The no-nos of pricing design services

Let’s take a look at some of the practices we think you should never apply towards the way you charge for design projects.

This is an appendix to the article about pricing models. At Superawesome we are constantly tweaking our pricing strategies, and experimenting with everything, including rates and billing methods. We understand that there's no silver bullet here, but we continue trying to come up with the fairest way to go about compensating our services at any given time.

1. Rates determined by the client’s financial status.

Some freelancers and agencies will form their rates according to how well-off their client is. Honestly, this seems like a really unethical thing to do. Imagine if you were looking to buy a car, and the price was determined by your income. Our advice: don’t go there.

This raises the question of working with large clients who by default have more money than their smaller counterparts. Should it be considered ethical — and simply wise — to charge larger clients more than the small ones?

In this case we think it is only expected to charge more because there will be more bureaucracy, more meetings, politics and dealing with middlemen in general, and all that will eat up a lot of your time, so consider estimating in more hours, or tweaking the rate if you're in luck to be doing these projects.

2. Timesheet tampering.

While apparently extremely prevalent in the law industry, it should never find it’s place within your design studio, and that’s editing timesheets to cover the projected or necessary budgets for the certain time period.

This simply seems like trying to push a round peg through a square hole. If you have to resort to doing this on a regular basis you need to either:

  • recalibrate your rates, or
  • figure out an alternative to time-based pricing.

3. The “bait and switch”.

This is the practice where the estimate for the job is significantly lowered in order to land the project, and than during the process various “additional expenses” start creeping up, and usually these projects end up costing the same or even more than the honest estimates that were in contest.

There is a lot of this going on, and honestly sometimes it isn't even done on purpose. By nature both designers and developers are underestimators, and we tend to favor the best case scenarios when we are asked how long something will take, or how much it will cost.

4. Gut feeling.

Now, this one is for the less experienced out there, and usually turns out for the worse for the designer than the client. Even though all clients are expecting you to come up with some kind of an estimate (or a quote) for the job you are being hired to do, please do your best to refrain from using your gut feeling as a sole clue into how much you should charge for the job.

Giving out those estimates is very stressful, and a hard thing to do in the beginning of your career, which is exactly why you shouldn't rely on it. You don't have the experience, and even the ones who do and are quite comfortable doing so, should know better.

What you should do instead, is come up with a metric based upon which you will price your work. Be it the billable hour, day, deliverable, revision, etc. Any of those is a better approach than just blurbing out a number that seems right to you. If you're starting out, feel free to experiment, and be ready to be very, very wrong at first. You will lose money, but consider it a cost of schooling you need to pay in order to improve.

5. Be rigid.

This is a tough one because at the end of the day, business in about the numbers. It's like calories in vs. calories out, only it's money in vs. money out when it comes to your cashflow. You most likely can't afford to lose money on projects, but sometimes it can really hurt your workload — or even your reputation — if you are treating your business as a math equation.

We are in a service business after all, and this means we are working with people, and people are complex. In today's modern, global economy different cultures do business in different ways, and you need to be aware of that when you talk and handle financials. Also, clients are people too, so while some clients are very open and up-front about discussing financial matters, for some it's almost a taboo.

All in all, it's very important to know when to "act human" about a financial matter, and when to "be an accountant". It takes a lot of social skill, and reading into people, and how honest they are with you. You are going to get burned eventually, so learn your lessons.

Conclusion

  1. Strive to be fair, open, and honest, and hopefully that will be met with understanding.
  2. From our experience if a client isn't comfortable with your rates to start with, it will be very hard to make that relationship work, so know when to back down from a project, or end it.
  3. Don't sell yourself short, but don't expect to immediately demand rates you aspire to. There are a lot of nuances in this industry, and you need to earn whatever you want for yourself.
  4. Employ tactics and be strategic in your pricing and billing. Things aren't black and white in business. Knowing when to take a cut will often times repay itself in the long run, so be smart about it.

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