Pricing

Q: How much should I charge for my work?

A: I have two young daughters.

Charlotte, my one-year-old, is just learning to talk. She repeats everything she hears. She doesn’t quite have the sounds exactly right yet, but she’s getting close. I know that “bata” means “bottle” and “kee ka” means “kitty cat.” She imitates people who have been talking for decades, and that’s how she’ll learn to talk. No parent teaches their kid how to talk through etymological discourse and verb conjugation. While it may be logical, it’s not practical. Kids learn through hearing and imitating.

Sidda, my three-year-old, has a pretty large vocabulary by now. She learned to talk in the same way: by imitating. She doesn’t know what some words mean, like “because” or “is,” but she says them anyway because that’s how the people that she imitates talk.

Once she got that down, she started to question some of the words she knows or hears. “Dad, what does ‘tart’ mean?” “Mom, what is an ‘insect?’”

Next, she started to experiment to see what would happen when she put words together in different configurations. Some turn out great; others are duds. For example: “Wanna know why I call clementines ‘times?’ Because I eat them all the time.” And so on.

What does this have to do with pricing? Well, dear design student, you may be grown in age, but you’re still a little design baby in experience. And learning to price is the same thing as learning to talk. Here are the steps:

  1. Imitate.
  2. Question.
  3. Experiment.

Step 1: Imitate

For your first paying gig, do what everybody else does: pick an hourly rate. There’s no wrong rate the first time; pick a number out of thin air. (Hint: that’s how everyone does it.)

I’ll start you off. Most professional designers and developers that have a few years under their belts charge somewhere between $70/hour – $120/hour. (Remember the hint. There’s usually no rationale for these rates, except that that’s what people have been charging for years.) Since you’re a student, you probably don’t have the skill or experience to compete at that rate, so something a bit lower will be more appropriate.

Start at $25/hour – $50/hour. It’s more than you were making at American Eagle last summer, so it’s a good starting point because you’re moving up in the world and your customers won’t feel like they’re being ripped off.

Do the job. Spend a weekend (20 hours-ish) designing and building that one-page brochure website for your friend’s mom. Earn $700 at your $35/hour rate. This is a happy ending to your first project.

Step 2: Question

On to the next project. Should you charge the same rate ($35/hour) that you charged for the previous gig?

Let’s evaluate what you gave up and what you gained. You gave up a whole weekend for $700. You could have seen a movie, played a video game, went to a club, gotten hammered, went on a date, or done anything of the things you crazy kids do nowadays. But instead, you sat at your computer and made a thing for someone. Was that worth $700? What does your gut say?

If your gut says yes, then $35/hour is a good rate for you (for now).

If your gut says no, then $35/hour is too low. So, what’s your weekend worth to you? $1,000? $1,500? $2,000? Let’s say you’d give up your weekend for $1,500, but not a penny less. That means your rate should be $75/hour ($1500 ÷ 20 hours), because you’d rather go see a movie for anything less.

If that feels too nebulous, here’s a tip: Instead of picking a dollar amount, think of something you’d trade. I call it object value pricing. If your friend’s mom wanted you to design and build a one-page website, would you do it for a fast food dinner? What about a new 42" TV? A new camera? That Ikea sofa you’ve been meaning to get?

Let’s say you would do it for the camera. A Canon 7D Mark II is about $1,800, so you could say you’d do the project if:

  1. She bought you the camera, or…
  2. She paid a fixed price of $1,800, or…
  3. She paid you an hourly rate of $90/hour (knowing that it would take you about 20 hours)

Do this a couple of times, and you’ll start to get a sense of a few things:

Step 3: Experiment

Once you start to develop this gut-level Spidey-sense about pricing, you can play around with things. I once had a customer that wanted to book me 6 months out. I didn’t want to commit so far out, so I said he’d have to pay a non-refundable additional fee—not a deposit, an additional fee—of $10,000 dollars to lock in the dates. He never responded to that email, but I found a check for $10,000 in my mailbox the next day that he overnighted. You’ll be amazed what people are willing to pay when they really want to work with you.

Here are some things you could experiment with:

The experiments are endless. But it all has to start somewhere. So, get to it. How much are you gonna charge?

Originally published on Medium for Dear Design Student.

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