaks for itself, and lands them as many projects as they need mostly through the client initiating contact.
Each of the designers within these categories will more than likely quote a project differently due to their experience. The more experienced designers, have probably constructed their own methods for pricing, while the less experienced, are likely to be testing out different prices and methods. This is natural, it’s just how things “work”. A Cub Scout designer can’t charge the same as a Junior Exec, neither can the Guru. This is one of the reasons why we should evaluate our experience.
Another reason would be to avoid over/under pricing. If you’re over pricing your experience, you’re most likely not going to progress as a designer, and if you’re under pricing, then you’re probably taking on a workload that’s not as profitable as it should be when scaled to your level of experience. Either way, it pays to evaluate your experience every so often.
Structuring Your Pricing
Everyone prices and quotes what they believe they deserve for their hard work, but how does everyone quote their clients? The three basic forms of charging for a project are 1. Hourly, 2. Project Based, and 3. By Design Package. Each of these have their pros, and cons. Most designers rather not charge by the hour since it can be somewhat hard to track and you’re always at risk of a client wanting do deny pay if they believe you’re lying about the hours you work. It’s true that it’s become much easier after the wave ofProject Management Tools hit the net, however, it’s not always as profitable to charge per hour.
Let’s say the average basic logo design takes you about 4 hours to complete and you charge $25 per hour. You’re going to rake in roughly $100, but if you were to charge a set price and your basic logo design package is $200, there’s a pretty big difference, and you’ll ultimately gain 50% more in profit this way. This isn’t always the case, but this happens more than you think.
Now, what about charging per project? This is probably one of the most widely used methods to price work, no matter the industry. Quoting specifically per project can save time, money, and protects you when it comes to under pricing your work. This method of pricing doesn’t work for everyone, and like every other pricing structure it has its downsides such as, stating a price only to find out you’ll have to do much more work than you expected. In order to find out which of these methods work best for you, it’s imperative that you conduct some research, ask a few colleagues how they charge clients, and test some of these out.
How Can I Avoid “Window Shoppers”?
Window Shoppers is a term we’ve come to integrate into the life of a designer. An individual, better yet, a client who window shops is someone who displays interest in your work/skills, asks you to quote them, then later initiate the project only to never hear form them again. There are times that they don’t disappear and remain in contact, however they’re never planning to pay you for the work you’re doing or will continue to do. In the end, you’re left with a bunch of designs that’ll end up sitting around taking up dust. These sort of clients are usually very easy to spot, and the hard ones can be scared off by asking them to sign a legally binding contract.
The most common method for weaving out the real clients from the window shopping bunch is to ask for a deposit before you begin working on a project. You can ask for 40% up front, then another 20% as you progress, and the rest when the project is complete. This is sort of like a “trust-system” that for many, works well. In fact, asking for a deposit both protects you and the client in case either of you can’t hold up your end of the bargain.
Contracts are a good way to protect yourself, but they’re more effective for projects on a larger scale. Small projects may not even be worth having a contract, but this is not to say you can’t use them to maybe scare or turn a window shopper into a serious client. It’s all up to preference from here on out.
Bidding on More Than You Can Handle
From experience, you should NEVER bid on a project that’s more than you can handle. It will end badly for you and your client. Bidding/quoting on projects that you’re not able to complete for whatever reason is pure “suicide”. The only time this is acceptable is if you’ve already planned to outsource or you have a team that you will work with, other then that, it’s definitely not advisable.
If you’re quoting a client on a project, it’s because you know you not only have the skills to complete it, but you also have the required time at your leisure. Take your clients seriously, and above all, the projects at hand. If you show your clients that you’re able to take care of what they put in your way with minimal trouble, then they will hire you for more projects. Be faithful with the little you have, and more will be given to you.
Accounting and Invoicing
No doubt about it, the more work comes your way, the more adjustments to your pricing you’ll probably end up making. This directly effects the outcome of they way you take your finances into account. As a designer, especially one that’s freelancing, you should keep a steady track of invoices, your previous rates, and what’s going in and out of your pocket. This will help you price your clients better in the future, and you will find a good balance between under/over pricing your work.
Not only that, but if you run your own freelancing business chances are you must pay taxes (depending on where you’re located), if so, then incorporating an accountant or the use of accounting tools will benefit you immensely. Time tracking tools are also a great way to increase the accuracy of what you bill your clients if you’re charging by the hour. The better you manage your finances, the more time you’ll have to actually design.