Economy and Freelance rates

With the economy down, so many designers being out of work, and so many students coming out of school have any of you notice that work is being done for a significant “discount” than before. I ask this because I have notice that there is work being done for much lower prices on the freelance end. It seems more and more clients are being able to find people that will do work for extreme prices that under cut the seasoned designers. That is all great for the individual but it effect the ones that maybe running a freelance businesses or take our craft and skill seriously and value or skills and time. I am not trying to pick on the new grad because I think they need to pick up any work they can get and with that a lot of them do some really great work and are capable of running a great business. The economy has to be hitting all of freelancers hard as more clients are looking to get work for much cheaper prices. I would love to hear you thoughts.

EDIT I know that we have to change with the times, but how far do we take it?

There are and will always be those that buy and sell on price alone. Others for who have something more tangible to offer, price is not really a factor, and if anything the economy creates a larger need for good design. I’ve never been more busy, and if anything have had to pick and choose what projects I take. Never discounted.

R

Saw a quote on that clients from hell site the other day, paraphrased:

“I got another quote and you are 5 times more expensive than they are”
“Really? Who quoted you?”
“Firm X”
“OK, but we are 10 times better than they are, so we are actually asking for 50% less than we should”.

Haha Engio. I have actually heard something similar to that used in a contract discussion…

Agreed. Never been busier for me too.

I had a couple of clients who would question my rate and billing… I was busy enough without them so let them fall by the wayside. You find you move onto to bigger/better clients who understand the value of what you bring to the table and will pay for it no questions asked.

However, when you start out freelancing or even in business it is difficult to be picky as you don’t really want to turn work down but once you have built up a strong client base you can start to trim the fat as it were.

It seems to me that there is probably a bit of the old “Supply -&-Demand” factor going on as well. There are a ton of new grads looking for work in addition to experienced designers who now find themselves out of work, which equals large supply. On the other side, I know a lot of my clients have cut back on spending in all departments and are a lot more price-concious with the projects they do have.

We all know that there really is no substiture for experience, but not every potential client knows that (especially when faced with a high price tag in this economy).

I find all my clients don’t want me to use hourly rate and want a fixed quote. If I go over, I eat it. I almost never have a client that lets me bill hourly rate cause it’s open ended and they can’t budget for it. I almost always end up eating hours a bit.

I find all my clients don’t want me to use hourly rate and want a fixed quote. If I go over, I eat it.

Likewise.

I bill in design “phases”, each phase in the design proposal clearly outlines every aspect and deliverable. I estimate how long each phase will take me based upon the type and amount of deliverables. I maintain a timelog for each project, which I don’t disclose, but I use this as a reference for myself in order to continue to learn more accurate time frames as my career develops. Maybe I went “over” or “under” in one or two of the phases from my last freelance project, this way I can tweak the final price quote for the next project I work on. It constantly keeps you in check and up to date with your billing process.

So if a client asks for something extra, I create an additional phase, or add cost to the existing phase. This way, both client and designer are protected, everyone knows what they’re getting, how much of it, and when.

This is exactly what I am referring too. With the veterans I can see how this would be a busy time as you have a client base and it is your full time job, but when it comes to us that do freelance on the side that take jobs as they come (2-4 a year) this year seems to be a bit different. We seem to quote what we know our skills are worth and somehow the client finds someone that will do it for ridiculous amount less.

I bring this up as I had a client come to me wanting me to design Packaging, branding, and merchandising for a new product that they were creating. I gave them a quote, without a clear brief, that I felt was very competitive and they came back not interested and saying that they found someone to do a great portion of the work for a 10th the price. Now that is ridiculous!! Now I think of myself as being a pretty decently smart guy and know a bit about what our craft is worth (which I did under cut)so this sounds a bit absurd to me. If I tell the client that something will cost $1000 and he tells me that he can get it for $100 than either I am way off in my quoting or there are people out there under cutting to make a buck. In hard times like this I don’t really blame someone for wanting to earn money anyway they can, but how far can it go before it is a problem.

On the other hand though this could also be a client that may not know the price of good design and when they got my quote they were sticker shocked and asked their mothers friends son that is going to school for design to do the work for a few hundred bucks and there is nothing we can do about that.

I think the issue there is anything relating to the “Arts” side of things. It’s where the ubiquitous “starving artist” comes from. If people view you as a style jockey or someone who makes things “pretty” it diminishes their perception of the value of the work.

The key is to elevate design in the business, which it certainly has over the past few years, but not in every sector or company. Bosses and clients need to understand what you can do to make them big money. When the design makes a visible difference to the bottom line in a way other than product sales (reduction in tooling or material costs, improved time to market, expansion into new markets that the business didn’t see) then suddenly people will start to get why you are valuable and pay you more for it.

That won’t always happen in every business. Some businesses just want a pretty picture and their core business is all that will ever exist, so design can’t do much in those realms other than produce the imagery and styling that they want and move on. In that case it’s up to you as a designer and as your own boss to decide when it’s time to cut them lose and figure out what your next big move is.

