Pricing your creative services is one of the most-discussed topics among freelancers. There is no one right way to price your creative services — there is no industry standard. There are many factors involved in pricing, and many pricing strategies. It’s best to choose one method — what you’re most comfortable with — and stay with it. The secret to effective pricing strategies for creative freelancers is to follow one method mostly. While it’s good to have flexibility, utilizing a variety of pricing structures is confusing for you and your clients.
For you to know how to price your design or illustration, you need to understand what pricing is all about. It’s meant to be a value-for-value exchange.
From the client’s point of view, pricing is about cost and expenses. They need a piece of visual communication and are paying for its creation.
From the freelancer’s point of view, pricing is about lifestyle. How many hours in a day or month do I want to work? How do I charge enough to sustain my business and my household yet not be working all the time? How do I charge what’s right so that I don’t under-price but also don’t over-price?
The 5 most popular pricing strategies
Time-based. Whether by the day or by the hour, time-based pricing is where most freelancers start out. It makes sense, since most employees are compensated based on number of hours worked. We’re used to it, and the business world is used to it. The key here is to charge appropriately. You may start out in the $20.00/hour range and, as you grow in experience, increase your rate. If you position yourself as a consultant rather than an entry-level, mid-level or senior-level creative, you generally will be able to charge more per hour, and be able to work less hours each week. With time-based pricing, you increase your revenue either by increasing your rate or the number of hours you work.
Project-based (per project). Another common pricing method is to charge by the type of project. For instance, the design of a 6-panel, letter-sized brochure is set at a standard price. A 6-page non-commercial web site is set at a standard price. This means you’re charging for the type of work, not the time you spend on it. Clients like this, especially when you offer a menu of projects. They also like it because you’re not charging extra for add-ons or changes. Unless you get very detailed in what’s included in the price, you can end up with less revenue and a lot more work than you expected. Example of a detailed project pricing description: Logo design: includes 3 initial concepts, 1 refinement and 1 final design.
Package-based or bundled. When working on a number of related projects, packaging or bundling may be right for you. Package-based pricing is popular with web designers and some portrait photographers. An example of package-based pricing is creating a web site plus a specified number of branded social media graphics and an email newsletter template as a package deal. Package deals are often used to attract new projects and clients. They provide the client with an array of related visual communications pieces for one low price.
When pricing a visual branding project, I bundle all the items into one package: logo and its variations, graphic guidelines, email templates, business card and identity system, website, collateral… The total fee for the bundle is about 20% less than if I were pricing each deliverable separately. This reduces the cost of the project for the client.
Value pricing addresses the worth of your work to the client, not the cost of the work to you or the number of hours you spend on it.
Value-based. This method requires that you discuss the full scope of the client’s needs up front so that you can offer an informed estimate. Value pricing considers the scope of the work, its use (where, and for how long), the rights transferred to the client, the need date, the complexity of the project, and even the degree of difficulty of the client. You also will want to learn about the client, their goals, their audience, there position in the marketplace. Value pricing addresses the worth of your work to the client, not the cost of the work to you or the number of hours you spend on it. If the client is expecting to yield several million dollars on their product launch utilizing your designs or photos, you price based on a percentage of that figure.
Retainer. In situations where a client has an ongoing need for your creative services, a monthly retainer may be the best option. The client pays a set fee in advance each month, and you work toward using up that fee on whatever projects and tasks are needed. For example, if you regularly design and distribute a newsletter for your client, a retainer becomes regular income for you. Retainer agreements should be specific about the work involved and the expected number of hours. Anything not included in the retainer scope will be billed in addition to the regular amount. Retainers are usually paid in advance each month, and last 3 months or more. The benefit to the freelancer is that you can count on the fee each month and it’s paid in advance. The benefit to the client is that there is a lot of flexibility as to the type of projects covered, and the fee is standardized.
Retainer agreements are my current pricing model. Because the work is ongoing and is paid for up front, my revenue is stablized. I do work on al la carte projects using value-based pricing, but my focus and preference is the retainer.
Each method described above has advantages and disadvantages. You should choose what works best for you. If, after a year or two, you want to change methods, do so, but let your current and past clients know in advance about the change. You can say something on the order of: As of (insert date) I will begin utilizing a project-based pricing structure for all new and existing clients and projects. And then describe what changes you’re making.
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What is your preferred pricing method? What are the benefits and disadvantages for you and your clients? Share your thoughts in the comments.