Ultimate Pricing Guide for Creative Business Owners

(Updated with Hourly Rate workbook (June 29, 2017), scroll below)

Pricing has always been an issue in my creative pursuit. As a self-taught designer, I started with no artist or designer peers or mentors, which means I had nobody to ask about pricing. As an aspiring designer, other designers or creative business owners barely know my name. I however, used this to my advantage. I requested their price list, learned what they offer for how much.

I learned many lessons along my design career, met many different customers, got praise for low price (which we don’t want), or complain for charging too expensively (which we don’t want, either!). I learned how to defend my price tag, lower it down, and increase it.

This is an almost 1,500 words article meaning it will take around 10 minutes relaxed reading. Pin image below to save and read when you have more time 🙂

Ultimate Pricing Guide for Creative Biz Owners + Free Workbook to Calculate Hourly Rate | We Bloom and Grow

 

Problems with pricing a creative product

Creative products are results of creative effort that is intangible, meaning it is difficult to measure and price. While there might be typical rates for particular services such as branding, illustration, etc., there really isn’t any pricing standards. One designer can price $3,000 and book her schedule a whole year ahead, and another might do $300 and still get “I think that’s too much” from a potential customer.

Things to consider in pricing

1. Difficulty or complexity, details of design

While it’s difficult to measure effort, you can also compare each of your designs complexity or difficulty, and make a scale out of it. You can also make range of those complexity levels. In most cases, the more complex, detailed, or sophisticated a design, the more efforts you’ll make. This, in turns, allows you charge for a higher rate.

2. Duration of working

The more time you spend to (rationally) finish an artwork or design, the more you can price your work. Not only related to the volume or complexity of the work, this might also relate to the medium you are using, oil painting for example, it takes a longer time to dry, while you may make similar efforts as in watercolor painting.

If you’re working with clients and do full time block for each of them, you should also take this into consideration. Make sure that you also have planned it well that the project doesn’t run longer than it should.

3. Your experience

Now, this also do the talking. When comparing yourself to your fellow designers, don’t forget to consider this. Your experience can bring you to a better and more mature design, and you might already have your raving fans, or your name may have already gained popularity. This is the results of your hard work. You earn it, a better planned and/or executed designs, and higher rate.

4. How much you want to earn

If you are running a business yourself or freelancing, you might find this formula useful.

  • First, find the number of hours you will use for creative work only. You can use this formula:

Hours for creative work in a year = 75% x Work hour per day*(Days in a year) – Work hour per day *(Public holidays and weekends + Your personal days off or leave)

Where did the rest 25% go? It’s for administrative stuff, baby. Phone calls with clients, trips to printer, replying emails, calculating the dollars. You may hate these stuffs, but believe me, if you’re working alone, you need to consider these activities when you’re setting a deadline or scheduling works, because they really take time. Underestimating these may cause late submissions, overwhelm, and stress, or even losing clients.

  • Now you’ve got the number of hours, calculate your expected yearly income:

Expected yearly income = Expected yearly salary + All business cost

  • Lastly, now you know how much each of your working hour values

Your hourly rate = Expected yearly income / Hours for creative work in a year

  • How much you should charge = Expected yearly income / Hours for creative work in a year
    Where:
    Expected yearly income = Yearly income expectation + All living cost, utility, saving needs
    And, assuming that you work 6 hours a day
    Hours for creative work in a year = 75% x 6*(Days in a year) – 6*(Public holidays + Your personal days off or leave)

Hourly Rate Workbook

Screen_shot_2017-06-29_at_3.29.14_pm

Want to know how much each of your work hour values? This workbook will help you decide how long you should work per day, how many days a week, and more.

Cross my heart, I won't send you spam. Plus, you can unsubscribe anytime. Powered by ConvertKit

My little pricing secret

Besides considering all the stuffs I mentioned above, I also use one key in finalizing my design fee. I will go with a value I would accept to do some stuffs, then add 20% of it, if I still feel comfortable with it, I will add another 20% until I feel a little bit scared of it.

For example, if my first price for my design is $100, then I will add 20% of it which is $20, that makes it $120. If I’m still feeling comfortable with this price, I’ll add another 20% which makes it $132. If I still feel confident, I’ll add another 20% which makes it $145.

Now that I already feel a little bit uncomfortable with this rate, I’ll put this price tag on my design. This way:

  • I won’t charge lower than what I feel is worth working. It’s easy for us designers to underrate our own creation.
  • I won’t charge too high that I can’t defend my price. Because I’m just ‘a little bit’ scared, not ‘freakin out’, then I will still be able to rationalize my rate. This is also a technique that you should master. To be, feel, and look confident with your rate.

Plus, it’s easier to discount than to increase price, even you can blow huge discount in events like Mothers’ Day, Spring Sale, Black Friday and many more. You can also make bundles of your services or products where you really drop the price into a value that you think is better for all of them.

For example, you initially priced your product for $500, but apparently too many customers think that it’s too pricey. Many of them said it should be priced at $250. After comparing with competitors and rethinking about it, you found that they were right, then you can make a bundle of 3 products for $750-$800.

It will sound as if you’re making a great discount (around 50% off) while actually it’s at that price!

Educating your audience

This is one really tough thing to do. Many people don’t realize the value or effort or process of a design. If you’ve been around for some time, you might have read “Clients From Hell” posts. It has a hilarious collection of clients sayings, showing that mostly they don’t have any ideas on what design is all about, be it about the money side or design side.

Because not everybody understands that changing particular object’s color (especially when it’s watercolor painted) or relayouting or replacing some stuffs with another is not always one click away. Same with the price.

When your client says that your fee or price is too expensive, there are ways to respond, but my favorite is to ask for their budget and offer them a smaller scope of work worth their budget. This way, not only you don’t lose your client at once, you will get an understanding of how much your client values design or is ready to spend for design.

If you’re just starting, you can adjust your pricing from this information (as long as it meets other aspects in pricing, such as your experience, design difficulty or complexity, etc.). But if you have been in the area for some time, but your customers keep on saying that your charge is too high and you really can’t afford this price level, you might either improve your design or service quality or need to adjust your branding and marketing. You might want to revisit your target market and marketing strategy.

Increasing your price

Although this is a tough thing to tell your clients, sometimes you really have to do this. Be it because of increased demand, new compulsory feature on your product or service, upgraded skills or technique that you are using in your design, or simply increase in production cost (such as materials or software subscriptions).

There are ways to help clients or customers cope with your increasing price. Keep in mind to include this when telling your loyal or previous clients about your price increase:

  • Thanking them for purchasing from your business, trusting, or supporting your business (whichever fits your business; genuinely, of course)
  • Notifying them few months in advance, for them to anticipate
  • It’s also worth offering them limited ‘special spots’ before the price rises, or even special price as loyalty discount. This is optional, but may block out your date before price rises and create a sense of urgency and them left feeling special.
  • Telling them that it is annual in nature also helps because inflation is real and chances are your customers are aware of it, too.

What other tips you’re using when pricing? Is there any other aspects of pricing that you feel you’re having a problem with? I love comments, just write and I’ll reply!

PS: If you like what you read, I would love a little share 🙂 Thank you! 

Ultimate guide to price product for creativepreneurs or creative business owners, complete with hourly work rate calculator - We Bloom and Grow

Hourly Rate Workbook

Screen_shot_2017-06-29_at_3.29.14_pm

Want to know how much each of your work hour values? This workbook will help you decide how long you should work per day, how many days a week, and more.

Cross my heart, I won't send you spam. Plus, you can unsubscribe anytime. Powered by ConvertKit


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