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Making Money in Design – How to Charge and Get Paid

Making Money in Design - How to Charge and Get Paid

What is the one thing every freelance designer and developer needs to know? The answer is simple … How to get paid for your work. We are in designing and building things because we love it. We also need to make some money to cover our needs and desires. In this article, we will discuss this whole subject of money. We will dive into tips on how to charge for your work and also how to present your proposal so you will get paid what you are really worth.

Money are not taboo

You will never get paid if you can’t talk about money. For many people, not just designers, money are taboo. Many of us are uncomfortable talking about this topic. And, instead of trying to figure out what caused this feelings, we rather try to avoid talking about money completely. Unfortunately, if you want to be able to stay in the business for longer period of time, you need to get comfortable talking about money.

When you decided to work in design, you’ve entered place where money are changing hands. Sometimes in high speed and amounts. Hopefully, you are one side of the trade, the person who will get paid for his work. We should make something clear right now. Whenever you think you are doing design, you are wrong. What you are doing is selling design and providing service that creates a value for your client. Thus, you should get paid for the value you’ve created. Are you comfortable with this perception of your work?

Part of the skill set

When you decide to make a living as a designer, instead of pursuing design as a hobby, it is important to make get used to talking about money. You can think about it as your soft skill. It is another part of your skill set, just like sketching, wireframing and prototyping. It is also important to work on this skills just like any another skill you use in your craft on a daily basis. Then, when your client will ask you on how much do you charge, you will have no hesitation to give him short, clear and confident answer.

Just like with many other things, it is also true for money that confidence creates confidence. Meaning, when you speak with confidence about your price, work and process your client will also have confidence in you. Then, there is much higher chance that you will get paid what you are worth. On the other hand, if you can’t talk about money your client will not be able to have as much confidence in you. Yes, you read it right. It is not that your client will not want to trust you. He will not be able to do that.

It doesn’t matter how much he will try, there will be still something telling him that you might not be the best choice. We can call this intuition if you want. As a result, you will either not get paid what your work is really worth or you will not get the job at all. This or that, you will still lose. The only solution is get comfortable talking about money and how much you are charging. Then, you will get paid the right price because your client will be able to have confidence in you. Also, keep in mind that your confidence will influence your ability to charge fair price.

Better base for pricing

When I started in design and web development I got great advice that helped me a lot in terms of charging for my work. This advice was “if you go too high with your price you can always negotiate down, but you can never negotiate up.” We will discuss negotiation later in the end of this article. Take a minute and think about this advice. You may find it useful. One thing that’s important for creating a base for your pricing and you need to know about it is that there is no silver bullet working for everyone.

It would be amazing if there was some one-size-fits-all approach to charging for design work. Unfortunately, there are too many factors such as level of your skills, quality of your work, expertise, experience, geography, type of clients you work with and so on. These factors make creating this type of solution almost impossible. We also can’t ignore the law of supply and demand. In certain places and certain time, demand for design services can be higher than supply, or the other way around. Therefore, what works for one designer may not work for another.

The problem with undercharging

The more we paid for something, the more we value it. Also, the higher the price is, the more likely you will care about it and keep it in good condition. This is one of the issues with undercharging. When you charge less for your work, or give discounts, chances are that your client will perceive it as something cheap. And, he will behave in a way that’s congruent with his perception. What this means for you? When you undercharge, it is like telling your client that your work has little value.

You need to understand price and value of your services are in direct proportion. Great example is volunteer work or working for free (don’t do that). In both of these cases, the people you worked for will have no problem using your time as they wish. They will steadily request some adjustments and changes. If they one day decide your design is not good enough, they will take it down and fire you. We have to remember that if you will not value our time, no one else is going to do that.

Can undercharging be avoided? I don’t think so. I think that every designer has to go through the process of trial and error to find the golden way. Meaning, there will be times when you will undercharge and there will also be times when you will overcharge (these situations will not be so frequent). After a period of time, you will start to see patterns and get enough experience to set your price right, or close to it. It is all just about practice.

The last thing to mention, when it comes to undercharging, is that there is one thing no designer, developer or freelancer in general should ever compete on. This one thing is price. The problem with trying to compete on price and undercharging is that there will always be someone willing to work for less money, or completely for free. Competing on price is that kind of race you will never win (fortunately). Instead, I suggest that you go full-speed and compete on quality, fit and value. Focus on these three factors and charge so you get paid what your work is really worth.

