Determining Profit and Personal Earnings
How will the business earn the rewards from all the value of its design?
You've got to know how and believe that it's worth it. By presenting the case that your process is a significant value for your client, your prospective clients will enjoy working with you because of it. It's worth the price. You have earned it. Here's how.
Because you've earned it, price your real value, keeping in mind your marketplace and your client's customary expectations. (Hint: They pay those professionals whose judgment they value pretty hefty fees, such as lawyers, accountants, tennis pros, psychiatrists.)
What are you worth? What should the return be on your investment in your business? Therefore, what should your reward be, and how should you earn it? Clients know. They say that "the experience of working with a designer is worth more than the products or services."
So the new rewards are increasingly coming from professional fees paid by the client for the value of the design experience and the result. Markups on products or hourly fees for services are both full of client apprehension, burdensome record keeping and just not sufficiently transparent to be respectable in a profession that deserves respect.
Premium brands charge like one. You've got the education and experience to justify that. Fees affirm your value. Your income is a justifiable return on your investment in your business, and better clients are accustomed to paying fees for consultant-style knowledge.
Economic models can be calculated that forecast time to execute projects and earn fees as compensation. The key to success with these models is your ability to specify the scope of work, and if the project 'creeps' beyond the initial scope, amend the scope and fee, or issue an "change order notice" to be compensated hourly.
These models also provide you and your clients several advantages:
- Fees affirm the value of design, more than hourly rates.
- Your day-rate reflects the convergence of your value and your expected annual income. Be intentional.
- The total fee can be invoiced in periodic amounts (e.g., $/month)
- The time necessary to record time is reduced.
- Merchandise purchased for the client can be priced more transparently. One method is the "most favorable price" (designer net) plus 5% - 9% for administrative costs. Yes, that's right! Net plus a few percentage points. That's transparency and respectability.
Better clients pay premiums for your attention, imagination, knowledge and quality. It all adds up to the distinctive experience they want from you and can afford. The quality of that experience is almost always remembered long after the price is forgotten.
You may never know what rewards you may actually deserve unless you plan for it, ask for it, and expect to get it. Remember the old adage: No Ask. No Get.
- Factors to Consider When Determining What to Charge
- How to Charge a Client: By the Project or the Hour?