So often we hear the question asked: how much should I charge clients? In this hard-hitting discussion, we tackle the issue of pricing head-on. An essential commercial skill is to be able to price your work in a way that maximizes your profit. We give you three key questions to help you do just that. Watch Discussion (12min, 32MB)
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Urban Dirty has terrific free grunge stock images and also provides color themes for various images with a downloadable .ASE file. You can import the .ASE file into After Effects using Swatch You Want.
nailgun* has done some smart spots for ESPN. Note the detail and depth, enhanced by depth-of-field and subtle camera drift, taking the photo/slide theme to the next level.
40 Responses to this post
August 17, 2009 at 12:56 am |
So what you’re saying is… if you want to be a business, you have to charge more money than you’re spending…
Well thank god someone’s giving us new, practical advice on the business of being a freelance designer, and not just dishing out “duh” moments like “if you want to be a successful human, you have to remember to exhale as much as inhale”
August 17, 2009 at 4:09 pm |
Thanks, Arvin.
We really appreciate your feedback. So often it comes down to the basics that get left out in the wake of all the day-to-day busy-ness.
Regards, to L.A. and all the best with Greasy Pig Studios.
August 17, 2009 at 1:03 am |
Love these posts, keep them coming. I would like to share how I charge clients.
Earlier I preferred charge a fixed price per project, but after having a couple of clients that kept on changing there minds about what they really want after I began the work, I started to charge by the hour.
So now I make a work hour estimate for the project and just before starting the actual work I take a 50% deposit of the estimated amount. The serious clients are ok with this, and the other clients… well I prefer to work with serious clients only
I generally like to finish the job earlier to keep the client and my self happy this work style lets me be a lot more flexible to potential changes
I use a time tracker widget to track my work hours, made a tutorial video about this (it`s my first one so it sounds a little strange
http://www.bluefx.net/blog/my-freelance-tools/ Hope it can be useful, any suggestions, tips are welcome
August 17, 2009 at 5:01 am |
Nice little tutorial. Those tools are really great helpers.
August 17, 2009 at 3:39 pm |
Researching your clients is a good idea, google searches can reveal a lot, like documented cases of Non paying clients for example. Unfortunately crooks lie in every industry, you just have to do what’s best to protect yourself.
August 17, 2009 at 4:05 pm |
Great ideas Gyorfi. Robin and I will be looking at these areas in future TBOD discussions.
August 20, 2009 at 11:31 pm |
Hey Jonathan, thanks for the excellent suggestion.
August 17, 2009 at 5:01 am |
Great discussion – thank you so much guys!
August 17, 2009 at 4:10 pm |
Glad you are finding it helpful illd.
August 17, 2009 at 4:50 pm |
You’re welcome, illd.
August 17, 2009 at 9:23 am |
Thanks for the great discussion. I attended a webinar that presented 2 sides of charging clients, and it has to do with invoicing. One side suggested NEVER to itemize because the clients can pick and choose services they don’t want, and the other side says ALWAYS itemize because it shows just how much work goes into each job.
Do you have any thoughts on this?
Sincerely,
Peter Baker
August 17, 2009 at 4:14 pm |
Hi Peter, I tend to itemize and then if the price is too high for the client, rather than cutting the price, you can simply drop items from the list to decrease the price. I know Robin has some great ideas in this area.
August 17, 2009 at 4:42 pm |
It’s a great point you make, Peter.
Client relationships thrive on two critical elements: value & trust.
The more transparent you can make your pricing, the more trust you build.
Conversely, ‘mystery pricing’, where you bundle the items into a total cost, just makes it all a little harder for clients.
My preference is to always fully itemize a costing (at the full rate).
Best, Robin
August 17, 2009 at 6:32 pm |
Very good point! Question is..what else can you itemize exactly, in a job like motion graphics, besides the number of hours you spent? what? “cups of coffee consumed”? any examples?
I hope the skill of estimation of hours needed to finish a project, comes with time and experience. i find it hard to guess in advanced [therefore exceeding time limits]..
