Rookie or not, you can charge more money with confidence
We tend to easily price our services by the amount of time it would take to finish a project and multiply to hourly rate.( i.e. 1 month(estimated time of project) = 150 hrs(average total work hours in a month) x $75/hr(base rate)). Although charging by time works, there are a couple of things that you should consider so that you can charge with confidence and discover better options to make more $$$. Below are methods that worked for me in the past and lessons I learned from successful designers that I wished I knew before I started.
Eliminate old paradigms and Know your Value
As designers, We tend to sell ourselves short and this problem rooted from past generations. When society made us think that being a designer is not a lucrative career and that we should all be doctors and lawyers instead. Things has definitely changed now, but we still subconsciously think that way. In result, we lose confidence in charging people rightfully for the beautiful work and ideas that we share.
In order to charge more, you have to believe that your job provides value.
We didn’t just wake up one day knowing how to design and build products efficiently. We had to go to an expensive school and gather lots of experience and training. Which reminds me of Picasso’s Napkin story when he charges $100k over a drawing on napkin that he made for his random client.
“How can you ask for so much? It took you a minute to draw this’ ‘No,’ Picasso replied, ‘It took me 40 years.”
Picasso was able to charge a good amount because he knows his value and he provided a good reason for it. It is important for us to really lock-in these values and take pride of it.
Showcase your work
Look at your experience in the field. A person who has been doing design work for 5 years are most likely to do better designs and manage tasks better compared to a fresh grad. If you feel like you have a good amount of experience, knowledge, and your designs are breathe-taking, be sure to know how to showcase it.
Check your portfolio and look at your current landscape. How does your portfolio look? Does it match what you have on your resumé? How does other designer’s portfolio look? Does it reflect the price that you’re thinking if you were to look at it from the client’s perspective?
Make sure your portfolio is impeccable. It’s your greatest marketing strategy and It helps to convince the client that you can provide amazing work.
Express a win-win attitude
Always approach any client with a win-win attitude. You have to show them all the benefits of working with you and emanate positivity that you are going to give them the best that you’ve got. Prepare a Presentation/Pitch deck on how they can gain value from you by showing ways on how they will be able to monetize your design, help them gain revenue — Which i will discuss more later — and successful projects you’ve done in the past with testimonials on it. In this way, they will have no reasons to think that you are not passionate in what they are doing and only driven by the money.
Being courteous builds rapport
Build rapport to your clients by being courteous and listening to their needs first. A great example is when you meet them at a coffee shop, you offer to buy them a drink. This simple courtesy shows respect and your willingness to attend to the needs of your client. Your relationship with your client is the most important factor in order to make things work in your favor. Believe me, A client would have a hard time saying no to your price.
Understand where you are in your career
Anything is possible and luck can be on your side but it is still good to take a step back and really know where you are in your career. Seeing the competition and the urge to earn more money blinds us from the reality of our knowledge and skill-level at the moment. In order to have the confidence to face more clients is to know your strengths and your weaknesses.
It is also important to know your needs. Are you financially stable? What are the risks if you don’t close deals? It is good to be practical and really know your needs so you have a higher chance of booking clients. Price appropriately and reduce risks on your end.
The more clients you book, the more you learn, the more valuable you are, the more confident you become.
Engage in a healthy conversation
Start a healthy conversation by showing interest in what they have to say and asking the right questions. This will not only help you understand the project better and the needs of the client, but it will also help the client get to the root cause of the problem.
Below are important topics you need to cover in order to manage your expectations when quoting your services for your clients. Remember that when you are going about these topics, make sure to design questions that would engage in a conversation and show excitement about it!
- Product/Service: I’m excited about the product that you are working on, Tell me more about it!
- Revenue model: Your product is very interesting, How is it selling in the past few months?
- Goals and Expectations: I appreciate you sharing all these valuable information to me, What are your goals and what results do you expect from it?
- Timelines: I am so thrilled to start working on this! When do you want the website to be live and working?
- Budget: Wow, I’m glad that your product is doing really well! How much money are you willing to invest on this project?
- Constraints and limitations: I can’t wait to start building this website! Who is making the content for it?
In case that the client is still confused of what to expect, you will have to determine the Minimum Viable Product. Ask “why?” 5 times to every hypothetical solution that you and your client come up with during the start of the process in order to provide better solutions.
Make realistic proposals
In order to asses the project and quote the client, you need to break down and list all of the deliverables. Come up with milestones that have realistic timelines with features that you went through with the clients. Because design is an iterative process, these deliverables are just hypothetical and may change while building the website but it should be close enough to the goals within the desired timelines.
Bidding by Value
The reason why designers can charge 1x ,10x ,100x to different clients is because they know how to bid by value. Bidding by Value is charging in congruent with the size of the company, its revenue model and potential growth. Keep in mind that this method of pricing is risky but has a great potential of making more money than charging by time. It is highly recommended for experienced designers to know the basic principles of business and negotiating.
Bid by Value: Know the market
It is important to do your research on websites like Glassdoor and be up to date on compensations of designers within your vicinity before talking to the client. The market changes as the demands for your work increases. Look into the skill level of the designer that resonates to you and that could be your guideline in determining your Minimum Acceptable Rate. Make sure to take this information by heart so when you talk to the client and they ask about how you come up with the initial pricing, you could answer with confidence.
