September 12, 2021
Pricing your work as a graphic or brand designer can feel super confusing!
We love talking about pricing and helping designers understand their worth and the transformation value they have to offer.
So what’s the answer to this question? BOTH! yes, both 🙂
We still believe hourly rates are important to use as a foundation.
Without it, you have no frame of reference. If you are solely basing your work on ‘value-based pricing’ you could end up making $5 per hour (we’ve been there).
We are advocates for first knowing how many hours it will take to complete a design project, because if you start guestimating value-based prices, you may seriously underestimate your value.
We’re guessing that if you’re confused or uncertain about pricing you may not quite understand your value yet, so chances are you may unintentionally undervalue your work.
Plucking figures out of the air may work for some people, especially if you have a good sense of self and you a heightened sense of your value and worth.
However, we know for a lot of designers this is not the case.
We don’t want you to underestimate the value of an hour with YOU.
And, we don’t want you to get to the end of a project and discover that you only made $5 per hour.
That’s super depressing and a sure-fire way to start resenting your business.
What we recommend is to start with the hours (and start tracking your time!!! Yep we know ‘yawn’—but you really must if you are to truly get a picture of how long things take YOU).
Just because someone tells you it takes them 10 hours to create a logo, doesn’t mean that you will take the same amount of time.
It’s like reading speed. We are all different. We all work at different paces. We all have different processes AND different value we bring to the table.
So start with the hours and then add Value to your pricing. Add it as a percentage. We go one step further and add value AND complexity as a percentage.
This percentage can be quite variable, depending on YOU and the CLIENT and the PROJECT.
The potential for business growth and also the level of creative or technical special sauce that you have to offer.
The pain in the arse factor!! The red flag factor 🤪 🚩
It’s also the level of creative genius required for you to untangle overly complicated projects. That requires patience and dedication and the skill for taking the complex to the simplex.
For more on this with pricing examples for designers, you really should download our pricing guide. It’s FREE!
We also have the most wonderful tools in The Academy to help you work out your business profitability, and whether you are lowballing your pricing.
We can help you work out whether you can actually make a living from this at your current prices—and not just any living, a living that includes an actual lifestyle.
Financial rewards are great but not at the expense of your life.
And there’s only a certain amount of time you can push yourself to your limits working crazy hours and not prioritising your wellbeing and health.
[00:00:00] Kris: Hello and welcome to podcast number 40. We are talking all about pricing. We love talking about pricing, but in particular, we’re talking about whether you should be charging hourly rate pricing, or should you be doing value based pricing?
[00:00:18] Donna: It’s a big question. and we get asked this one a lot and the answer is really interesting. Isn’t it? Kris?
[00:00:25] Kris: It is. Yeah. The answer is both. We believe you should be doing both.
[00:00:30] Donna: Absolutely.
[00:00:31] Kris: The reason why that is, there’s a couple of reasons, but we believe you need the hours as a foundation, you need that foundational price. We call it the baseline price. You need that foundational price, because otherwise you don’t have any frame of reference for the amount of time you’re putting into a project. And if you’re basing your work solely on value based pricing, there’s a real danger there of plucking a figure out of the air that may feel good. It may feel like a lot. It may feel. You know, like a fair price, but you’re really just making it up. And in the end you might actually be worth working for $5 per hour.
[00:01:13] Donna: Yeah, absolutely. It’s guesswork until you put some work in and work out what an hour is worth with you. The value of an hour with you is worth, then you really are just guessing, like Kris said, it’s plucking it out of mid-air and yes, it might feel good or it might be based on somebody else’s prices. But what we’d love you to do is not be looking and comparing yourself to others and what they are pricing, but really understand your value and where that stands. So, there’s got to be a foundation and a starting point.
[00:01:45] Kris: Yeah. So we’re big advocates for tracking your time and knowing how long projects take you because you are individual, just because somebody else does something in 10 hours, doesn’t mean that you’re going to do the same kind of project in 10 hours. We’re all so different. And if you’re not understanding how long things take you, you can really end up. We’ve been there. We’ve, we’ve been there where we’ve had the project. So, you know, did we make even $5 per hour on this project?
