Here’s why creatives shouldn’t price their work by the hour

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So you’re a creative looking to go into business huh? Not bad. You’ve fleshed out your offerings, you’ve drafted your contract templates, you’ve perfected your portfolio and your pitch. Still, the third ‘P’ evades you. 

What should your response be when a potential client asks about your pricing? Should you pick a number off the top of your head? Or should you charge by the hour like all the experts say?

Here’s your answer. You shouldn’t charge by the hour. That’s not what the experts say.

What charging by the hour actually means 

What you’re really saying when you say “I charge by the hour”, is that your clients are paying you for however long it takes you to complete the project. This means that charging by the hour is another way of arriving at a flat rate. 

If you price by the hour, and a project generally takes you 25 hours, then your flat fee for that type of project is $X amount. For example, a client requests a new logo for their brand, which takes me 15 hours on average to complete. If my hourly rate for design is USD$44, we arrive at a price of USD$660 for that logo. 

Because I know that a logo takes me around 15 hours of work, my flat fee for a logo becomes USD$660. 

Charging by the hour punishes you for being efficient

Here’s the catch to that method, though. Charging by the hour punishes you for being efficient. We know that time is money, but charging by the hour lowers your potential income. 

As an expert with years of experience in the field, you work quickly. See where I’m going with this? If as a brand designer with 5 years of experience, you can draw, illustrate, and export a logo in 5 hours, you now get paid less. 

In this way, if a new designer does the same project as you do, with a time frame of 30 hours to get it perfect, that means they get paid USD $1,320, while you get USD $220 in comparison. This example also uses the assumed hourly rate of USD $44. 

See how it starts to make less and less sense?

Charging based on value 

The correct way to price your work takes into account the time you spend, your level of expertise, and the type of client you are working with. This type of pricing is described as pricing based on value.

What value is your time worth to you? As an example, we’ll keep the 30 hours and the USD $44/hour rate. 

What value is your level of expertise? Did you get formal training? A college degree? How many years of experience do you have in your field? How many projects do you already have under your belt? How many referrals do you have to back the quality of your work? All those things drive up your price.

To continue the example, let’s say I have a college degree in design, I have two years of experience, and I have 30 projects and referrals under my belt. There’s no hard and fast rule on how to determine value, so let’s say I decide that all these things add an additional USD $4,000 to my worth as a designer.

Next we come to the part of the equation that can vary. What type of client am I working with? What value is my work to that client? If I was working with a large company or business magnate on a design rebrand, we would need to get into the nitty gritty of the company’s net profit, their print budget and the details of just how many items and merchandise the new logo will be printed on, as well as how much of a boost in company revenue they are expecting this rebrand to bring to them.

For a more thorough breakdown of how to get into these types of details with your clients, and more on how to price your creativity, see this video on YouTube by Chris Do via The Futur

Back to our example. Let’s say a massive sportswear brand comes to me for a brand redesign. The price that I charge them will differ from the price I charge a company that’s a startup and looking to go into tech. 

Remember also, that value to the client pricing is in addition to the ‘value of my time’ (USD$44 x 30hours), and ‘value of my expertise’ (USD $4,000).

You might be thinking that I’m just pulling numbers out of thin air and that this is way too much to be charging. That might be because this is Jamaica, and creatives like you and I are more accustomed to being haggled over pricing, rather than having companies and clients see real value in our work enough to pay any quote we might put forward. 

Go, watch the video, it’ll open your eyes. Remember, creativity isn’t cheap, it isn’t free, and it most certainly isn’t easy. If it was, everyone would be a designer or cinematographer or artist or illustrator. 

Charge what you’re worth. Period.

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