How to handle pricing as a freelance designer

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

I generally provide proposals in phases with one of them being specifically called out as CAD. This is where I throw out a number based on how many hours I would expect something like this to take if it were very simple and straight-forward, then multiply that by 50% because there will ALWAYS be issues that come up requiring creative solutions along the way. That’s what you offer as compared to some CAD guru straight out of mechanical engineering school. I provide this phase as a fixed cost but it’s based on having a very detailed scope determined first. If things deviate from that based on client requests, that’s when you start either providing them fixed costs for those changes or charge hourly.

Having been on both sides of the table when it comes to ID work, I agree that proposals need to confine total costs to a fixed range as long as client doesn’t make wild changes along the way. There will be changes, of course, as that’s just part of the process. The goal is to capture those expected fluctuations in development in your fixed cost so there are no surprises. Good way to lose a client is to give them a bill for extra work simply because you didn’t quote appropriately.

And when it comes to taxes, just expect to take out half and set it aside. This can be used for SEP 401K plans, Roths, etc. For the most part, if you keep this amount in the bank and only pay yourself 50% of your actual income, Uncle Sam won’t be knocking on your door for more.

Most of the projects I do are long term (Couple of month and more…) which in that case I usually advise my clients to pay for each milestone achieved,as part of a predefined time table (i.e : counting weeks and days for each step) rather than payment based on an hourly rate.
This also secures that in any phase, if anything goes wrong or each on of the sides is not satisfied with the process for any reason, both the client receives a usable outcome while the designer is getting paid in a timely manner for what he already worked on.
It’s up to me to analyze the project at hand and evaluate a realistic time frame, so I stay effective.
The client pays for my quality of deliverable, rather than purely on the time I spend.
There is a risk to this approach, so I usually send a detailed SOW the defines everything before work actually begins, so there aren’t any bad “surprises” such as major changes to the design, request of additional jobs to fulfill or out of the blue requests that I may need to work on without getting paid for them.

I noticed that small startups find it hard to work in this way, as they used to work on an hour based payment with other contractors or employees (Programmers, UI designers etc. ), rather than timetable/ deliverable.
Larger companies or more mature ones prefer to work this way, as it sets a clear time table for them and a detailed explanation of what they’ll receive at the completion of each milestone.