Pricing Creative services can be such a head rip. Wouldn't it be amazing if you were able to just create cool stuff without having to worry about the pricing and paperwork? Without the stress of number crunching and calculating?
Of course it would... but as we know - this isn't how the cookie crumbles.
Choosing the right pricing method for your creative services can make all the difference between a thriving freelancing career or a dying one.
In this post, we're going to take a look at different time-based pricing methods for freelance creative services, in a bid to help you decide what the best fit will be.
Hourly Rates
Exactly what it says on the tin. Hourly rates are applied and charged depending on how many hours it takes to complete the project.
As this is one of the easiest methods to use, it has also proven to be one of the most common - but is it best suited to your client projects? Let's take a closer look.
Pros
- Easy and fairly straightforward to calculate.
- Paid extra for working overtime.
- A simpler way to quantify and justify rates to clients.
Cons
- Fee focused - doesn't account for value or quality.
- Can be a source of conflict or confusion when clocking up hours.
- Client may be unsure what sort of fees to expect at the end.
Things to consider with hourly rates.
Are you considering the potential value?
Only setting a rate based on how long you think it will take to complete a project completely bypasses all other factors. For example, associated costs of resources, workspaces and tools needed to see the project through. As well as other individualised factors such as company size, usage and deadlines.
If you are working on a commercial project where the client stands to generate income or business in some way, pricing by the time taken alone, completely disregards the potential value you may be supplying the client with.
Put it this way; imagine you were to design a series of prints for a client. You have an hourly rate of £50 and it has taken you 8 hours to put the designs together, so you charge the client £400.
The client then goes on to use those prints across a range of clothing to sell in-store and online.
The client generates sales in excess of £2000 per month on the items featuring your prints (do you see where I'm going with this?) Leaving you short-changed - as you have only charged an amount based on how long it has taken you to create.
How are you recording time?
How will you accurately record time spent working on the project? Just wanted to squish this in here: working on a project doesn't only include creating, it also includes journeys you have to take, phone calls, material sourcing or any other activity needed to complete the project.
Review your rate regularly.
This part is true for all pricing methods because the fact is, are you start to tot up your experience, you will become more skilled at what you do. In turn, you may even find that projects will take you slightly less time to complete.
If your hourly rate remains the same with no inflation to reflect this, you are essentially punishing yourself for being more efficient.
Need some help setting a rate in the first place? Click here to use the free minimum hourly rate calculator.
Day Rates
Day Rates are based on the amount of days it takes to complete a project. This time based pricing method has slightly more 'give' than hourly rates. Let's get into it.
Pros
- You're able to determine what a working day looks like for you.
- Fairly straight-forward to calculate and set an overall rate for.
- Makes it easier to factor in ad-hoc tasks as well as direct work.
Cons
- May be a slightly higher chance of never-ending revisions.
- Likely to receive a lot of ad-hoc tasks just to fill time.
- Strong need to assert boundaries to avoid being contacted at odd hours.
Things to consider with day rates.
What your working hours are.
How many hours do you class as a working day?
Day rates give you the flexibility to choose what this may look like, although it may be seen as taking advantage if you're rocking with anything less than 6 hours.
That said, this is entirely up to you, as long as you know you are doing all you can to meet the needs of the project without totally burning yourself out or overworking in the process.
Setting your boundaries
No one wants calls at 2am. Or e-mails in the dead of night harping on about JPEGs or colour changes.
There needs to be boundaries established from the jump (with any pricing method really and truly) to ensure that there is no overstepping and that communication runs as smoothly as possible.
Clearly state your working/contactable hours to the client at the very start to reduce the likelihood of unwelcome contact in your downtime.
Overtime
Consider applying an additional rate for add-on tasks that have to be carried out after your working day is done.
If an additional rate applies, it's important you are completely transparent with the client about this before the project work even takes place.
Monthly Retainer
This is usually a flat rate based upon the months spent working on a project.
This could either be a one-off or rolling month by month, depending on the needs of the project and the type of agreement you have with the client.
Pros
- You're covered for the entire month.
- Gives more of an opportunity to build a great relationship with the client.
- Ability to decide what your working days look like.
Cons
- May be difficult to find the time to work on other projects at the same time.
- Can be a little trickier to secure monthly retainers as a payment method.
- Possible scope for never-ending revisions is quite high.
Things to consider with monthly retainers.
What do your working days look like?
Does your agreement require you to clock in and report to the client on a daily basis? Or will you opt for a working week with slightly less days to provide more time for other activities?
Or will you opt to provide work and have check-ins based on a particular structure as opposed to day in and out?
Not making sense? Let's take this scenario for example:
Let's say you start working on a project June 1st - predicted to finish by August 1st.
For example, by the day could look like:
Working hours: 10am - 5pm Weekdays
Feedback Meetings every Monday & Friday.
Completely based on the process could look like:
Concept & Strategy Board Feedback Session: First week
Check-in: Second week
First Draft: Third week
Both methods have some sort of structure, but they're based on different variables.
One is based on a set routine, whereas the other is defined by the project process. Give some thought to which of these structures may be a suitable fit for your working style.
Establish a revision cap.
This should be in place regardless of the set up and can generally be decreased through the hosting of discovery sessions at the start of a project. However there may still be the potential for never-ending revisions.
Especially during long-term projects.
Those endless revisions can easily bleed into your breaks and cause you work a tonne of overtime you hadn't originally banked on.
Make sure these revision caps are clearly communicated to the client from the start.
Building relationships
If you're going to be working with your client for at least a month, it would be a great idea to try and get to know more about them. The more you know about someone and what their goals are, the stronger and better suited the outcome is likely to be.
Key points to remember:
- Make sure you are incorporating potential value and experience in some way.
- That you are covered for your expenses and costs.
- That there is transparency on both ends with crystal clear paperwork.
- Consider the clients' potential to gain commercially and factor this in.
Unsure if time-based pricing is best suited? Need some help finding a suitable method? Click here to access the Pricing Method quiz.