Quality-Price-Ratio in Web Design (Pricing Design Work)

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I’m about to make a bold statement. The quality of a design and the monetary cost of producing or procuring that design have absolutely no relationship whatsoever. It’s a bitter pill to swallow, I know. Many of you are crying foul at this very moment, but hear me out. I’ll explain my radical position – and hopefully give you a few pointers about how to more effectively price and position your design business in this brave new, and uncorrelated, world.

wine
original image by Kris1

Quality-Price-Ratio (or QPR as it’s commonly referred to) is a concept that is used extensively in the wine trade. In it’s essence it’s nothing more than a measure of perceived value, of the enjoyment you receive weighed against the price you have to pay. Do you feel that the benefit your gained was worth the price you paid? If you don’t, then the product or service has a low QPR. On the other hand, if you feel like you got away with highway robbery then the product or service has a very high QPR. I’ll spare you the metaphysical comparisons between wine and design beyond this one important point: There is no correlation between price and quality when discussing wine or design.

The Assumptions

Good design is subjective

While most good design shares many of the same basic characteristics, beyond a certain point the perceived value of all design is subjective. What appeals to me may not appeal to you; in fact, you could go so far as to say that you hate it. But, if you were being honest (and the work in question was in fact well done) you would have to admit that it was, at the very least, well put together.

Good design is cheap

Don’t misunderstand me. I’m not saying that good design should be cheap or that it always is cheap. I’m just saying that, these days, good design can be found very inexpensively. Think 99designs2, Graphic Leftovers3, and even some of the more reputable stock agencies. These services are extraordinarily popular because they bring good design to people on a budget. These services can also be extraordinarily difficult to compete against.

Good design has no correlation with price

From the client’s point of view, the QPR of design falls into four, and only four, categories.

Listed from lowest QPR to highest:

  1. Bad design that’s expensive. As a client, you do not want to be here – it’s a world of pain.
  2. Bad design that’s cheap. This type of design, I think we’ll all agree, has a fairly low QPR because, well, it still sucks even though you paid very little for it.
  3. Good design that’s expensive. This is a tough one. You’ve gotten a great product, but you’ve paid a hefty price. You normally just tell yourself that you did the right thing because everyone knows, “you get what you pay for”.
  4. Good design that’s cheap. This category has the highest QPR because you are getting a great product for a small price! Who doesn’t want to be here?

Your clients are clearly looking for that magic fourth category, while you’re trying to get them closer to the third. This is what makes selling design so difficult – you’re interests and the clients interests are clearly at odds.

Good design is about attitude

A little attitude and a little cockiness never hurt anyone. I would argue that those two qualities have actually helped more businesses than they’ve harmed. Why? Because being confident in your product or service is infectious. If you believe strongly in the value and the worth of what you’re selling, your clients are going see that – and respond in kind.

Good design is about branding

Brand is all about good will. Having high brand equity is nothing more than having a stockpile of good emotions and good response reactions from consumers. What does this have to do with good design? It doesn’t, other than the fact that consumer will give the benefit of the doubt to a design that has a strong brand behind it. They may not know what good design is, but if they respect your name – chances are they will respect your design.

Pricing Strategies

Let’s face it, deciding how to price your creative services is hard. You are, in essence, trying to attach a discrete number to your creative acumen; which makes it seem very much like you are bragging if you charge a lot or like you have no backbone if you charge too little. But it is imperative that you get beyond these feelings. Design, and good design especially, is a very scarce resource and, as such, should be priced accordingly. But how to go about arriving at a number?

A note about premium services

I once heard about a wedding photographer (who charged average prices) that wanted to work less. So, she figured that if she just began raising her prices there would simply be less interest from clients. First she bumped up to $3,000 a weekend, then $4,000, then $5,000. To her astonishment, she actually began receiving more requests from clients. The clients figured that if she was charging such a high sum, she must be really good. Truth being told, she hadn’t gotten any better, she’d always been a good photographer – but the higher price led her potential clients to believe this and, in the end, they were never disappointed. Finally this photographer raised her prices to $20,000 per weekend, essentially pricing herself above what almost anyone could afford. Her potential clients then began offering to fly her to remote locations around the world just for the chance to have her shoot their exotic weddings.