Charging for value

There are many different pricing “strategies” that promise to help you figure out exactly how much should you charge for your work. These strategies are often built on formulas calculating with your time, expenses, supplies, utilities, your markup and other factors. Are these formulas useless? No, not at all. These formulas will actually do exactly what they claim. They will help you figure out how much do you need to get paid to survive from month to month. This is also the problem.

These tested formulas will only tell you what amount of money you need to make to stay alive. There is nothing wrong with knowing this critical number. Not knowing your minimum rate or even ignoring this rate could soon get you in trouble. However, there is a big difference between making minimum rate and surviving and thriving. The first option is synonymous with the term “starving artist”. The second option is synonymous with … Well, anything you want that requires money.

If we take into account the previous paragraph, one possible conclusion is that charging minimum rate is not the best option. What’s more, this type of rate depends on time you spend on the work. It is scalable only to some degree. You have only twenty four hours per day and you also can’t use all these hours strictly for work, at least not for a long time. Therefore, we need to find something else we can get paid for. This why we should base our pricing on value we bring to our clients.

Let’s take a look at one example to illustrate this approach to charging for your work. Imagine you are working on two web design projects. One is landing page for sport event. Second is small website for local small business. Let’s suppose that both projects will take you the same amount of time. Are you going to charge the same price for both projects? If you were to charge based on time, you would. However, you are now basing the price of your work on value. Therefore, you are not going to charge the same price for both projects.

Well-designed functional website can bring that small business on the corner new customers, increase its profits, improve its brand and so on. On the other hand, website for sport event will function mainly as source of information for people interested in attending the event. The majority of these events are free of charge, making any profit is not a goal. Let’s also mention that website for that small business will be in operational much longer than website for sport event. There is no doubt that website for small business will have much higher value than website for sport event.

Another example can be working on two logo designs. The first logo is for local sport team. The second logo is for new and very promising product line of international company. Which logo do you think will have more value? The first logo may help the team to build and strengthen relationship with its fans. It will also communicate its philosophy and team spirit. The second logo may help the company penetrate the market with its new product. This can potentially result in a lot of revenue and maybe even new strong brand. Are you going to charge the same?

We can think about many examples, but I hope that these two were sufficient to give you the idea of how charging for value works. There is one thing you need to understand. When you decide to charge based on value, focus on value your client will get. This is what you should get paid for. Therefore, it is important to have full understanding of client’s business. Otherwise, you will not be able to estimate the value client will gain from your work. It all starts with learning about client.

Research your options

With every project you will work on, there are two types of research. The first type of research is the one you do during your design process. Goal of this research is to help you gather information about users to understand them and create something they will want to use. You will get paid for this type of research. Ont the other hand, the second type of research is done for free (hypothetically). Goal of this research is gathering information about your potential client. You will use these information to respond to client’s proposal and get the job. Where to start?

You can start with general information about your potential client. Start with information about his business, history, mission, brand, current and past products or services and also customers’ reviews. Then, go deeper. Is the client known for launching products on time? What experiences other people have from with him? Is there anything that could threaten or even terminate the project (acquisition, bankruptcy, etc.)? Is your client decision-maker? Are there other people involved in the project? Does your client have money to pay you?

You should also find out information about client’s employees you will work with. How much will they be involved in the project? Will they have power to make decisions? Will you work depend on them? Will they be responsible for any parts of the project? You also need to make sure you all speak with the same language and share the same goals and vision for the project. This research may look like unnecessary work, but nothing can be further from the truth.

First, this research will help you estimate a solid price. Second, it will help you sell the project with more confidence to your client in the end. Third, it will help you understand what problem your client wants you to solve. Fourth, it can help you build stronger relationship with your client and his team. This can result in another work in the future. Fifth, it can also give you enough information to pack your stuff and run away from bad client and bad project.

Understand client’s needs

Without understanding client’s needs you will never know how much should you charge and get paid for your work. You will also never be able to design anything that will work and bring value to your client. Fortunately, most clients will approach you with at least some idea of what they want to get from the project. If not, find out what needs and desires your client has on right on the first meeting. Then, estimate a price and benefit for each of them. After that, figure out which needs and desires are must-haves and which are nice-to-haves.