A few more thoughts -

Variant, not sure what kind of design you are doing, but $15 an hour is ridiculous. That being said, the first rule of pricing is that you are worth whatever you are willing to accept. If you accept a job for $15/hr, then you are the one that is saying that is how much you are worth. You can’t blame the client.

Second, I think it is key that in offering your services, a designer makes it clear what they are charging for, and where the time goes, and hence what the value is. If you are presented with a project, with no brief or detailed deliverables, and come back with a quote of $1000 (or whatever), then of course the client may balk at the price. They have no reference and you have no model to explain it, other than it’s a number you just came up with.

To maximize your value, I always suggest in being as detailed as possible in any quote. Break down each phase into estimates of hours. Quantify deliverables. In the end, you can offer a per project rate, but it’s a lot harder for a client to take a $1000 quote with this kind of detail and knock it down to $100. With this detail in place, it’s easy to come back to low ball client response and negociate by removing phases, deliverables, etc. while keeping your rate constant.


R

I totally agree here. When I mentioned I gave them a quote with out a clear brief I am referring to not a clear brief on their end. I broke it down into different phases, what would be delivered in those phases, and quoted what I felt was needed to accomplish their needs. Now like I mentioned there was no brief so maybe all of it was not needed, maybe there was more needed.

When I look back I think some of it comes from picking and choosing the work that you take on. Some clients are a lot more open with communication than others. I think their are people out there tat just don’t understand the amount of work that goes into creating a great product or package. I also feel that there are plenty of designers that just don’t understand the value of our skill and like R mentioned we are worth whatever we charge. The only issue is that when someone low balls their rate it hurts all of us as the client is going to go with the cheapest rate.

R mentioned we are worth whatever we charge. The only issue is that when someone low balls their rate it hurts all of us as the client is going to go with the cheapest rate.

Those kind of clients tend to be not worth working with TBH. They might be late payers or they may not pay you at all. I’ve done jobs where I’ve been the most expensive, I’m sure R has too. As my management consultant ($1,500 a day) Aunt says when anyone questions her rate, 'If you pay ‘x’ you get them, if you pay ‘y’ you get me.

Honestly, I think $1500 is pretty reasonable for a full 8 hours of work… but my rates are not low.

A friend of mine who used to represent a lot of web creatives (kind of like as an agent) says that for 10+ years of professional experience, he would have he clients bill at $300 an hour… he also says that ID’ers chronically charge to low.

I think it depends on the product and the country - we footwear designers in the UK tend to charge a bit less than, say graphic designers. There are some consultancies in Italy that charge an absolute fortune. There is definately a ‘going rate’ for footwear design in the UK, to the point that many agencies I signed up with whinge that we are too expensive and can we not drop down to the going rate. :unamused: , (one of the many reasons I’ve got no patience with agencies).

I think it will recover, it’s no surprise that something as fluid as freelance design pricing should drop in a slow economy. It certainly has before.

Two years ago our company worked with a stable of established full-time freelancers. However our clients have been pinching the pennys tightly, especially early/middle of '09. Scope was changed to bring design costs down across the board for almost all projects. We’ve done what we can to hold on to these people because they’re awesome, do great work, and are great to work with. But you can’t always get what you want and we couldn’t provide these guys with enough work for them to make a living. Now all but one of them has taken full-time employment at an agency to make ends meet. It’s not the best solution, there’s a reason that they freelance, and often it’s because they find something stifling or infuriating about working a ‘regular’ job. But we’ve all got to eat.

The cascade effect of this is that we’ve had to find new people to work with, or work with our old people under limited circumstances. It’s been a freaking disaster. We have yet to find a new (to us) freelancer who has delivered acceptable work on time. Twice the designer just fell off the face of the planet. We continue to work with some of our old contractors where we know each others expectations, but they’ve got full-time jobs so can only work a few evenings and weekends. This has lead to communication breakdowns and deadlines missed by a country mile.

As soon as out clients loosen the purse strings again (and we’re seeing indications that they are already) things will improve. We’ll be able to pay more for good talent, the good freelancers can quit their day jobs (again) and all will be well in the world.

While there are big gorillas in the room of eLance/craigsList/etc based offshoring and new crops of underfed art school students every year, there is still no substitute for quality. There are people who don’t get it and never will, and for them the $10 logo designs are where they will always be. We aren’t in competition with them unless we choose to be. For the clients that recognize that you get what you pay for, we’ll be there.

Well stated…

less than graphic design? ouch. i’ve never hired or worked with a firm in the UK, but from my experience in Europe and with the US, I’ve found most rates across the board for pros pretty similar. wonder why the UK is so low (at least for footwear)?

R

You guys are technical athletic designers. I’m more fashion, I do more own label. And I’m one of the pricier ones… :laughing:

hmm. interesting. didn’t realize there was such a difference between the athletic and fashion markets in terms of design pricing. either that or maybe here graphic designers are just underpaid by comparison :wink:

R