I think you get my point. The old economic adage that higher price correlates to lower demand doesn’t always hold true, and this is especially true of luxury goods. Design is a premium service. A luxury good. It is certainly not necessary to run a business (just take a look at all the used car dealers of the world for confirmation), but results in a definite advantage to the businesses who value good design. Don’t be surprised to find that design and the pricing of design follows a slightly paradoxical pricing relationship.

This little story also illustrates how important market positioning is to luxury goods. You’d be a fool to try and compete on price with sites like 99designs, so don’t try. Compete on completeness, your creative vision and your customer service.

With our new assumptions and the idea that design is a luxury good, let’s take a look at a few tips to help you formulate a sensible price for your design services.

Don’t charge per hour

Design, or any other creative endeavor, should never be charged hourly. I know, it’s an industry standard method, but I whole-heartedly disagree with it – and here’s why.

clock
original image by Scarleth White4

Charging hourly works fantastically for things like stamping exhaust pipes or writing legal briefs – any type of job that is characterized by taking inputs and transforming those inputs using a specific process, it’s easy to see the direct correlation between hours and number of exhaust pipes or legal briefs.

On the other hand; with creative pursuits, and design in particular, there is often no time correlation what-so-ever. Sometimes you get that spark and a project takes 2 hours, sometimes you have to batter yourself for days before you feel that you have something remotely resembling a decent design. Should the client in the first instance have to pay nearly nothing for their design while the client in the second pays through the teeth?

Hourly rates are unfair to both the designer and the client. Well then, I can hear you asking, if not hourly, how are you supposed to figure out how to charge?

The cost of doing business

money
original image by bradipo5

The first step in coming to a fair and reasonable valuation of your services is to take a look at your cost of doing business. Cost of business is simply everything that it takes for you to operate. The cost of your computer, the cost of all the software that you use, if you rent office space, the cost of your office space. Think of every single thing that you use on a daily basis to get your work done and write them all down. This is your cost of doing business (I find it easiest if it’s written in monthly terms), and you should revisit and revise this number at least once a year. To estimate a per project break even figure you can divide your monthly cost of doing business by your average number of projects completed in a month and you will have an average baseline project cost.

Your cost of doing business serves as a baseline to your pricing equation. This, by the way, doesn’t mean that the average baseline project cost is the lowest price you can ever charge for a project, but, it should, instead, serve as a guide post to help you maintain profitability.

The creativity coefficient

Let’s not mince words, creativity is hard work. It’s not rote production, transforming inputs using a standard process. Design, as with all creative pursuits, is all about creating something from nothing; and because of this, creative work demands it’s own pricing methods.

Price = Creativity Coefficient x Cost of doing business

The creativity coefficient is nothing more than a multiplier that you apply to your base cost of doing business. This coefficient (or multiplier) gives the designer a measure of control to help match the prices they charge with the difficulty and involvement of the projects they work on. The creativity coefficient should be based upon three things:

  1. Difficulty: If the project is difficult or very involved – charge more. This should be clear at this point. If you’re producing one tri-fold brochure your multiplier may be as low as 1.20, on the other hand if you are completely rebranding and redesigning a medium to large company’s image your creativity coefficient may go as high as 10 or 15.
  2. Brand strength: Simply put, if you have a strong brand behind you – charge more. At first glance this may seem unfair but, in reality, it is the simplest and most effective way to separate potential clients into the two groups that matter. The ones that just want to work with you because of your name – but are going to be a major headache (especially over price), and the ones that recognize the value that your brand brings and are willing to pay for that value.
  3. Individuality: If the client is coming to you because you specialize in a certain type of design or in a specific medium and there is no one else out there that can competently perform the work – charge more. Niche work is important and there is value in being different, especially in today’s hyper-homogenized world, clients that come looking for something different will be expecting to pay premium prices for something that they cannot get anywhere else.

The creativity coefficient gives designers a simple and effective way to try and wrangle concrete numbers around the value of creativity. And because you are starting with a baseline amount that reflects your actual cost of doing business you are ensuring that your business will stay profitable.