And I’m sure a lot of you can relate because those projects can blow out. Especially if you’re doing a project you haven’t done before, or if it’s a little bit of an unusual one, you really do need a formula for pricing. That’s going to work for a wide variety of projects and yeah. Plucking figures out of the air may work if you have a good sense of worthiness and a good sense of self-belief in your value, but we’re guessing that if you are struggling with pricing or confused about it, you think, am I right? Am I too high? Am I too cheap? If you’re having those thoughts, chances are, you’re probably undervaluing your work. So value based pricing may not be the way to go for you at this stage. Yeah.
[00:03:02] Donna: Yeah. 100%. And I think the other thing is, not understanding the value of time with you. It can go the other way as well, because your experience might be more than that of somebody else. It might be more extensive. You might arrive at solutions a lot faster. And that’s quite simply because you’ve had all these years experience prior that enable you to arrive at that solution faster.
So it’s really imperative that you really understand the value of that time with you. And I know it’s like a great big yawn ‘oh no’.. Are you going to ask us to fill in time sheets? Well, yes, we are to get that understanding. So once you understand where your time is, where your time sucks are, what’s happening with your time, how fast things happen for you, what processes really make you tick and you can get through quickly and what processes within the creative process that you have make you lag a little bit. And you struggle with once you really understand that you really turn that knowledge into understanding how much value there is. So it’s an important step. People don’t like to, I’m one hands up. I do not like tracking time. It’s a painful, but it’s so valuable. It’s an asset. When Chris said, when you’ve got that confidence and really understand your worth, not only just understand your worth as a designer and your, your creative intellectual property, but really understand how you tick and how you work so valuable. Isn’t it?
[00:04:31] Kris: Yeah, it, it really actually doesn’t take that long to track. It’s probably an extra few seconds, really like maybe 30 seconds to put that little line entry, how long you just spent I just did two hours pop that in, you know, it’s very critical Intel that you are gathering in your business. And I just wanted to go back to a point you mentioned earlier Don about why should you be punished if you’re super fast and super experienced and you’re getting faster and faster and more efficient, or you’re tapping into your previous ideas and research you’ve done over and over again for different projects. Why should you be penalized if you’re fast?
[00:05:12] Donna: Yeah that’s a deep well of knowledge right there. Yeah.
[00:05:16] Kris: Exactly. So if you’re just doing hourly rates, that would mean you would actually be charging less over time. But really, as you progress in your career in your business, you should be able to charge more. So it doesn’t really make sense. So how do we get around this?
So yes, you need to know your hours. How much time does it take you to do a particular type of design project? But then what we do is we add a value percentage on top. And if any of you have downloaded our free pricing guide, we talk about this extensively. If you haven’t downloaded it, you really should go and download it. We’ve actually given it a little rejig um recently. We really love how clear it is. We hope that it’s even more helpful now. So if you want to re-download it, absolutely. Go ahead and download the latest version.
[00:06:06] Donna: We are crushing on our own pricing guide. We got to this update, just recent update and we’re like, okay we want everyone to know out there who has already downloaded the pricing guide. If you downloaded during September, 2021. It’s good to go. It’s the one we’re crushing on. If you were prior to that, feel free to go and grab it again because we’ve made some updates to it. And it’s really, really clear crystal crystal clear because we were getting questions coming in all the time about pricing, and we thought, well, let’s add that to the pricing guide.
Let’s make that a little bit clearer because this topic is essential for you to have confidence in. This is the one, this is the topic. How do I price that? How much am I worth? How much is that project worth? What’s happening with this project that enables me to charge the value that I am worthy of.
And these questions all relate back to you understanding an hour of your time. And then on top of it, like Kris is just about to launch into is the transformation. Or, there’s another factor isn’t there Kris? There’s transformation or complexity factor. So we’re just about to talk about that now, but it’s so essential that you get on top of this from the get go. So go and grab that pricing guide if you haven’t already.
[00:07:22] Kris: Yes, because in the guide we talk about, well, it’s not just value. We like to add, we like to add complexity as well as value because you know, there are projects that are really complicated for a number of reasons. It might be a complicated kind of client, might be a red flag kind of client, or it might be just a really convoluted kind of project where it’s going to take your special kind of genius to unravel it and simplify it.
And you should be rewarded for that. That is his value right there, your expertise in getting that succinct, beautiful solution. So that’s complexity. So it can be those oooh, do I really want to work with this client? You know, that kind of feeling plus the value. That’s pretty straightforward. It’s like, how transformational is this project going to be?
Absolutely. We love the idea that as you progress in your career, as Kris was saying before, you will get more and more experienced you the well we’ll get deeper and deeper and you will have this beautiful ability to dissect and transform a brief, a client with their brief, so, so beautifully and that needs to be rewarded.