Client’s desires and needs should be always congruent with project’s overall goals. If not, you should discuss either client’s needs and desires or goals for the project with your client. Otherwise, there is high chance that the result will not work as you and client expect. Figuring out what needs and desires are the most important will also help you adjust the budget and create a list of priorities for the project. Never start any project without this list.

Define your services

The easiest way to get paid what your work is worth is to make sure your client knows which services he is charged for. Not only should you outline all the parts of your process you will get paid for, you should also explain to your client how these parts are interconnected. Explain to your client how these individual parts are ordered and how each builds on the previous one. Also, make sure that client knows and understands which services he is not charged for.

If your client is in business, he will expect you to come up with this kind of outline or itemization of your design service. This itemization will also make your invoice easier to be accepted. Detailed list composed of individual parts of your design service with precisely divided sums will always look better than invoice with one item and one big number. When your client will see this list, he will also be less likely to try to negotiate the price because he will see all the work you had to get done.

In case of web design, another good practice to make your life easier is creating some sort of chart or spreadsheet and specifically outline what are your responsibilities and what not. Meaning, you may design the website and build the front-end, but not the back-end. Or, you may do the design and coding, but not SEO optimization. Or, front-end and back-end. Also, will you publish or deploy the website? Will you take care about purchasing the domain and hosting for your client?

These things may seem like a no-brainer to you. However, your client may have different opinion. Your client may also have previous experience with web designer who took care about the website from the first sketch to uploading the source files on hosting and redirecting domain. Your client may easily the same service from you. Sure, it is just an assumption, but the same is true for thinking the opposite is true. Cover your back and invest five minutes into creating this spreadsheet.

The danger of being too good

Why do you think your client hired you? What is the thing you will get paid for? One of the common answers is your time. This answer is completely wrong. The truth is that your client is paying not for your time, but for the solution to his problem. Unless you miss the deadline, your client often doesn’t even care about how long did it take you to solve the problem. He just wants to have the solution delivered on time. This is something you should consider a good thing. Why?

There are two main reasons for taking this as something positive. The first reason is that your proficiency and efficiency plays against you when you want to get paid for the time you spent on the project. It is simple. The better you are, the less time you will probably need to get work done. Is it fair for you to get paid less than someone else because you are better? Is it fair for you to get paid less because you saved time of your client?

When you charge for time, you are basically answering both these questions with yes. Sounds too hard to be truth? Imagine there are two designers working on project with same scope and requirements. The first designer is complete beginner. The second designer is professional with couple years of experiences. Sure, they will probably have different hourly rate.

However, the reality is that beginner designer will get paid for higher amount of hours than professional. Where did the professional designer make the mistake? He is charging for his time instead of for his skills. Unfortunately, charging for time is not scalable. Charging for time also soon ceases to reflect the level of your skills.

The second reason why you should be glad that your client doesn’t want to pay for your time is that it doesn’t reflect the amount of time and effort you’ve invested in learning your skills. It is very unlikely that you were born with pencil, tablet or keyboard in your butt. It is also very unlikely that you were born with all the knowledge and skills you currently have. You have to invest a lot of time and deliberately learn all of it. How do you want to effectively reflect this important fact in your hourly rate in a sustainable way?

You can’t. Sure, you can regularly raise your hourly rate, but this is not sustainable. You can’t raise your hourly rate forever. Sooner or later, you will hit a plateau beyond which no one will be willing to hire you. In other words, you will “raise” yourself out of the market. It’s time to get real. Hourly rate is not the best way to get paid for your work what it is worth.

Quick note on small jobs

If you can, avoid doing small jobs and gigs. In most cases, small jobs contain similar amount of work and problems as bigger jobs. On the other hand, small jobs don’t have similar budget. Small jobs are also much more limited in the terms of time. When working on small jobs, you often have to squeeze your whole design process into two or three weeks, or even less. Unfortunately, every step in your process needs certain amount of time. Otherwise, project may fail.

Second reason for not taking small jobs or projects is that the term “small” is relative. Meaning, you may think that something is a small project that will help you make a quick buck. However, your client may think that the same thing is much bigger and will require adequate amount of your attention and effort. Please, don’t get me wrong here. I’m not suggesting that you give less effort and attention to less paid projects, nor that you should.

There are just certain differences between, say, design gig for small store or sport team and big project for established company. However, your client may not know about that. It is possible that your client will want you to work in the same fashion like you would with bigger projects. As a result, what looked like a project you will finish in a week will take you twice the time. Logically, the budget will stay the same. Conclusion? Don’t take small projects or accept that it will probably take much more than you think.

