There is some risk in writing an article like this. It discusses pricing for professional services; getting it wrong in either direction can cause problems for the supplier, customer or both, and the risk is that the problems and solutions outlined are misunderstood. However, the principles I’ll describe below ultimately benefits the end customer, and so I hope it will educate and inform, and so in turn benefit more end customers.
This all starts with a few assumptions. Based on 8 years of quoting for and delivering fixed-price creative work, I have found that customers who buy design (eg. web design, graphic design) or development (software development, web development) work for a fixed price think that most or all of the following are true:
- the quote reflects a specific number of hours work
- reducing the requirements will reduce the price
- all of the hours charged for are spent actually doing the graphic design, programming, or whatever skilled work is being charged for
- the price is equal to number of hours multiplied by a fixed hourly rate
Many web designers, graphic designers, developers and consultants start out in their business also believing that these things are true. However, within 1-2 years it becomes obvious (usually when the bank account is empty) that these things are not true.
Let’s work through a few examples and find out where this model breaks down, and why so many creative professionals struggle to build a viable business.
Why Price is not related to Time
Meet Danny. He’s a graphic designer who’s just bought a shiny Mac, picked up a 2nd hand copy of Photoshop from eBay, printed some business cards, and built himself a flashy website. Let’s walk through a few example customers at various stages in the life of Danny’s small graphic design business. Read More