So that transformation is the most powerful thing. Like creating a logo for a company, pretty damn transformative. That’s a real catalyst for that brand. So that needs to be rewarded.
So, we call it the T and C value. So it’s the transformation and complexity value. So you’re going to add that as a percentage, essentially, on top of your baseline price on top of your foundational, hourly rate price. And so transformation can cover quite a few things like Donna was talking about.
It’s like how much value you offer, like your special sauce, your experience and all that sort of thing. But it’s also about the project itself, because a logo might take the same amount of time as some other kinds of project, like same amount of hours as a brochure, but one is going to offer more transformation than the other.
So some are for short-term events and it’s not really going to move the needle for the client’s business, but then some projects like a logo. That is hugely transformative. It’s going to help grow your client’s business. It’s going to help establish their presence in the marketplace. Like it’s a very different kind of value.
So we want to want you to look at the transformation and the complexity and add a percentage. So you might add 10% or 30% or 50% sometimes. Like, you know, if it’s a really red flag client, you might want to up that percentage. So it’s up to you. You get to decide. And so when we see people who are asking, how much should I charge for this? How much should I charge for that? Well, we want to give you some ideas on what to charge, but it is so individual as well. So don’t get too hung up on what other people are charging. Don’t get freaked out if you think you’re too expensive, don’t get freaked out if you think you’re too cheap, just start to be aware about it. Start to track your time. And we have some incredible resources in our academy, we’ve got the design and prosper academy. If you haven’t heard about it, it’s our 12 week transformational group learning program for designers in business with loads of business resources.
One of the modules that we cover is design for profit, which is all about understanding your numbers because when you understand your numbers, that is where the big shifts happen in a design business. So we have a process for pricing and it actually ends up meaning that nobody’s charging the same amount, because it totally depends on your business model.
[00:11:04] Donna: Yeah. And I think that freaks people out a little bit because they’re like but she’s charging and he’s charging and they are charging this amount of money. So shouldn’t I be charging that? Well, there’s definitely a ballpark in the air, but it really is so unique and individual to you and how you work and what you offer and where you are at in your career and where you are at with your niche and the level of demand that you are in.
And isn’t that exciting? That we are in control of our own business and our own pricing, and we don’t have to be dictated to by others. I just love that whole philosophy. Yes. There’s a formula that everyone can apply, but it ends up being so unique, unique to you, unique to your business.
And to me, that’s really empowering. And one of the reasons that we go into business in the firstplace is to run our show our way. So it’s definitely something that you need to be thinking about and using the right tools to arrive there so knowledge is power, like Kris said know your money. What’s that quote, Kris about being measured.
[00:12:07] Kris: Oh when you can measure it, you can manage it.
[00:12:10] Donna: Yes. I love that quote. Um, thank you for that. To us, this is the power of understanding the money and to be able to measure and understand what’s going on. So that you’ve really, really aware and what it does for me, it creates an enormous level of confidence because when you are asked to quote, you, don’t sort of go into a bit of a jelly mess about, oh my goodness, what am I going to here? The confidence is there. The understanding is there, you have the knowledge, it’s powerful. You’re able to quote with confidence and know for sure that what you are going to deliver equates to the price that you were about to charge that client.
And that confidence is palpable. Clients pick up on that. And we’ve noticed that, and we’ve lived it. We’ve breathed it with our businesses. When you are confident about what you are charging, clients will not even hesitate. They’ll be like, where’s the contract. Where can I sign?
[00:13:04] Kris: It becomes undeniable because when you understand your pricing with relation to how you want to live your life, the lifestyle that you want, the goals you have, not just your financial goals, but your lifestyle goals.
When you’re pricing is integrated with all of that, it becomes undeniable. You go, well, I can’t possibly charge any less than this, this is a fair price. I am being rewarded for my time. I’m providing value. It’s a whole ecosystem. We often talk about the design business ecosystem. All these different parts need to work together.
And if one part is not working, there’s another lever you can pull to make sure that it’s all starting to flow together. And, you know, financial rewards are great, but not at the expense of your life. You know, you could charge a certain amount for a logo, but if you’re having to do 10 of them per month to achieve your financial goals, well, that’s not sustainable is it? You know, you’re going to be burnt out. And there’s only a certain amount of time that you can push yourself to the limits and Donna and I did that in our early twenties. We pushed ourselves right to the limits and we were young and fit and, and we had a lot of energy and we could do that
[00:14:22] Donna: Still young. Still fit Kris.
