Is it me, though, or is that article and the numbers inside crazy? Sure, you could base your rate on some extrapolation of your client’s business, but how does that make sense or have anything to do with what is involved in the job on your end?
Might as well make something up, like your rate is equivalent to the price per pound of all the copper wiring in your client’s house. Make as much sense.
And if the design budget for rebranding is $500,000 I surely hope it’s more than a logo and some new business cards.
Comparisons make sense, if they are directly involved with ROI. Price of design = X units sold or at sold at higher price
Like I said in my post, the numbers are outrageous. But I would like to see more discussion regarding how we might make a more powerful argument with regards to that ROI. Of course this depends on so many criteria, but attempting to quantify the value good design adds to an organization’s bottom line is a worthwhile endeavor. I rarely ever quote an hourly rate because that number can be so misleading to a client who may not fully comprehend exactly what happens during each of those hours and the talent and expertise that’s being brought to bear.
I’d like to hear more from other designers on their methodologies (maybe it’s not something that should be discussed on a public forum), but I think it’s a worthwhile discussion.
Things like hours and sketches have limited value. A solution has almost unlimited value however. As designers we are in the solutions business. Sometimes solving problems the client didn’t even know existed.
I use an hourly rate though to help calculate a flat fee though. A friend who was a former account manager recommended adding 10% to that rate with each project to see how far it could go. Solid advice. I was following it until I got to my current role where I don’t really have the mind space to take on extra work other than for Icon which is more of a passion project type of thing.
That’s why royalties are so nice, since it says design is worth X% of the sales price of the product. That’s very easy to get one’s head around, because it’s how all costs are calculated- materials are 40%, packaging is 5%, design is 3%, and so on. If you do a good job and it sells better, you get paid more.
As long as you’re working for clients you can trust (ideally you should be anyway), and the cash flow works, it’s a nice arrangement.
I don’t think there’s anything bad about quoting an hourly rate. Shows where the money is going and sets up the turnaround expectation of how long it will take. Also makes it clear how much it will cost on extra changes and how much you are worth in experience to other professionals they pay hourly like their lawyer, accountant, etc. Ultimately most of those other costs (materials, production, etc.) boil down to hourly rates for extraction, assembly, anyhow.
I use a combined approach usually for larger projects. Outline the budget by phase with hourly estimates and rates, but invoice as a fixed cost. This way I don’t have to track hours (I’ve worked enough to know how long it takes), the client can see where the money goes (I didn’t just pull a number out of my head, and harder for them to lowball, as I can go back to the budget and ask what hours they’d like to reduce). If they take your word about how long things take as you are the pro, there’s very little negotiation tactic on their end. Also allows me to give a bulk discount for a new client or special project on the bottom line while preserving my rate for future work. Upping the rate also easy and clear as s year to year cost of inflation.
End of the day, there are many strategies. What works for you may not work for others and it depends on your type of clients, projects, industry, etc. one thing for sure is that as mentioned better to push your rates and see your limit even if losing some work, then under charge.
Also, pick work and clients you like and the rate doesn’t matter as much mid rather make less on work I love then more on work I hate. Best to make more on work you love, of course
