The Struggles of Pricing Creative Projects
Here's the problem: our work is service-based, but clients tend to view it as product-based. We price based on the value of our time or work. They expect a price based on what they think a website or a logo is worth. It's no wonder that it's so difficult to reach an acceptable price for a creative project for both parties.
We're lucky enough to work in a creative industry, but the hard fact is that clients don't always see it that way. To be able to price accordingly, we have to meet them in the middle somewhere.
Unlike traditional goods or services, with routine production processes and hard costs, we’re unable to simply offer a price for a sales inquiry. If we were making hockey sticks, we could calculate the cost of the wood, the labor time, and the products needed to finish the product. That cost plus a markup, would be our price each time.
Creative project pricing isn’t as calculated as a physical product. We take time to learn about clients and their needs. We’re asked as professionals to diagnose the solutions for their open-ended problems. Often times, clients have more needs than what they originally asked for. These are opportunities for you as well as more variables to consider when pricing out a project.
The most difficult part of pricing creative projects is the inconsistency in what needs to be delivered from project to project. Creative services are not easily defined. We have conceptual visions of finished products, but lack the ability to predict how to exactly get from start to finish. This makes pricing this projects incredibly tricky to dial in.
On our side of the glass as service providers we think about how long something will take and multiply that estimate by how much we believe each hour of time is worth. On the other side of the glass, the client is thinking about a website and how much they believe it should just cost. It’s very unique to our industry. The very same client questioning your $50/hr freelancing hourly cost won’t hesitate to pay a car dealership service department an undisclosed amount of money at the end of their time in the garage, usually with an upcharge halfway through the work. Yet because we are viewed as “artists” there is a perception that creative time is more negotiable.
The simple solution to overcoming the inferiority complex we encounter as creative service workers is to understand that those who do not value your skill are people who are not likely someone you would appreciate working with. Granted, when you are first starting out there may be no way around needing that work, but it will still be apparent that they don’t appreciate what is being created for them.
Don’t forget that education is part of the sales process. Sometimes a potential client may have an objection to price simply because they haven’t been fully coached on what will be done to accomplish their goal successfully.
There are situations where education is nearly impossible, like the RFP process where you know you are simply being asked to provide a rough proposal with a price on it for immediate comparison before getting to really know the client. Price comparison shopping is the worst level of hell to get sucked into. You may be called in to a final round of proposal meetings, but that will likely be based on qualifying in a price range you didn’t know existed.
You need to fully understand the client’s objectives and what work will be required to deliver successfully. You need to know their budget so you can make the most educated suggestion on including or holding off on certain aspects of the project until they are financially ready to support that type of work. Most importantly, you need to make sure you don’t put yourself out of business by drastically underquoting or misunderstanding a project’s scope.
Despite your best efforts in educating or screening bad clients, it will always be rough and unpredictable. You can protect yourself from the worst of it with the right pricing model. You will know when you have the right pricing model when sales meetings revolve more about the “hows” of what you can do for a client and less about the “whys” of cost validation.
Remember the goal of creative project pricing and sales is to work with the client to find great solutions for them within their budget.
Golden Mean Pricing helps balance these unpredictable factors and then identify a fixed rate comfort zone that can allow for confidently proposing a package of services within the client’s budget.