[00:14:24] Kris: Still young. What am I saying? You know, but we have been those invincible twenties, you know, like you feel invincible, right? You know, nothing can happen. You’re sort of untouchable. You can work the 80 hours a week. You can eat rubbish. You can, you know, exist on crap food and all your coffee
[00:14:42] Donna: Or oh, no food, just coffee. Just keep powering through.
[00:14:45] Kris: Keep powering through with little sustenance. But the more time goes on and we have the wisdom of those years behind us. We can see what’s happening. We can see what’s happening with our friendship circle, even. Our friends and family, people who are our age. There’s only a certain amount of time you can push yourself. Yeah. To really hustle like that, like you can do it for a few years. Sure. We don’t want you to have to do it at all, but you can do it.
[00:15:12] Donna: I wouldn’t want to do it at all. Now that we know better, we do better. And that’s the thing. When we have this understanding, why hustle? Why do all those long hours? Why push, push, push, push. At the expense of the cheque like you were saying Kris, it’s not all about that financial reward, there has to be balance as well. So yeah. It’s just important to get it right. It’s right for you. How you’re working. Yeah. Yeah.
[00:15:37] Kris: Yeah. Because we want you to have this beautiful lifestyle that comes with the financial rewards as well. It’s all integrated and we’re seeing where the wheels are starting to fall off with people in our lives. You know, we don’t want that to happen for you. It’s like let’s hustle, hustle, hustle. And then all of a sudden, you know, people, people having strokes at 32 people were getting cancer diagnosis, it’s terrifying, because we’re not looking after ourselves. And so it’s just, it’s not worth it. And we want you to have this beautiful balance. Yep..
[00:16:09] Donna: Yeah, yeah, absolutely. And just coming back to our beautiful pricing guide that we’re so proud of because of the recent update. And we’re proud of it before, but it’s even better. So get your hands on it. Um, in there are some starting points, so if you are completely lost as to where to start charging, how much to charge for a package. Because clients love packages. So there’s some examples in there some starting points. So you can go, okay, here’s a ballpark. That’s the ballpark now, where do I fit in that ballpark? Where do I see my value and an hour with me? How does that work and where do I fit? So it’s an awesome resource for you to actually get started just to start unpacking it and start really thinking about it and get out ahead of it. What we would love to see you do is to actually spend some time, we’re all about the beautiful big CEO morning once a week, where you have a ritual where it’s all about working on the business, not in the business and sit down and work out your pricing, work out your pricing on the jobs that you want to be doing, the jobs you want to attract into your business and get clear on it before you’re asked. Before you’re asked to quote on it. So you understand what the value is of the work that you want to be doing, the work that you can do for other people. So that you’re ready. You’re ready. You’re ready. As soon as you get asked, I know, I know what to quote, so it doesn’t shut you down and pinch you off and block you from even providing a quote. So yeah, get out ahead of it. Get our pricing guide, spend some time, track your time, understand how you work and, and then think about the transformation factor for a variety of different projects that you’re either doing now or would like to do in the future and start working it out. So you’ve got it ready, a beautiful pricing kit, ready to roll out. It’s all there in the pricing guide for you to start with. So get your hands on it and get started. .
[00:18:01] Kris: So you can head to our website designandprosper.co you can sign up on our homepage. Or if you want to go direct to our free pricing guide page, it is designandprosper.co/freepricingguide. And we’ll also link that in the show notes for you. So you can click through. So go and get your hands on that one. And just before we go, we wanted to mention that in a matter of days, doors are closing to the academy, the design and prosper academy.
[00:18:29] Donna: Yes, we are so excited. We only offer the academy twice a year it is our big signature offering. We are so passionate about the academy and we are so proud of the content and so excited to share it with you. So yes, doors are closing 10:00 AM on the 15th of September. So not, not far away hit next, next Wednesday. Yeah. Pricing’s just one piece of the puzzle. So one piece of this ecosystem that we share in the academy, and we would love to be able to help you out with that. If, if you’re thinking wow this is all too much. We’ve got you.
[00:19:06] Kris: So, head over to designandprosper.co/theacademy, and you can find out all the goodness there. So good luck with your pricing. Have a beautiful day, everybody.
[00:19:18] Donna: All right. See you guys.
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