The Take-away

Finding a balance in the way that you price your designs isn’t just about economics and finding the highest number that you can get away with. These guidelines are just that, guidelines. Hopefully they have given you a new, and inspiring, light in which to view your services and the value of those services – but in the end, it comes down to feeling that you are providing a valuable service to your clients and that you are being fairly paid for those services.

Further Resources

Footnotes

  1. 1 http://www.flickr.com/photos/kristinbradley/3430174833/
  2. 2 http://99designs.com
  3. 3 http://graphicleftovers.com/
  4. 4 http://www.flickr.com/photos/iloveblue/2415834085/
  5. 5 http://www.flickr.com/photos/bradipo/1435739708/
  6. 6 http://www.burnsautoparts.com/BAPsite/Index.html
  7. 7 http://vandelaydesign.com/blog/marketing/12-realities-of-pricing-web-design-services/
  8. 8 http://press.harvardbusiness.org/harvard-business-review-on-pricing

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Jeff Gardner is a business nerd. He loves spreadsheets, graphs and helping companies figure out how to perform better. He also enjoys writing, photography and being outside. You can check him out at his blog.

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  1. 1

    Anyone who has a problem with the “design is cheap part” – bloody hell, open your fricken eyes and read it properly!

    When I read this article it gets me in a frame of mind to sell my work, perhaps thats what this article is excellent for – giving us the boost to value our work accordingly without feeling guilty perhaps?

    I agree that charging hourly (although it works for some) is probably not the best way I would take ‘MY’ business. And you can definitely let your clients know how much work you are pouring into the project without this in place….lets not be ignorant people!

    @nateB – basically your an idiot, go away!

    @Jeff Gardner – excellent article. I think you are pretty much bang on there. You have raised my motivation and I enjoyed every minute of reading through your article. Keep up the excellent work, I hope to read more!

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  2. 52

    Great article! I totally agree with you about not pricing at an hourly rate. I think that pricing with a flat fee makes more sense for large projects especially. You never really know how much time a project will take until you start working on it anyways, and most clients are going to want you to give them a set price before you start working.

    I wish that smashing would do a poll of designers and see how much everyone charges per page/ or by the hour. I’m really curious to find out how my prices stack up.

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  3. 103

    Smashing article.

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  4. 154

    A lot of designers underestimate the value of their work and sell too cheap, not realizing they cause a race to the bottom which affects the entire industry. Various template sites exists because designers are willing to contribute work and while many (not all) template designs are worthless or not entirely what a company is looking for, the fact that you can buy a template for $49 or so, says a lot. It gives customers the impression that design is cheap. Doing spec work is even worse! Designers should really learn to become better businessmen/women.

    About the cost of doing business, this depends also on the region where you live. A disadvantage for designers living in expensive area’s since competition is no longer local.

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  5. 205

    right on the money!!! pun intended :)

    an excellent submission

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  6. 256

    This is easy. Most people judge a book by its cover (the way it looks). Also people are attracted to good looking things.

    The design is just as important as the content if you ask me (you need both not one or the other).

    For example I used to use the standard Joomla template for my blog (http://www.NickYeoman.com). Once i switched to a new template, that is all it took to gain 100+ readers a day. The design was cheap, I bet I would retain more readers if I had a professional designer go through it.

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  7. 307

    This is my biggest struggle as a freelance designer. Get deposits. I am now owed invoices from 3 large and reputable companies because they have just decided not to pay. They blame the economy.

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  8. 358

    With respect to you, this article is rubbish and incorrect.. what happens when you told your client they were entitled to three revisions of your initial design concept, and they demand ten? Including some kind of hourly rate for these scenarios is essential in order to survive. Being a freelancer I only scrape a living thanks to this kind of thinking. You do get what you pay for, and it’s important to differentiate between good work, and bad work. You don’t get excellent work for pittance in any industry, and web design should not be the exception because it prevents people from being able to make a living from it and it lowers the standard of work for everyone.

