What Should I Charge? First Understand What You’re Selling
What Should I Charge? First Understand What You’re Selling
Cameron Foote of Creative Business defines “getting pricing right” as “charging enough to ensure good profitability, but not so much as to lose a client to competition.”
Understanding What You Are Selling
One major obstacle for many designers is the belief that what you charge is related to your value as a person. Wrong!
First of all, it’s not about you. A prospect or client will often ask, “How much do you charge for a web site?” or “How much do you charge for a logo?” or “How much do you charge for a fill-in-the-blank?” as if they are buying a can of tomatoes.
Look at the way that question is constructed: “How much do you charge for…”
If you were selling tennis shoes, and somebody said, “How much do you charge for tennis shoes?” you wouldn’t say, “I charge $100 for tennis shoes.” You would say, “Tennis shoes cost $100.”
It’s the same with design services. It has nothing to do with what “you charge.” It’s not about you, and it never will be. Shift your mindset to think instead about what the product and the process costs. When someone says, “How much do you charge for a web site?” take the “you” out of it and respond with, “A web site can cost $X.”
You’re not selling your time
Time flies when you’re doing your creative work, especially on the projects you really enjoy. In fact, you may not notice how much time you’re spending. Some designers don’t realize they’ve spent much more time than they had initially allowed for. They don’t dare divide the number of hours by their hourly rate, only to discover they’re making little more than minimum wage. That’s a rude awakening. And it’s all the more reason to track your time.
It’s a cliché, but it’s true: Time is money. The more time one project takes, the less time you have for another, and the less money you make.
Many designers price by the hour, and for all the wrong reasons.
First of all, it’s easy to price your services by the hour. It’s clean, it’s orderly and it doesn’t require much math. But it is not to your benefit, especially in the long run.
This is because the faster you are and the better you get, the more money you will make. A logo might take you five hours today when, two years ago, it may have taken twenty. You get better—sometimes a lot better—with time. But if you charge by the hour, as you get better, you earn less. Does that make sense?
Also, design is a creative process. Not only is there no rule about how long it should take; there is a certain amount of inspiration involved. You probably don’t know how long it will take for your best ideas to come. They could come right away, or they could take a while. Should you be paid based on how long it takes for your ideas to come together? Is that how you should determine how much money you earn?
What you are selling is your years of experience, the effort you’ve expended developing your skills and talents, and your resulting expertise.
What you are selling is peace of mind. Not many clients understand design, so they don’t know what they’re buying, and they know they don’t know. So it’s your job to make them comfortable and safe in the knowledge that you do understand and will take care of everything. If you do that, the good clients will choose you, even if you’re the highest bidder.
What you are selling is your brain, your attention and your creative imagination applied to a client’s specific problem, and that has a value. It’s not an objective value; in fact, it’s highly subjective, which makes it challenging to quantify. That’s why it’s easier to charge by the hour.
That value—your price—is based on several factors, including geographic location, timing, what the market will bear, the urgency of your prospect’s need, aggravation factor (or lack thereof), and what it’s worth to you to do it or your level of desperation (hopefully low to non-existent), just to name a few.
Your responsibility in estimating each job is to determine what that value is for each project. Once you have made that determination, though a series of steps we will explore in this chapter, you present that to the prospect for their feedback. Then, through conversation, you either come to an agreement about the value of your services, or you don’t. It’s that simple.
The value of your work
There is no intrinsic value to your work. Its value is based on perceptions. The perceived value of any project comes as a result of positioning your services properly through your marketing and sales process. You have to understand your client well to know what he or she will find valuable. Maybe he cares most how well the project is executed. Or that you meet all the deadlines. Or that you deliver quality that exceeds her expectations. Is your client looking for quality, ease, time saved, lack of stress? Once you know what’s important to each of your clients, you can position yourself to provide exactly that. And they will pay for it.
Value comes with service, not design. Design has become a commodity. They can get it anywhere. They can do it themselves. (How many times have you heard a client say they just got Photoshop?) Your competitors are up and down the pricing spectrum. There will always be someone whose price is lower, so you must understand what value you add, and use that to position your services.
Customer service will make you stand apart. You add value by anticipating needs, by under-promising and over-delivering. That’s why they appreciate it when you take the lead. They want you to be in charge so they can focus on other things. That’s how you sell peace of mind through design.
What Should I Charge First Understand What Youre Selling - To learn more about this author, visit Ilise Benun's Website.
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Designers spend an inordinate and disproportionate amount of time determining pricing and fretting over it. But there is no right or wrong answer when it comes to pricing. It’s all completely subjective and dependent on a wide variety of factors.
Cameron Foote of Creative Business defines “getting pricing right” as “charging enough to ensure good profitability, but not so much as to lose a client to competition.”
Understanding What You Are Selling
One major obstacle for many designers is the belief that what you charge is related to your value as a person. Wrong!
