Pricing is super-hard. You’re thrilled that someone wants to hire you, and then you obsess over creating a proposal.
And before you even get to the panicky part about what the client will think about the final numbers, you have to actually determine what final number feels right to you.
For longer than I’d like to admit, I sort of just picked a number that sounded good to me without a ton of justification. Sure, I kind of did a half-hearted breakdown of design + project management, but if a client had really pressed about why X cost $Y, I wouldn’t have had a great answer. Heck, I wouldn’t have even had a good answer.
And negotiations…ugh. That process took forever because I wasn’t willing to negotiate on the fly (because I was doing so much guessing), so I needed a day or two to “go over the numbers” or risk being exposed by making nonsensical adjustments.
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I knew I needed to make pricing a process.
Mix ‘n match pricing
There are tons of philosophies on how to price projects, and each one has its pros and cons. So I took the best elements (imho) of three major ones and tossed ’em in a blender.
One might say a graphic design blender? Heheh – sorry, bad joke.
Basically, I price per project based on a value-based hourly rate.
Yeah, I know. It sounds a bit silly.
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Let’s break it down:
- Project-based pricing keeps the focus off how many hours I’m working and on the value they’re getting for their money. (Read less stress over how long I’ve spent on <insert element here> or negotiating with questions like, “can’t you work faster so we can afford it?”)
- Basing my project price on an hourly rate makes it so much easier to price out. I simply determine my value-based hourly rate (more on that next) and multiply by the number of hours I think the project will take…and I guesstimate the hours based on previous projects and the scope of the project.
Value-based hourly rate?
Okay, so I love the ease of an hourly rate, but I don’t want to limit my income to number of hours worked.
I also don’t want to try to convince a client on true value-based pricing…the idea that they should pay for the value of what the project should bring…because to be honest, that’s a tough sell (much tougher than value-based advice makes it sound). And a lot of my clients just don’t have that kind of money. And if another factor out of my control totally bombs the project after I’m done with it, I’ve lost a client at the least and have a very angry (and vocal) client at worst.
So I combined them, and a few other things.
Here’s how I determine my hourly rate (check out this ebook to figure out the details for yourself):
- What I need to make
- The value of my expertise, education, and experience
- What the industry will bear / client’s budget
- Project-management and/or client-management fees*
*Project management – setting up files, emailing proofs, writing quotes, yadda yadda – accounts for at least 30% of the project. So instead of itemizing this on the proposal, which I’ve found often becomes a haggling point, I just include it in my hourly rate.
To be clear, I increase my hourly rate, not increase my number of hours. I find that KISS (keep it simple, stupid) is better for me when writing a proposal, so I work that cost in ahead of time.
One of the best, most stress-free parts about this type of pricing is that you rarely have to deal with the dreaded price increase reveal to your clients because you’re always pricing by project rather than by hour (sure, it’s based on hours, but they don’t need to know that).
So you can raise your prices gradually – a buck or two per hour (up to $2000-$4000 per year!) – and unless you’re doing repeat projects like posters or something, your clients will almost never notice.
Design hours * hourly rate = project price. (Of course, each project – and budget – may alter it a bit, but it’s a super-simple start.)
Questions? Suggestions? Advice? Share your thoughts in the comments.
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