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  9. 409

    You’re right about some things, but it’s foolish to say good design is cheap.
    The work on 99designs and sites like Crowdspring is just average (and most of the entries are way below average) and may absolutely not be classified as great works.
    The clients are most of the time not aware of what design is about and they dont know what they really need. It’s more a game of luck then a game of the best may win. Good design is not cheap, you need to invest in design to make your company/product or whatever work/sell!! Why do you think the largest companies of the world invest so much in marketing/design? If they put their project on 99designs or crowdspring, they would get all kinds of bad works and it’s just a waste of time.. Finally, the work on sites like that is most of time just temporary stuff. It doesnt really got vision or something like that..

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  10. 460

    but when it comes down to it those are the clients that usually under-appreciate what we do for them

    In 13 years of marketing and advertising, I have observed that the clients that haggle on price and are only motivated by cost are NEVER satisfied. They make the most changes, have the biggest demands and are the most difficult to work with.

    That alone is the reason why we choose not to negotiate on pricing or offer “discounts”, because it always sets the tone for disaster. If someone thinks they can get the same service elsewhere for cheaper, they are more than welcome to do so.

    We do not fear the free market, and as a result, a lot of people we turn away come back to us after they contracted somebody else on a budget who failed to deliver. It’s a hard lesson to learn, but a lot of people have to learn that way.

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  11. 511

    @John S. Great opinion on pricing!

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  12. 562

    Nicole Hernandez

    July 14, 2009 10:12 am

    For a long time I wanted to keep prices down on my web development studio to make sure everyone would have the ability to get a website if they wanted one. It took me quite a few years to realize that no matter how great the quality of work they were getting – most non-tech people still associate cheap price with cheap work. I went back to basics on marketing fundamentals, and realized how huge a mistake this was. I realized I needed to charge based on overall experience, not on each individual project. A client isn’t paying for a website – they’re paying for the years of experience we have and how well we take care of them.

    We did a complete rebranding, and every time we have raised our prices – we have gotten MORE work. I also stopped doing the work myself and collected a group of amazing designers and coders to work for me. I also had to finally realize my personal value as the owner (and this was actually rather difficult for me because I tend toward the modest). Now, if a client specifically wants me, as the owner, to do a site for them – the price immediately doubles or more. My marketing manager had to really push me on this one, but I think that he finally got through to me when he asked me this: “If someone walked into a Vidal Sassoon salon – do you think they expect Vidal himself to do their hair?” Granted, he sold the salon chain, but that’s not the point — it got through to me that most people don’t expect the owner to do the work personally, and they would expect to pay a lot more if they did.

    In a nutshell — charge for your overall experience, not just for the project. Anyone can make a decent enough website, your experience is what people come to you for.

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  13. 613

    Very good article! I allways thought like that! And the best part of the article is on your comment:


    “As a business owner myself, I always appreciate it when a professional (in any field) can know enough about their chosen profession that they can give me a rough total cost from the outset. It gives me confidence because it shows that they know what they are doing and they know how long it will take and what their costs will be in completing the work. And for them, while they take on a little more risk pricing by project, they are left with the upper hand in defining boundaries and terms (which is fine with me as the client, so long as those boundaries are clear).”

    This is exactly what I always say: the totalcost is “x”. And I will take care of this job for you.

    Thanks for sharing it!

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  14. 664

    @Nicole Very nice insight on your experience as a owner, I find myself in your shoes too.

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  15. 715

    A former employer charged by how deep the client’s pocketbook was. I still can’t believe the piece of junk one client received for $10K.

    I price jobs based on the complexity and how long comparable projects have taken me in the past. And from now on leave the hours out of the estimate.

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  16. 766

    Not to be a prick, but if you want free artwork from graphic leftovers…

    1.) Find the image you want
    2.) Right click on the image, and select “view image”
    3.) Remove the “_watermark” from the .png file

    ie: http://graphicleftovers.com/images/member/2623/gears_watermark.png turns into
    http://graphicleftovers.com/images/member/2623/gears.png

    They should really do better at securing their user’s art.

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  17. 817

    Hmm. With the three “Coefficients:” Difficulty, Brand Strength and Individuality, I realise I haven’t been valuing the third. If a project is in an area that I specialize in, I usually charge less because my experience will make it less difficult. But I shouldn’t ignore that the quality of my work will also improve.

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  18. 868

    Sounds like you have been lucky as well as skilled in the clients you service.
    My experience is that only a minute portion of clients will even work with a firm that cannot quantify costs on the basis the client usually does, and that is, whether we like it or not, hourly charges.

