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Re: Resources For Consultancy Fees?

Postby Cyberdemon » January 4th, 2015, 6:24 pm

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warrenginn wrote:Have any of you held back on that final deliverable until receiving your final payment (or the check cleared)? What happened when that final payment never came? Did you hold the final database for "hostage" until receiving payment, or use the client's acceptance of the final database as acknowledgement that the project was complete and payment was due?


I had a client where I had gotten in the habits of sending over the deliverables and iterating them until they were correct (technical drawings). At one point, the client got the drawing they needed and decided they were not going to pay me.

Since he was not going to pay me, I was not going to return any of the collateral or documentation he gave me on his "top secret" idea until he did.

Instead of doing what a normal person would do with paying and moving on, they decided to hit me with a summons suing me for $10k for espionage and intellectual property theft, all kinds of fun stuff.

It went back and forth for a while and I had to lawyer up. Both lawyers realized the guy was off his rocker, and finally agreed to settle. What is annoying is the legal fees ended up being more than the couple hundred bucks for the last round of drawing changes. I had a provision in my contract/Master Service Agreement which said he would have to pay for legal fees in the case of us going to court, and I probably would have easily won. But it simply was not worth the time or money or headache.

Re: Resources For Consultancy Fees?

Postby rkuchinsky » January 4th, 2015, 6:44 pm

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Chasing money with lawyers is hardly ever worth it. Only the lawyers get paid at the end of the day.

Best way to avoid this is to carefully pick your clients. Saying no or doing due diligence up front is a far better strategy. In 7+ years doing this I've never had an issue getting stiffed. A few delayed payments from startups with cash flow issues but at the end of the day they always paid as they appreciate the work I do and understanding as believe in both my work and the client. Funny enough, but biggest issue/delay was with a huge multinational corp I had to chance for a long time. Smaller clients I get good terms (50% deposit and payment on presentation) and less issues even if the bills are larger.

I try not to make it an adversarial relationship. You may get paid but likely won't work with them again. Most of the time, if you have good clients, there is a reason they may delay payment. The more you can be understanding the better for the relationship. You can also then adjust terms next project to compensate (larger deposit, etc) and clearly explain it was due to the last payment issue that occurred.

R
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Re: Resources For Consultancy Fees?

Postby Cyberdemon » January 4th, 2015, 8:48 pm

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It shouldn't have been a big deal, but this guy was just on a high horse of self greatness, and when I started trying to go after him to get him to pay he flipped out.

I would've just let it go but once I got summoned I knew I didn't want to go into court so I had to pay the lawyer just to settle it.

Re: Resources For Consultancy Fees?

Postby warrenginn » January 5th, 2015, 12:13 am

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rkuchinsky wrote:Best way to avoid this is to carefully pick your clients.


Totally agree.
Warren Ginn, FIDSA
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Re: Resources For Consultancy Fees?

Postby warrenginn » January 19th, 2015, 2:52 pm

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I found another related article on FastCo Design which proposes alternate methods of "valuating" design services as opposed to merely charging by the hour:

http://www.fastcodesign.com/3038902/the ... y-the-hour

While some of the numbers the author comes up with are kinda outrageous, I do think it fair to consider the value of design to the client company and the return on that investment. Using comparisons to other costs that client may incur in their business can be a useful method of adding some perspective.

w
Warren Ginn, FIDSA
GinnDesign, LLC
http://www.ginndesign.com

Assistant Professor of the Practice, Industrial Design
NC State University
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Re: Resources For Consultancy Fees?

Postby rkuchinsky » January 19th, 2015, 3:57 pm

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Warren,
Thanks for the link.

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

R
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Re: Resources For Consultancy Fees?

Postby warrenginn » January 19th, 2015, 5:44 pm

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rkuchinsky wrote:Is it me, though, or is that article and the numbers inside crazy?


Thanks Richard,

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.

w
Warren Ginn, FIDSA
GinnDesign, LLC
http://www.ginndesign.com

Assistant Professor of the Practice, Industrial Design
NC State University
http://design.ncsu.edu/people/warren-ginn-fidsa

Re: Resources For Consultancy Fees?

Postby yo » January 19th, 2015, 11:55 pm

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I never quote hourly rates either.

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.

Re: Resources For Consultancy Fees?

Postby Scott Bennett » January 20th, 2015, 8:32 pm

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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.


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Re: Resources For Consultancy Fees?

Postby rkuchinsky » January 20th, 2015, 9:33 pm

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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 ;)

R
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Re: Resources For Consultancy Fees?

Postby Mikey_Uchiha » November 15th, 2016, 6:35 am


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When you don't know what to charge you can always research online their are countless websites that can help you and just might have what you're looking for example...
http://www.forbes.com/forbes/welcome/?t ... le.com.pr/
Always keep in mind that you should research thoroughly before making anything concrete or absolute.

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