August 18, 2009 at 5:08 am |
Hi Eladbari, you’d charge for any hard costs such as stock footage or 3D models purchased specifically for a job. Basically any out-of-pocket expenses that need to be recouped. These things need careful consideration before quoting on projects. Understanding how long a project should take does get easier with experience.
August 18, 2009 at 5:09 am |
Hey! Thanx alot for the reply, John! :]
Now it makes all sense. Keep up the good work, and those great discussions that are usually not being discussed over the net. We all need that :]
August 18, 2009 at 1:02 pm |
It’s also useful to itemize out any additional, creative OPTIONS that you have come up with that go beyond the brief, but that add significant value to your proposal.
For example:
OPTION 1:
Create powerful animation sequence for introduction:
Add: $2,500 (assumes x hours).
This is just a silly example to get you thinking.
We will be covering this in much more detail when we start discussing the on-trepreneurial skills (selling, negotiating, presenting etc).
August 17, 2009 at 11:20 am |
This is the best discussion so far, in my opinion. Good points. It does answers some of my questions.
I always use the same rate for any video production company i work freelance for. If i am working directly for a client, i try to figure out how much time i would spend on it and double the price. T
August 17, 2009 at 4:16 pm |
Hi Tillimanjaro, as long as you are covering all costs and making a profit, that’s the key.
August 17, 2009 at 4:49 pm |
Thanks for joining the conversation, tillimanjaro.
It makes sense to double the price to cover your time spent if you are banking your desired profit above and beyond the job costs i.e. for taxes, fixed costs, buffer funds and long-term savings.
What would it take for you to be able to triple your price?
August 19, 2009 at 3:00 pm |
Well tripleling, for client i regulary work for, would be a bad move. Because they know +- my prices and like John said, they would move to another company. However adding a bit on a next project isn’t a bad idea i think. But again it depends on what project.
Thx for the great BOD’s and all the rest on the site. respect!
August 18, 2009 at 4:06 am |
Great discussion, as usual guys. Overall, lots of good insight and advice. Thank you for taking the time to do this for us. Best, J.
August 18, 2009 at 12:52 pm |
Thanks, James. You’re very welcome. Great to get your feedback.
Best, Robin
August 18, 2009 at 5:14 am |
Thanks for actually discussing a topic most people run from! My accountant told me (when I set up the business) that I’d be taxed (something like) 42%. I round that to 50% in my head and charge double what I think it’s worth because half is going to taxes!
The fact that I round up helps for 2 reasons. I’m bad with math & this way makes me a little more profit!
August 19, 2009 at 4:10 pm |
Hi Chris, thanks for sharing your workflow. Is that technique making you enough profit for your business to survive?
August 21, 2009 at 10:10 am |
Great episode! Thanks for all the advice. I have a doubt though… if I start charging just thinking of my cost structure and not what other companies or freelancers are charging, my possible clients, won´t hire me, and they´ll go to the company or freelancer who charges less.
I am building my own little company and it´s really hard to achieve some income to have real profit. I think I am at the step you were talking of having the money for month to month, and no buffer, and it really is hard “sleeping at night” or just being relaxed. It seems like very few companies here appreciate the value of the motion graphics / web design / etc, and they all think it should be cheap. At least here were I live.
Sometimes it makes me wonder if I would have to leave to another country and start searching for a job at some company or continue fighting here to make my own company profitable. I am 27 years old, so I should think of a deadline for myself, to decide what the heck I am going to do for the rest of my life, soon.
What do you think about this? Is there any advice for my case?
August 21, 2009 at 3:12 pm |
Hi A3,
I would add this to the reply I left to your question on radsmarts.com (bit.ly/93ftL).
If clients perceive that what you are offering is essentially the same as others in the marketplace, it will be much easier for them to choose the vendor with the lower price. It’s human nature, and a good purchasing discipline (see the BOD discussion on LOWERING COSTS in the next few weeks).
People will only pay a premium if you deliver VALUE that is important to them, that they can’t get elsewhere.
The job of every product/service developer who want’s to command premium prices is to design more valuable offerings that the customer MUST HAVE and is PREPARED TO PAY FOR.
Not ‘nice to have and you think they will like it’ – ‘must have and they can’t wait to get it.’