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  19. 919

    Dogan Arslanoglu

    July 14, 2009 11:26 am

    I sort of agree, but I don’t agree with good design having to be cheap. I think it dilutes and saturates the market. Now in any normal case, this would make the better designers stand out even better. But one thing we have to realize is that client is trusting our judgment and these cheap design producing companies do not have that idea in mind. They just go with what look sufficient, leaving a lot of potential behind and sometimes even creating design crimes without the client ever noticing it because he has trusted that judgment to the designer.

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  20. 970

    @Nicole – Thanks for sharing your experience!

    @Ryan – For sure, don’t forget the individuality thing – that’s a big one! I’m glad you saw my point on that one.

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  21. 1021

    That’s a rather interesting article. I myself think that the most of this article is right, a higher price gives a good feeling about quality. I started my own company 1,5 years ago and a little i am a little scared about telling my customers a higher price.

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  22. 1072

    A carte blanche refusal to bill hourly seems counterintuitive. The premise that “with design in particular, there is often no time correlation what-so-ever” is almost laughable to those of us producing regularly. Whether working in-house or freelance, part of being effective in this industry is figuring out how to tap into what spurs creativity, not by forcing it, but by knowing your process, knowing your abilities (strengths/weaknesses), & knowing how to deliver according to your workflow. If you’re burning up “days before you feel that you have something remotely resembling a decent design,” then perhaps you’re not cut out for that project (or even line of work) … or you at least need to reassess your abilities before assuming you should get paid for that vocation.

    Or perhaps your ideas are so revolutionary and innovative that clients will happily pay big bucks just for you to stew on a concept for days, weeks, maybe months. It happens, though I wouldn’t bank on it.

    Don’t misunderstand: I don’t expect sausage factory design — cranking out mediocrity, but you have to be able to provide your product in a timely fashion at a reasonable price (and all of that should be considered in establishing your rates, contracts, employment, etc.). Billing by the hour can be highly effective. What’s more, every business, every project, and every process is different. Hourly rates work for some scenarios, flat-rates work for others.

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  23. 1123

    This is the kind of information that is so valuable, it is hardly ever given away for free. I commend this author for offering his insight in such a digestible format. I feel very enlightened. A big thank you is in order.

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  24. 1174

    Wow, this article has a pretty high bullshit-factor.

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  25. 1225

    PLEASE make an iPhone app… thanks!

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  26. 1276

    I’m a freelance web programmer (ColdFusion) and find myself in the occasional need to partner with a designer–but where do you find a good one who charges a reasonable price? When you post on Craigslist or listservs most people who respond are not what I would consider “real” designers. Their websites are so generic and frankly, a lot of the time, really, really bad that even I could put a better site together than that. Who has the right to call themselves a designer? There’s no standard or certification for that term. If a wannabe quotes a rate of $X an hour and a “real” designer 3 times that. I have no concept of figuring out the better deal. The real designer obviously would give better quality, but with out knowing–even tentatively–how many hours it would take, then I have to err on the side of caution because I don’t want any surprises for me, the budget, or the client. So, why not offer packages–X number of designs, X number of revisions–if you want more it’ll be at an hourly rate of $X. I’d love to upgrade the services I can offer to my clients, but without knowing a (somewhat) fixed dollar amount, I don’t feel comfortable doing so because a miscalculation on my part would be disastrous to my bottom line–I charge fixed project rates too (and hourly rates for maintenance and piecemeal work)–if there’s a cost overrun it comes out of my profit.

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  27. 1327

    What’s more, every business, every project, and every process is different. Hourly rates work for some scenarios, flat-rates work for others.

    That’s right. While our agency tends to eschew billing by the hour, there are definitely circumstances which warrant it and certain clients that prefer it.

    The bottom line is that we like to diversify our portfolio of clientele as far as how we are compensated, and the healthier the mix the healthier the portfolio.

    But overall, having the billable hour dominate your portfolio is a mistake, because more often than not it will cost you money. The billable hour only accounts for the TIME spent creating the work and assigns no value to the results whatsoever.