Four tips on getting paid what your work is worth

After we discussed better way for estimating your prices, it’s time to take a look at couple tips that will help you make this phase of work easier and smoother.

Avoid surprises

Necessary part of your design process is gathering feedback and working with it. The same thing applies to proposal. Every proposal should be taken as a rough draft. Nothing more and nothing less. Meaning, when your potential client gives you a proposal, it is just a beginning. What comes next is refining and iterating. Your goal is finding every potential roadblock and anything that may be missing and point it out. Remember, you are the designer here. You know what your work requires, not your client. It is high likely that there will be a need to make some corrections.

It is a good thing to always summarize what is included in services and what is not. You can also use the spreadsheet or list we mentioned earlier to outline what are your responsibilities and what will you deliver. This list will help your client understand what he is paying for. These responsibilities can include services such as wireframing, design, front-end, back-end, copywriting, localization, custom illustration, custom iconography, custom fonts, CMS customization, SEO, domain and hosting setup, website maintenance, etc.

Present, don’t send

Finishing your proposal is just the first part of the process. The second one is selling it to your potential client. Designers and developers are often making one mistake. They send their proposals via e-mail or some message service. This can be a great way to lose your opportunity to get interesting project. The key thing about proposal is that it is just a prop. You should always use it only as a tool to present and sell your services. Keep in mind that when you send your proposal to your potential client, you are immediately losing any control over the situation.

The benefits of presenting your pitch and selling your services is that you can work with reactions of the client in the real time. If you are presenting in person or over video call, you can literally read your client and adjust your pitch. You can increase or decrease amount of details included in your pitch by watching your client and his reactions. While you will be presenting the benefits of hiring you, you can spot the benefits are the most important and give them more time and space.

Think about proposal or pitching as any other presentation. I guess that you would never send your client pile of slides so he can go through them. You would always use these slides as a way to illustrate your ideas and as a reminder for yourself. Don’t do the same stupid thing when you want to pitch your services. Remember that proposal is only tool for your pitch, not pitch itself.

Explain the value and your (higher) price

There is only a handful of people willing to take the risk and pitch higher price than is average. Take every pitch as a chance to describe and explain the value your client will gain from your work. We already discussed how important it is to be confident about yourself and your price. The higher your price is, the more important the level of your confidence will be. When you charge higher prices, you need to sound like that. Your client has to think that you are the best fit for his project.

Great pitch is built not only on great communication skills. It also requires that you go more into the details. You have to explain why exactly should the client hire you. You need to show that you have a detailed understanding of what has to be done to get the job done. The last thing, never criticize or badmouth your competition. Don’t try to make them look bad. It will only backfire and decrease your chances of getting the work.

Avoid negotiation

We discussed negotiation in other article. My advice was always to never negotiate. This doesn’t mean that negotiation is bad. Personally, I love it! I think it is one of the skills everyone should learn, and not just to get paid more in job. Client who is trying to negotiate is also a good sign that you are charging the right price. In series about web design process, I suggested that you never negotiate. I still believe that. Unless you are not sure about your price, you can do these one of the two things when your client tries to negotiate.

The First thing you can do is simply leaving the table. Based on my own experience, many clients will try to negotiate just to test you. Then, if you will not break under pressure, they will accept your price. The second thing you can do is adjusting the services you will provide. If your client wants to pay less, you will do fewer things. Remove something from your proposal, explain the consequences and wait for client’s reaction. Your client will either hire you and you will get paid less but for less work, or he will go accept your initial price.

Never settle on lower price without taking away something on your side. Your client has to understand that for less money he will get less work. If you are a little bit afraid of losing the client, remember that he wouldn’t be negotiating with you if he didn’t already want to work with you. The last thing … Be comfortable with not getting the job.

Closing thoughts on how to charge and get paid

Money are probably the hardest and least discussed part of work. It takes years until you get comfortable talking about it. At least it took me years to talk about money. Many of you are in the business of design because you love design. However, you also need to get paid to survive and do what you love. When you get comfortable dealing with money, you will also be less stressed and have more energy for your creative work. Remember that the secret to get paid what you’re worth is knowing what to ask for, having the confidence to ask for it and be willing to walk away.

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