Creative Billing
The insider's guide to placing value on the work you do
By Sue Wasserman
Call it Tijuana Syndrome. A little known malady caused by the lack of desire to pay face value. What is its origin? In Tijuana, as in so many Mexican bordertowns, it's almost unheard of to pay full price for anything. If you've been there you know that a hand tooled leather purse priced at $175 can be had for less. Dickering is an accepted way of life. All that is required on the part of the buyer is a little chutzpah (translation ... extreme gumption).
U.S. retailers, on the other hand, work a bit differently. If you tried offering $50 for a $100 blouse at Macy's or $1,000 for a $2,000 computer at Office Depot, employees would laugh you right out the door. Tijuana Syndrome or no, retailers have placed a face value on their products and if you want what they've got to offer, you're expected to pay full price.
Tijuana Syndrome hits a little closer to home for professionals in the creative services arena because the concept of face value for an idea, design, or implementation of a marketing program seems somewhat less concrete. What is a logo or a corporate web site really worth, for example? And should the person who creates a new brochure promoting your firm's products be paid only by the hour or page, or should there be some additional charge for the idea and its impact on a firm's bottom line?
In other words, when it comes time to send the bill, how should you price your time, brains and talent? Let's face it, the question is not a new one. In fact, as creative services providers, it's probably something that we all struggle with at one time or another. Should you price yourself at the low end of the spectrum just to ensure that you'll get the work, stay somewhere in the middle of the road, or is there something to be said for having the highest prices in town? You might not get as many clients; but you're confident that those who do secure your servies will be willing to pay.
If you're looking for a be all end all pricing solution: sorry, it doesn't exist. Instead, we've gathered a little insight from some interesting individuals who live in the trenches and were only too willing to share their personal experiences.
WHAT'S SO ROMANTIC ABOUT BEING A STARVING ARTIST?
NOTHING. Somewhere along the line, someone romanticized the concept of suffering for one's art. Jackie Goldstein, Co-President and Creative Director of Galileo, a company specializing in multimedia and Internet solutions for advertising, marketing and sales, advises people to get that thought out of their heads immediately. The design veteran says, "I know an illustrator who happens to be incredibly talented. But for some reason, he had it in his head that he'd be a starving artist. Sure enough, he became that. If you think it, you will make it happen." She's happy to add he's no longer starving since they've helped him create a more competitive pricing structure. "Galileo," Goldstein says matter of factly, "is not a not-for-profit company. I've been in this business for twenty years. I'm not ashamed to say I make money."
IT'S OKAY TO CHARGE FOR THE IDEA ...
"We've been taught to give it away," comments well known ad man Joey Reiman. "Three years ago," he recalls, "I gave away an idea that created massive revenue because I wanted to handle the implementation." No more, says the colorfully bespectacled gent who created the city's first ideation company. Filled with an enviable sense of self worth, Reiman's firm, Brighthouse, has no qualms about asking its members to pay either a half million or one million dollars in return for a single big idea. Reiman looks at the fee as being nothing more than a small percentage of the expected impact that idea will generate. And, by the way, creative implementation is not included in Brighthouse's fees.
"Ideas are golden," notes Reiman, whose upcoming book, Thinking for a Living, will be on the shelves May 15. "People will pay for good ideas. I call it Thinkanomics. In the book, I talk about three things necessary to make it happen ... domain, talent, and self loving. First, you've got to understand the work you do. Second, you've got to be talented. Third, is to do self loving exercises. Can you ask for ten times what you're asking now without smiling? If not, you've got some work to do."
Although most creative shops might be hesitant to charge one million dollars, the point Reiman raises about being paid for impacting the bottom line is well taken. "Clients are no longer as impressed by the magic of creative as they are with seeing how well an idea worked," cites Galileo Co-President Mike Wittenstein. He continues, "I'd love to be paid on a performance model where we're compensated based on the action we generate. There is already a lot of pressure on the entire advertising industry to begin moving in that direction."