Bid by Value: Think like an Entrepreneur
Social proof is really important. Establish with the client that you’re a business person that understands business concepts and are comfortable talking about difficult conversations. Below are common examples of conversations with clients after you have gathered their business model and how they make money.
Example 1 “ I can hire someone cheaper ”
You: By looking into your site and taking in consideration your goals, deliverables, time, and effort that it would take to revamp the website , It would be 15,000 in total.
Client: Why 15,000? I know this really good designer that charges half of what you are charging.
You: Did he tell you how long it would take him to finish the project?
Client: 3 months.
You: Is your website and your time important to you?
Client: Of course.
You: How long has he/she been doing design?
Client: 4 years
You: Since time and this website is important to you, I guarantee you that you don’t have to worry about this website and you can focus on operating your business. And, in 2 months we will have a working website that you would be proud of and that it would help you gain 10% revenue increase and 20 million dollars of net profit. Instead of hiring someone cheaper with less experience which could take the project longer than what you are hoping for and it may not even live up to your expectations. By then, you would have to go through this process again.
Remember that clients don’t choose the best option. They choose the least risky option. You need to appear like the least risky option. -Futur
Example 2: “What if we don’t achieve the increase?”
You: Is increasing revenue important to your company?
You: If we fix the website, we will have a 20 million dollar increase in net profit.
Client: What if we don’t reach 20 million?
You: If you get even half of that isn’t that an increase?
You: If you get half of the expectation, I’ll get half of our deal. Isn’t that fair?
Client: Yes, That’s fair.
They sell what they do. You sell what the world can do. — Futur
If you can look back to the conversation and notice that it is designed to let the client respond to your questions. Because when clients agree and say it, they believe it. Also, Setting expectations, providing specific information and good reasoning would inform the client that working with you would be a win-win scenario. In this case, you are reducing their risks in comparison to other designers that charge less.
Bidding by Time
If you just need to get started and you’re not very good at negotiating, Charging by time would be a good structure for you to learn more about making deals and pricing.
As i mentioned in the beginning of this article, the way you can charge by time would be to research on the compensation of the designers within your vicinity that matches your skill set and multiply it by the estimated time it would take to finish the project.
ERTP(estimated rate by time of project): 1 month(estimated time of project) = 7.5(average work hours per day) x 5 (average work days per week) = 37.5(total hours per week) x 4(weeks in a month) =150hrs(total hours in a month) x $75/hr (your hourly rate based on vicinity and skillset)= 11,250(total))
Bid by time: Buffers and Incentives
In making initial offers, it is important to add buffers as cushions for drastic changes that your client adjusts from. It is also crucial to make a realistic buffer — Not too big, Not too small — that would allow a lot of room for the client to haggle with. In my experience, clients are usually comfortable when i add 10% as a buffer to the initial offer. ( i.e. 20,000 (minimum acceptable rate/ERTP) + 2,000(10% buffer) = 22,000(initial offer)) If you look in the example, the buffer is 2,000 because it is 10% of the minimum acceptable rate or ERTP.
Since you are freelancing, how do you promote yourself knowing that projects usually lasts from 3–6 months? My incentive is usually 2.5% or 5% addition to every project. (i.e. 30,000 + 750 (2.5% incentive) = 30,750(minimum acceptable rate)). So just in case the client manages to go all the way down to the Minimum Acceptable Rate, I know that i would take that offer with an incentive/increase.
( i.e. 30,000 + 750 (2.5% incentive) = 30,750(increased minimum acceptable rate) + 3075(10% buffer) = 33,825(initial offer)).
These formulas worked for me in the past so if you are ballsy enough to have 50% more as a buffer to your initial offer, it is completely up to you. Negotiating is a gamble. Just know that you are taking big risks into closing every deal.
Advancing your knowledge is a must
The Technology industry is constantly evolving and as a designer, you always need to keep advancing your knowledge by reading books, taking classes or by networking with really good designers. By doing this, you can make better designs in the future that are aligned with current trends and increase you value.
The last century’s Burger menu might become a Patty menu— insert rolling eyes — or no menus at all. You might need to take your Interaction design skills to the next level because of the rise of No-UI’s like Voice interactions.
The only way you can survive in this industry is by constantly evolving and being open to change.
Have an abundance mindset
Business is like dating and people sense your vibe. Prevent showing neediness by knowing that if they don’t accept your offer, you have lots of other options. This doesn’t mean that you shouldn’t exert ways to win your client, I’m just saying that having this mindset would reflect how you communicate with your client and will surely add confidence to you and how you approach them.
After the project, make efforts to show gratitude so you can keep your relationship with your clients. It can be as simple as composing a well made email or a call saying thank you and that you are fortunate and delighted to have worked with them. This simple acts of courtesy shows professionalism and goes a long way. Always remember that what you put out in the universe comes back to you.
Best of luck and more power to you! Ciao.
“Whatever the mind can conceive and believe, it can achieve.” — Napoleon hill
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