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  28. 1378

    @ Bob You were able to download 500×500 pixel low quality thumbnails of artwork by removing the _watermark.png but that is fixed now. Thanks for pointing that out.

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  29. 1429

    Good design may be subjective, but when considering design for the web, good coding skills, or the way that design is made into a template, can make a huge difference, and is worth more. 2 “designers” could make a website that looks exactly the same, and one could get search engine ranking and have a successful site, while the other site never gets visited.

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  30. 1480

    I loved this article but I don’t think that any of us inspire to do “good” design, we inspire to do GREAT design. Buying stock logos/designs it pretty hit and miss and you’d have to be extremely lucky to hit the nail on the head. You also have to consider your time as a designer to troll through gigs of stock images praying you find a suitable design when that time might be better spent designing, keeping your skills sharp and having the chance to design that one layout/logo that is brilliant.

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  31. 1531

    John S.
    In 13 years of marketing and advertising, I have observed that the clients that haggle on price and are only motivated by cost are NEVER satisfied. They make the most changes, have the biggest demands and are the most difficult to work with.

    Great thought, succinctly put. I just found myself in the saying-goodbye-politely to a client today for the same reason.

    Thank you for the article, it sure is provocative! I can only say that finding myself as a designer previously primarily for luxury brands, I feel the double hit in this economy.

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  32. 1582

    This is a great resource I am always in an internal struggle whenever I am quoting a new project, and this is a resource that I will refer back to before my next quote.

    Creativity is such a hard thing to try and put a number to, especially before you begin the work. you want to be fair to win the work but don’t want to agree to design something that will take far longer than you have quoted for…

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  33. 1633

    i agree with this article…
    thanks for the insights :)

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  34. 1684

    Kathleen Hanover

    July 14, 2009 5:46 pm

    Wow, FABULOUS article on a thorny subject!

    I’m a creative director, marketing strategist and copywriter, but I deal with so many of the same issues as freelance designers. I feel your pain.

    @John S., I could not agree more. I started raising my prices in earnest over the past year, specifically to weed out the kind of vampirish, soul-sucking clients you describe. The last one who talked me into a discount actually stiffed me for half the discounted fee…and she’s a lawyer who bills $275 an hour!

    Never again.

    Now my business terms are 100% of project fee escrowed up front, 50% released prior to start of work, and 50% released in 14 days (I do a lot of work through Elance specifically because of this escrow feature.)

    And I no longer charge by the hour for project work. It’s all flat fee. I agree completely with @JeffGardner on this one. I’ve come up with a campaign concept that generated $250,000 in sales in the blink of an eye…charging by the hour, I’d bill the client 9¢ for that work. On what planet does that make sense? And on what planet would a client not feel that they got a good deal by paying me $25,000 for a concept that made them 10 times as much money?

    The only time I ever bill by the hour is when I’m doing consulting work, and you really are paying strictly for my time and attention on the phone.

    It is absolutely true that the more you cost, the more you’re valued. Sorry, but it’s human nature. I have clients who have paid me the equivalent of $900 an hour for a copywriting gig, and I never hear a peep out of them. They LOVE my first drafts, are a joy to work with, and do not nit-pick. They’re awesome. The cheap ones are like bloodsucking little no-see-ums, constantly on the phone, wanting instant revisions, and still managing to feel slighted even when you kill yourself to please them!

    Re quality of design work. We are not artists, writing or designing for our own amusement. We’re hired (I assume) to achieve a stated business goal. And that end isn’t “come up with a logo,” it is “create a way to instantly visually communicate our brand attributes to help us compete against established companies in our vertical so the company gains market share and we earn stock options and raises.” Creating a new logo is the means, not the end.

    Most hack designers (and hack copywriters) do not have the training or expertise in direct marketing, public relations, marketing communications, etc. that you’d need to create a strategy to achieve the end. They are about the means. They can execute a skill set (that is, they know how to use Photoshop or Microsoft Word) but they’re doing it outside the context of an overall marketing or communications strategy. That’s why they’re a dime a dozen.