Remember the people queuing around buildings to get the iphone (silly example, but you get the point).
Designing products/services for maximum profit is an incredibly important topic that we will be covering in future BOD discussions.
Thanks for being part of the BOD discussion. Best, and let me encourage you as you move forward with your business.
Robin
August 21, 2009 at 7:54 pm |
Thanks a lot Robin for your answers and excellent advices. I see what you mean with being really different from the rest to be able to charge different than them (by charging more, of course).
August 21, 2009 at 9:50 pm |
Hi Guys, Rob’s statement “Pulling in more than the cost of the business=PROFIT”, is really the key element of the discussion. Cost of business means 1) Fixed costs—must be paid. 2) Variable expenses—can be changed (less chockie biscuits this month). Taxes, insurance, cars, office expenses, salaries, entertainment, buffer for the future bad times etc. When all these items are adequately covered we have PROFIT—and not before! And dont’ forget, the money you pull in, is NOT YOURS—it belongs to the Company, of which you are an employee. So you are entitled to a commercial salary—and no more. Looking forward to “discounting”.
August 28, 2009 at 2:52 am |
Allan, you make an excellent point about “company money”. With all that cash coming in, it can be easy to get carried away with spending.
Best, Robin
August 23, 2009 at 6:41 pm |
Thanks guys for this series. It’s my first comment on any of them but I’m finally caught up. It’s good stuff. So much of being successful in business is making sure you’re getting all the fundamentals right.
It sounds simple, but 24+ years into my career, and 20 of them running my own business, I still perceive the need to constantly refresh these fundamentals. It’s especially valuable when presented in a unique and fresh manner (with an Aussie accent, LOL!).
All that to say thanks, keep ‘em coming. In today’s economic climate, with so much pressure to ‘race to the bottom’ on price shaking the very foundations of our industry, it’s an important message to be delivering.
Should be required viewing for any and all in the field.
August 24, 2009 at 3:27 am |
Thanks for your support and encouragement Carey, Rob and I are pumped that you are finding value in discussion. Best, JD.
August 26, 2009 at 4:32 pm |
It’s funny…I come from Entrepreneurial family, and yet, until seeing this, I never really thought about thinking of doing this to make a profit. I’ve been looking at it in terms of what the market can bare.
I’m CONSTANTLY struggling with lowering my prices so I can get the job, but then, if I do that, then I have to take on more jobs just to pay the bills.
I too did what Gyorfi did. When I started freelancing, I was charging per project, but found out pretty quickly, that that was going to work and switched to hourly. I too also estimated how many hours I would spend on the job, and gave an estimated quote based on that. I too asked for a 50% deposit upfront as a retainer and the rest due upon delivery of the project. I think most clients respect that and agree to it, but I also think that most clients have no clue what it takes to fulfill their objectives. Heck, most clients have no clue what they even want to do, and look to me to fulfill their creative goals. I try to put the burden back on them, by explaining to them that if they don’t have any clear objectives as to what they want, I’m more than happy to help them out, it’s just going to cost more. Most clients realize rather quickly that they need to go back to the drawing board and get a clear objective before proceeding. Some clients pay the extra fee. Others provide examples of what they’re looking for.
I had to learn the hard way that when a client says that I have “full creative control” and they want me to take the initiative and run with it, that’s a disaster in the making.
Great job Robin and John! I’m off to watch the “discounting” episode!!
All the best,
bE
August 27, 2009 at 6:01 pm |
Hey Benjamin,
I respect your experience and the fact that you willingly share it with us. Thankyou. I will be very interested to read what your views are on discounting.
One of the things you are really highlighting here is the critical importance of SHARED EXPECTATIONS i.e. going to great lengths to make sure that both the customer and you share the same expectations about your business transaction. We will cover this in much more detail in a future BOD discussion.
Best, Robin
July 28, 2010 at 11:43 am |
Thank you for this discussion which is timely for me. It is a dilemma I am currently facing: Value vs Volume. These discussions are important in the online digital world and in person, where we’re interacting with our customers. We need to place a high value on our products and skills to pay all our expenses, to generate cashflow and to enjoy the profits.
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