As a major for behind one of the first companies to enter the realm of interactive media, Goldstein admits pricing was "a huge challenge in the beginning." She adds, "Creative is always difficult because it's not something bought by the pound or inch." But over the years, the firm looked at hours, expected value, and what the founding duo felt the market would bear. Goldstein also consulted the Web & New Media Pricing Guide and the Graphic Artists Guild Handbook, not to mention paying attention to intuitive "gut feelings." "We don't work off a specific rate card," she remarks. "What happened is that we completed a few projects that felt like they were priced right. We used those milestone pieces as benchmarks so that in pitching future projects we could say, 'this looks like an "x" or "y" project.' At this point, we keep very solid checks and balances. When we do a proposal, we make sure the creative is well designed, and the estimated hours are clear."
BEFORE YOU QUOTE ...
Accurate pricing also hinges on educating the client early in the selling process. "Your job," Wittenstein emphasizes, "is to make sure the intangible creative is perceived as valuable, then to create that real value the client is expecting."
When it comes to bidding on a project with little to no ammunition regarding project specifics, everyone interviewed agrees ... JUST SAY NO. "The way I approach billing a new client," Atlanta writer Hope Winsborough comments, "is to ask as many questions as possible up front. It's vital to get a sense for the audience, expected shelf life, and how a piece will be used." She encourages creative professionals to be meticulous. "Am I writing original copy, or is it more of an editing project? Do I deal with the artist or just raw copy? How many people will be signing off? Is this being used to kick off a new campaign, and if so, how will it be distributed? How much time, from the moment I get the information, do I have before the project needs to be completed?" Winsborough believes her list, which doesn't end here, helps clients better understand the ramifications of what she'll be doing as well as the value she brings to the project.
TALKING ABOUT USAGE ...
Now that you know more about who the client is, and what they're looking for, you can better design a pricing structure which accommodates project usage. Wasserman says, "Sometimes, clients don't understand why a logo, for example, costs so much. Logos are so difficult to price because a good one looks like it's so easy to achieve. They assume you just had a vision, never seeing the time, the number of sketches, and years of experience that went into creating it. Not to mention the fact that this mark will be their image and visual identity for years to come."
GETTING A FOOT IN THE DOOR ...
There's something to be said for charging smaller fees for the opportunity to get your foot in the door, or to build your portfolio. Finding the right situations that will help build your career is essential. Wittenstein warns however, "Before you do a foot in the door project at a minimum price, be certain that the next time around the client understands you won't be paid that same minimum rate." As Goldstein reminds, "There are plenty of opportunities to work for free. Pick and choose carefully those projects you do."
NO DEPOSIT NO RETURN ...
Now that you're feeling comfortable with the proposed project, don't be afraid to ask for an up front deposit. According to the most recent Freelance Forum Survey, the majority of creatives ask for a deposit between 33 - 50% of the total bill. Afraid the client will turn you down? Perhaps, but as Goldstein and Wasserman have experienced, "If they're going to squawk at paying a deposit, they're going to squawk at paying you at the end of the project, too."
LET YOUR EXPERIENCE BE YOUR GUIDE ...
Misquoted a few projects? Wasserman has found that keeping track of hours spent on individual projects and consulting the Graphic Artists Guild Handbook helps keep future projections in line. She reminds people, though, that those prices are based on New York rates which are higher than those charged in Atlanta. One way to avoid misquoting, according to Wasserman, is to be methodical in listing all the requirements for a particular job and be sure to make allowances for hard-to-predict expenses like courier fees. As Winsborough states, "If I undercharge a client for a project, that's my mistake and I won't charge them more on that particular project. But I tell them I undercharged and will remember it the next time around."
TO THINE OWN SELF BE TRUE ...
"Know what areas you want to be involved in," Winsborough emphasizes. "Go where the clients are a joy to work with, where they thank you for the work you do. Choose the smartest clients who can explain what they want and who value your services." And as everyone interviewed mentioned, don't be afraid to say no if the price or the client isn't right. If they don't value your efforts, just tell them you know some great creatives ... in Tijuana!
WHAT ATLANTA CREATIVES ARE BILLING ...
Are your rates competitive? It's always good to know the current market rates. Wasserman says, "I keep abreast of what other designers are charging in order to get a handle on what the Atlanta market is. I charge according to my experience and within what the market will bear."
Need more information? If you're making a career out of your creativity, you may just want to go to the bookstore to find the creative guideline that best suits your field, such as the Graphic Artists Guild Handbook, Web & New Media Pricing Guide and the National Writers Union Guide to Freelance Rates and Standard Practice. They may prove quite useful.