    So…deliver work product that no one else can, and you can charge what no one else does. End of sermon. :)

    Kathleen Hanover
    http://www.twitter.com/KathleenHanover

    @John S. said,

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  35. 1735

    I have such a hard time with this. What if you have never had a client before? Where do you even start? I always feel like I am going to get ripped off or ask for something outrageous, and nobody will ever give even give me a general middle ground.

    Say I design a tri-fold brochure and do an average job and they are happy. I wouldn’t even know whether to charge $100 or $2000. And for the life of me no designer will even give me a clue. I understand everything artistic is subjective, but……

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  36. 1786

    Design is subjective? I don’t think so. Art is subjective. Good design is measured by the ability for the designed thing to do its job, in promotional/advertising design its the ability to convey a message, a website could be how well it works etc etc.

    The primary goal of business is: Make a profit. That means that if you offer good design for cheap, unless you have a huge team and a monopoly, you’re probably not going to be very profitable. So in undercutting every other professional designer out there in an attempt to try and make a buck, you’ve just shot yourself in the foot.

    Of course the underlying problem is that most lay people think they know better about what looks good than an experienced designer, but what’s worse is that this disease means that inexperienced designers ALSO think they know what looks better than an experienced designer and hence open up shitty little design shops or freelance and that ruins us all.

    Regulation is what is needed. Perhaps making all designers do a four year apprenticeship after uni before they are allowed to do any freelance work, or run a business is what is needed.

    The article was ok, at the end of the day two things rule what you can (or should) charge: your brand equity and the law of supply and demand.

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  37. 1837

    Design is art. A really bad design can accidentally work out really well for a business, and well crafted one by an experienced design artist could have no effect (or even a negative effect) on a business’ sales, so it is all subjective. Like you said the primary goal is to make a profit, the same commercial that outrages a conservative makes the next person want to buy the product that much more.

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  38. 1888

    Thanks for this…

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  39. 1939

    Jeff

    This great article goes a long, long way towards a better way of delivering value and pricing accordingly. However, I would pull you up on one point.

    The “cost of doing business” should never be a factor in setting your prices. It is only of use in determining your “walk away point”; the point where you know you cannot agree a fee that is both a bargain investment for high value for the client and highly profitable for you.

    You need to help the client articulate to themselves, and thus to you, the value of having their (design) problem fixed, and then set your price accordingly.

    Pete

    You just don’t get it, do you! The client just couldn’t care less whether it takes you an hour, a day, a week or a month to fix their problem. They just want their problem fixed. Given that, they’d rather you only took an hour – not because they think they’d have to pay less (wrong!) but because they’d start reaping the benefits a lot quicker.

    So stop charging for your time and start charging for the value of your result.

    And secondly it’s legal, ethical and morally right to charge different customers different prices for different value! Period!

    Alan

    “What if you have never had a client before? Where do you even start?” Whether it’s your first or your millionth client, you start by talking with them, helping them reach their own perception of the value of having their problem fixed; and then charge accordingly – subject of course to the test of whether it is highly profitable or not for you to do that project at that price.

    Andrew

    Design, like everything else is of course subjective. Value only exists in the eye/mind of the client, and clients will only ever pay for value!

    And no. Supply and demand doesn’t apply in this or any similar cases. No supplier of “professional services” ever tried to increase demand ad infinitum. Supply and demand only applies to commodity markets.

    Hope this helps.

    David

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  40. 1990

    Lets try your suggestions plus coding skill variable. thx

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  41. 2041

    @Big Buddy,
    You seem to like to demean people. You must be more like Steve Jobs then.
    Just curious. Is that your website bigbuddymedia flagging as malware in my browser?

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  42. 2092

    Great article!

    If people agree or not up to them self to decide, but I am pretty sure this article made a lot of people rethink the way to do your price.

    @Nicole is right, your experience and good reputation is a very important factor.

    Best

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  43. 2143

    Thanks!

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  44. 2194

    Great article! And, I am not shy to say, one that reflects my current work ethos and beliefs superbly. I think I do actually fall into that “magic 4th category” that clients are looking for .. but yes, I am obviously striving for the third!

