How to handle pricing as a freelance designer

My estimate would be around $40-50/hr for you.
But you will have to determine for yourself based on the kind of projects you are looking to do and what clients would be willing to pay given your experience and specialization level.

I prefer working with hourly contracts where you simply track all hours worked through a piece of software that includes screenshots and written memos, so the client always has an overview of the progress.

For fixed-term contracts I factor in 10% extra work due to iterations needed to be done. You can consider the amount of iterations/revisions you offer to prevent putting in too many hours. I charge non-creative activities such as research and communication at 70% of my hourly rate. You can work with an upfront fee to ensure professional conduct and establish some trust with a client. I also advise you to include a Terms & Conditions document stating your rates, cases where your rate or project fee may be changed, the scope of the project and its deliverables, file handling and legal disclaimers.

If you are a design engineer with any competent level of tooling design experience, there’s no reason you shouldn’t be charging $100+/hr. The product engineers I’ve worked with have ranged in price from about $85 on the low end for an experienced CAD jockey with solid part design knowledge, to $250 on the high end for someone with extensive experience in mechanical design and part analysis.

  1. It feels like your full-time job is “getting in the way” of your side work.

Jonnie Hallman, Brooklyn-based designer and founder of Cushion, a forecasting app for freelancers, couldn’t shake his passion for independent work even if he tried. He’d race home after his day job so he could maximize time spent on side projects until it became clear that change was in order.

“I’d catch myself daydreaming about side projects constantly. All of a sudden, 5 p.m. – 2 a.m. became ‘my’ time. I’d try to accomplish as much as I could before returning to my real job the next day,” says Hallman. “When the side projects started taking off, I found myself being recognized far more for that work than anything I did at my full-time job.”

  1. You’ve learned everything you can in your current role.

There’s a reason why it’s rare for recent graduates to start out as freelancers. Sure, it’s doable, but the experience and professional skills you gain when working in a creative role for a company or agency are irreplaceable.

Becky Simpson, illustrator and founder of paper-products store Chipper Things, comments, “I think working for a company you believe in, whether it’s a few years or a lifetime, is a great thing and shouldn’t be seen as ‘lesser than’ working on your own.” Back when she was in college, Simpson knew she wanted to work for herself eventually. She adds, “That’s part of why I studied graphic design—I figured it would be a flexible career. I really loved my design job, but started to feel disconnected from my work. I felt like I was bursting at the seams with ideas and I wanted unlimited time to pursue them.”

  1. You’re okay with living frugally.

I have a frivolous success metric for my first year of being on my own. It’s whether or not I can continue to buy makeup from Sephora, versus switching to less-expensive Ulta. (Yes, this is ridiculous but it’s measureable.)

Visual artist Hannah Rothstein left a communications role to focus on her own projects, including the humorous book Yoga for Bros, full-time. She shares, “If you’re thinking of quitting, make sure you’ve saved up several months of living expenses and are comfortable living frugally. If you like to make it rain, quitting a steady job might not be the best idea for you.” She adds, “Before quitting, it’s also a good idea to decide what your ‘oh-shit point’ is. This is the financial threshold that, once you dip below it, signifies it’s time to start looking into your Plan Bs.”

  1. You’ve started to feel more excited by risk than you are fearful of it.

Leaving a full-time job to start your own venture is a form of entrepreneurship, and entrepreneurship is just-plain scary. You’re putting what you have on the line and a wide range of skills, from branding to sales, are required to make it all work. Taking on such an endeavor is indeed a risk, but if you’ve planned well, it’s an intelligent risk to take and it can be extremely exciting.

Simpson shares, “I kept thinking ‘if not now, when?’ When you’re holding back for no reason other than just being scared, it’s worth taking the risk.”

  1. You’ve planned accordingly (task-wise and money-wise).

From building up clientele in advance of your last day at the full-time gig to fleshing out contingency plans in case freelancing doesn’t work out, your business plan is comprehensive and answers all of your “what ifs”. Even more importantly, you’ve saved a few months’ worth of cash to help cover unplanned costs during your first few months in business.

Hallman shares, “I’ve had countless surprise expenses that I didn’t plan for, so I found myself scrambling when I thought I’d be coasting. Even though I’ve been solo for a while now, I still have those ups and downs, but I’ve learned to deal with them.” (Quarterly tax filing is a whole different ball game so be prepared for that too.)

  1. You’ve been planning this switch for three months or longer.

We all get frustrated with work from time to time, but just because you’re over your current role or company isn’t a reason to go out on your own. Wanting to pursue projects that you’re passionate about should be what’s driving you (not hasty decisions).

Rothstein says, “Quitting spontaneously is seldom a good call. However, if you’ve been feeling the slow burn of discontent for months, sense a deep-seated desire in your core to do your own thing, and have thought about what you’d do if things don’t work out as planned, it’s time to go for it.” She adds, “I knew it was the right decision.”

Even though the idea of leaving the security of a full-time role can be scary, remember that you’re not the only one trying it out! According to an independent study commissioned by Freelancers Union and Elance-oDesk, 53 million Americans are working as freelancers (a number that’s said to rise in coming years). That means there’s a huge network of freelancers and resources out there to help lead the way.

Hallman adds, “Surround yourself with a good support group of people in the same position, help each other out, and learn from each other. You’ll find that the freelance community is strong and full of people willing to lend a hand.”

