Monday, June 29, 2015

A Working Method for Pricing of Work

Had a few questions on approaching pricing on work and here are my thoughts...

1. Never talk money first...always allow the client to lay out their needs first.
2. Access what the solution to those needs will entail, including any and all concepting, revisions, meetings etc.
3. Outline this process to the client with a timeline that matches their deadline.
4. Then ask how much the client has set aside in the budget for this portion of their project.

Before you ask this question you have to have a value you have already accessed to you overhead expenses, your experience, and your talent...The first of these can mathematically be calculated, the latter two not as easily.

1. Add up all of your business expenses:
a. rent for the portion of space you use ONLY for work. So for example a spare room in your apartment or house that is not used for living in. Measure it's square footage and divide it by the square footage of your apartment. Then use this ratio to divide all of your utility expenses.
b. supplies
c. equipment upkeep, upgrades, software subscriptions...
d. health insurance...
e. any funds use require specifically to run your mileage in specific cases

2. Once you have a monthly total, double this total amount. This ensures that you are not only breaking even but making funds to invest back into the business.
3. total up your remaining expenses that cannot by written off on your taxes, but that if you don't pay them you'll starve and be out n the street...
4. Next access what the going rate for the services where the client is located is.
5. Honestly measure your experience level to the experience level of the best of the best in that region. If you have the same experience as the most experienced contractor, you can afford to bill the same... if not, look to bill a reasonable percentage of that
6. Use the same method regarding accessing your talent.

Soooo what does this look like? Hypothetically... for say a room in your apartment you call your studio

Monthy business expenses:

Rent + Utilities = $500
Supplies = 100
Equip & software = 100
Health Insur = 175
Misc. = 100
Advertising = 200

Total = $1,175
Double it = $2,350
living expenses = $700 (food, car, car insurance gas, clothes, savings account, remaining rent etc...)

$3050 divided by 160 hrs in a month = $19.06 per hr - this is merely on operating expenses, investment back into your business and keeping food on the table. This is also your gross profit. Before taxes and social you'll need to pad this. One way to do this is by accessing your worth as a creative and what your value to the client actually is in the region you live in...

For example, The going rate for an independent creative with a 5 - 10 years experience in NE Ohio is $35 - 50 per hour
If you have superior talent and the client list to back it up up that rate to $50 - $100 per hour..

Now this is to determine an hourly rate...there are many projects that don't come in by the hour, but by the project. So access how many hours you intend to spend on the project and then give them the total rate....