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  45. 2245

    I always start by asking the client what their budget is for set project. People will probably say this is the shortest way to being under-paid but hear me out. Clients always have a number in their head. They rarely come in without knowing how much they are willing to spend. Once they tell me what their budget is I can tell them my hourly rate hence how much time I can spent within the budget. This means they now have a clear overview of what their money will actually buy them. Also it gives me a idea of what can be achieved within the budget and therefore makes it easier to advise them. Next is the negotiation which, because both parties now know the value of the work and the money, runs a lot smoother. I see this approach as the best of both worlds. I have a project price and they have an hourly rate.

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  46. 2296

    @yetanother

    I freakin lol’d. Now google warns me its mall-ware. What a douche.

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  47. 2347

    Great comments all around – I really like the discussion that’s going on!

    @David W – If you’re using cost of doing business as a determining factor in your “walk away point”, you are effectively using it as part of your pricing calculation. Maybe not directly, but indirectly. I think we were both trying to get across the same point. You can’t, under any circumstances, charge below what it costs you to create. I will have to call you out on the supply demand thing though ;-) Supply and demand exists and applies in any and all free-ish markets. If designers become the next celebrity chefs I guarantee that you will see prices sky-rocket. Why? Because there will all the sudden be high demand for a service that is in (relatively) shorter supply. The law of supply and demand is exactly that, it’s a law. It always applies, unless the market is very tightly regulated (ie, government price fixing).

    Please keep the discussion going everyone. It’s great to see so many ideas and hear about everyone’s experiences.

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  48. 2398

    I dont agree with most of your assumptions:

    1.- Good design is not subjective. Just the aesthetical part is subjetive.
    2.- Good products need research, skills and hard work, if you are a pro this mean MONEY.
    3.- Sites like 99designs.com degrades our profession, I never would say website contests offer good design, 99% of the designs are useless (I bet its because they pick that name) and very random.
    4.- Stocks are stocks, I can buy good stock design for cheap, my competitors too. You are missing the exclusivity.

    The rest of the post is not that bad but stop saying things like this or you will loose your credibility.

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  49. 2449

    @David W – What Jeff Gardner said! I was going to say the exact same thing in response, but I only just got home from work. Every free business on the planet is bound by it and its the second thing they teach after “make a profit”.

    @Alan & @David W – design is NOT subjective and design is NOT art. Young graphic designers, tend to think that design and art are the same, they are not. Art is an expression of human emotion which the artist expresses in any number of forms. Design is something that is created to fulfill a purpose, more often than not it is paid for and more often than that it is paid for by someone who thinks they know better than the designer; and a combination of poor business acumen, inexperience and/or stubbornness on the client’s part means that the job gets done poorly, or does not fulfill the purpose; or bad design. You don’t go to a doctor to ask what’s wrong with you, only to TELL THEM what you have and then haggle on the price of the consultation?! They’re professionals, they’d laugh you out of the office. So why is it different with designers? Because everyone thinks they’re a creative, and gets art confused with design, and no body has the balls to set them straight. All the best design comes from places where the professional is allowed to do their job, give their own interpretation to solving the problem.

    I’ve experienced this in my years as a designer and I’ve found, as I’ve grown older, that the more accurately you define your costs and the more confidently you present your quote/estimate to a client the more likely they are going to pay it. If a client turns around and says “That’s too much, I won’t pay it”, then you tell them you can reduce the cost at the expense of one of their requests. If they respond and say they’ll go to someone else, then you remind them of your Unique Selling Proposition (USP), just as any other business operating in the world. What’d your USP? Its your experience, your style, who you know, what you studied etc. For a web job, a well defined proposal with a quote that breaks down the costs of the job, presented in a meeting so the client can discuss is probably the best method. If they are happy with the quote, they can sign it then and there. If not, then you have them face to face to discuss.

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  50. 2500

    from the get-go, there is an assumption of what qualifies good design. I think that is the biggest weakness of this article. I couldn’t get past that, i felt like I was on a completely different plane. If we’re talking strictly about the visual aspect, forgetting markup architecture or user-testing or research or several key factors to a well designed website, then OK. Sure, lets update a blog page. But that is just a fraction of what good design is. I quote St. Steve on good design: “Design is not just what it looks like and feels like. Design is how it works”. With this in mind, I’m sorry, but it is expensive and almost entirely associated with time/money.

    Sorry

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