First of all, it’s not about you. A prospect or client will often ask, “How much do you charge for a web site?” or “How much do you charge for a logo?” or “How much do you charge for a fill-in-the-blank?” as if they are buying a can of tomatoes.
Look at the way that question is constructed: “How much do you charge for…”
If you were selling tennis shoes, and somebody said, “How much do you charge for tennis shoes?” you wouldn’t say, “I charge $100 for tennis shoes.” You would say, “Tennis shoes cost $100.”
It’s the same with design services. It has nothing to do with what “you charge.” It’s not about you, and it never will be. Shift your mindset to think instead about what the product and the process costs. When someone says, “How much do you charge for a web site?” take the “you” out of it and respond with, “A web site can cost $X.”
You’re not selling your time
Time flies when you’re doing your creative work, especially on the projects you really enjoy. In fact, you may not notice how much time you’re spending. Some designers don’t realize they’ve spent much more time than they had initially allowed for. They don’t dare divide the number of hours by their hourly rate, only to discover they’re making little more than minimum wage. That’s a rude awakening. And it’s all the more reason to track your time.
It’s a cliché, but it’s true: Time is money. The more time one project takes, the less time you have for another, and the less money you make.
Many designers price by the hour, and for all the wrong reasons.
First of all, it’s easy to price your services by the hour. It’s clean, it’s orderly and it doesn’t require much math. But it is not to your benefit, especially in the long run.
This is because the faster you are and the better you get, the more money you will make. A logo might take you five hours today when, two years ago, it may have taken twenty. You get better—sometimes a lot better—with time. But if you charge by the hour, as you get better, you earn less. Does that make sense?
Also, design is a creative process. Not only is there no rule about how long it should take; there is a certain amount of inspiration involved. You probably don’t know how long it will take for your best ideas to come. They could come right away, or they could take a while. Should you be paid based on how long it takes for your ideas to come together? Is that how you should determine how much money you earn?
What you are selling is your years of experience, the effort you’ve expended developing your skills and talents, and your resulting expertise.
What you are selling is peace of mind. Not many clients understand design, so they don’t know what they’re buying, and they know they don’t know. So it’s your job to make them comfortable and safe in the knowledge that you do understand and will take care of everything. If you do that, the good clients will choose you, even if you’re the highest bidder.
What you are selling is your brain, your attention and your creative imagination applied to a client’s specific problem, and that has a value. It’s not an objective value; in fact, it’s highly subjective, which makes it challenging to quantify. That’s why it’s easier to charge by the hour.
That value—your price—is based on several factors, including geographic location, timing, what the market will bear, the urgency of your prospect’s need, aggravation factor (or lack thereof), and what it’s worth to you to do it or your level of desperation (hopefully low to non-existent), just to name a few.
Your responsibility in estimating each job is to determine what that value is for each project. Once you have made that determination, though a series of steps we will explore in this chapter, you present that to the prospect for their feedback. Then, through conversation, you either come to an agreement about the value of your services, or you don’t. It’s that simple.
The value of your work
There is no intrinsic value to your work. Its value is based on perceptions. The perceived value of any project comes as a result of positioning your services properly through your marketing and sales process. You have to understand your client well to know what he or she will find valuable. Maybe he cares most how well the project is executed. Or that you meet all the deadlines. Or that you deliver quality that exceeds her expectations. Is your client looking for quality, ease, time saved, lack of stress? Once you know what’s important to each of your clients, you can position yourself to provide exactly that. And they will pay for it.
Value comes with service, not design. Design has become a commodity. They can get it anywhere. They can do it themselves. (How many times have you heard a client say they just got Photoshop?) Your competitors are up and down the pricing spectrum. There will always be someone whose price is lower, so you must understand what value you add, and use that to position your services.
Customer service will make you stand apart. You add value by anticipating needs, by under-promising and over-delivering. That’s why they appreciate it when you take the lead. They want you to be in charge so they can focus on other things. That’s how you sell peace of mind through design.
What Should I Charge First Understand What Youre Selling - To learn more about this author, visit Ilise Benun's Website.
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Dave KurlanDave Kurlan is the founder and CEO of Objective Management Group, Inc., the industry leader in sales assessments and sales force evaluations, and the CEO of David Kurlan & Associates, Inc., a consulting firm specializing in sales force development. Dave has been a top rated speaker at Inc. Magazine's Conference on Growing the Company, the Sales & Marketing Management Conference and the Gazelles Sales & Marketing Summit. He has been featured on radio and TV, including World Business Review with General Norman Schwarzkopf, in Inc. Magazine, Selling Power Magazine, Sales & Marketing Management Magazine and Incentive Magazine. He is the author of Mindless Selling and Baseline Selling – How to Become a Sales Superstar by Using What You Already Know about the Game of Baseball. He created and wrote STAR, a proprietary recruiting process for hiring great salespeople, and he writes Understanding the Sales Force, a popular business Blog and is a contributing author to The Death of 20th Century Selling and 101 Great Ways to Improve Your Life, Volume 2. - Visit Dave Kurlan's Website |
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