I’ve only been fully independent for about 2 years now but something i learned pretty quickly is that when you’re not an employee and there is no long term commitment from an employer, hourly rates can be a trap.

They make sense for straight forward 3d modeling services and when the client brings a significant amount of the solution to the table and you’re just helping them execute.

When you’re doing real design work and solving real problems and lending real specialized knowledge pricing should be based on the real value of your contribution. Most companies/clients will pretend this is impossible to quantify because this model is not in their best interest but it’s not an impossible calculation and you can cover the unknowns and the speculative part of the projections with an advance/residual pricing model.

As mentioned previously, an important thing to remember is that the value of your contribution to a fortune 500 is not the same as the value of the same contribution to a startup.

As one of my mentors said to me “don’t sell hours, sell solutions. There is a limit to what people will pay for hours, but solutions are much more valuable”

I just submitted a proposal, selling “design solutions” rather than hours. Funny/strange/sad how designers of all stripes will undervalue their work, or be susceptible to others devaluing their work. I didn’t fall into this scheme, this time. Broke out the project into four phases with ‘a la carte’ pricing, but made sure that the first two phases were more or less mandatory in order to get the project completed. The last phase was CAD which would be estimated and budgeted on an hourly basis rather than a lump sum. As a manager now I have direct insight into how long projects take even the most efficient designers, and the sad truth is that a lot of freelancers are making very little compared to where they should be.

However - we shall see what the potential client says in return. In which case, the lunchbreath graphic rule shall apply:

I came across this video a few weeks ago, and then I lost it. Luckily it resurfaced on Facebook. I cannot for the life of me find a youtube link, but this is really good and summa up my approach to pricing. You need to know what your hourly rate and speed are to create a proposal, but after that I look at it like this:

Found it:

The Futur (that youtube channel) has a bunch of other great resources and videos as well!

Anyone have any experience/tips on budgeting the CAD portion of a project? Where despite best intentions, the full extent of the 3D problem solving can’t be fully understood until you are elbows-deep in a model?

My example is that I’ve completed the first two flat-rate phases of a project (initial research and scoping, and narrowed-down to two solutions worked out in sketches and AI). I now need to estimate the CAD portion.

My hypothesis is that I still should follow the rationale of the first phases and hope to get ‘close’…its either that or start with an estimate and then bill it hourly with a “not to exceed” fee…which more or less amounts to the same thing.

A very good reference to know how to speak to your audience. Speak in their terms. Similar to the “What was your most successful product” thread.

He did take some liberties with GP. Although he did correct himself in one case.

Found it:

Awesome video, absolutely brilliant. And a great way of thinking bigger.

“You guys sell what you can do. I sell what the world can do.”

Anyone have any experience/tips on budgeting the CAD portion of a project? Where despite best intentions, the full extent of the 3D problem solving can’t be fully understood until you are elbows-deep in a model?

Wondering the same thing.

In that video above, has anybody tried those tactics for pricing a CAD job?

Or what other approaches have worked well?

The more complex the assembly or geometry you will be working on, the more hours you will need to put in and that works somewhat exponentially. So you have to go by experience and for unknown territories count for the exponential effect. For any fixed price I base that on a number of hours with a given set of deliverables and number of iterations. When in excess of the hours, the contract agreed upon states that these hours will be paid extra.

So, here’s the price, unless I take too long, then I charge you extra?

Who signs that contract?

It sounds super juicy, but I think ralph is right, and it comes back to the relationship you might have with the client. This is similar to the tactic I ended up doing - over-estimating the CAD hours, talking to the client about what I’ll be doing, and reiterating that the goal is to not use all the time/hours listed. The CAD budget thus becomes “do not exceed” and if there is indication that we will, we have another conversation about why, and how much.

Breaking up the CAD into smaller bite sized portions “a la carte” for the client also seems to work - its easier to budget hours that way.

How is that conversion not entirely off-putting to your client if they did not change scope?

You - Hi. I misquoted. I want more money.

Client - How is that my problem?

You - I apologize for my mistake. I didn’t understand yada, yada, yada.

Client - Again, how is that my problem? I hired you because I know even less. You are the professional. Why didn’t you see yada, yada, yada coming? It’s your job.

At that point, what exactly do you say? I’m not a professional? I haven’t a clue how to do this job? If you don’t pay me … ? As I see it, the only response the client has to any excuse is a pink slip. I’ve been in both places, it is not comfortable. I would agree you have a chance of going to the well with a long-term client, but only once. If someone ever came to me a second time, even on a different project, it would not turn out well.

Yes, that would be terribly off-putting. If it was my mistake, I’d suck it up and eat the hours, as I think that would be the professional thing to do, which hopefully would preserve the relationship. But the to-not-exceed quote, and the a la carte menu, is supposed to prevent uncomfortable situations like those.

I’m fortunate to not rely on client work for my bread-and-butter however so I could be hopelessly naive.

Thanks for posting that, it’s such a good way to approach pricing. The company I work for recently had a client blow up in anger when they were told that they would have to start paying for my time (design is sold for free normally :angry: - it’s a sheet metal workshop), and demand that it remain free or they would get their product manufactured elsewhere. It’s amazing how many clients expect something complex to take an hour or two and only cost them a few hundred bucks.

Im just engaged in a freelance job and i think this couldn´t be more real, also the sales potential of solutions is far greater than what you can acomplish with and hourly rate. Havn´t though about it this way. THANKS