What to Bill For Your Time?
If there is one question that every creative pro has been asked at one point or another in his or her career it is:
“How much do you charge?”
Often this question is followed up by,
“Hourly or Flat Rate?”
Indeed, at nearly every conference I speak at I get asked these questions, or often on social media sites like Twitter and Facebook you can find the debate raging about these topics. If you follow forum websites like Creative Cow or our favorite, Lift, Gamma, Gain you’ll inevitably see these topics discussed as well.
For some of you who work at facilities, these are questions you don’t really need to worry about. The specifics about what and how to charge are often handled by management leaving you do what you love – grade!
However, if you’re a freelancer or own a small shop, you probably wrestle with these questions. In this Insights article (the first in a two-part series on how to answer these questions) I’ll start with some advice about how to determine your base rate. Once you know what your time is worth, figuring out how to plug that into different methods of charging is pretty straightforward.
The Big Disclaimer
As we start let me be really clear about one thing – every market is different, every client is different, skills and experience, equipment and potential workflows all differ, so the rates that you set should reflect these and a number of other factors – including ones discussed in this article.
End of Disclaimer!
The Market Approach
Perhaps the easiest place to start to determine your rate is to see what others in your area are charging. Not only is this good general knowledge to have about your market, but also it can help you in part, determine the ballpark your rates should be in.
Determining competitive market rates can often be as easy as visiting a competitors website to see if they publish their rates online. If not, you’ll have to do a bit more grunt work like:
- Crossing your fingers that someone you know at the facility will tell you.
- Ask a client that’s worked at the facility.
- If you’re really sneaky calling the company with a request for a quote (just note this duplicity is often not appreciated especially if the company finds out! But it’s done all the time).
The problem with this method is it often doesn’t give you a real accurate measure of rates in the market for several reasons:
- Published rates are often not the final rates given to an actual client. For example, I will often give hourly discounts to clients based on the commitment of work (see Volume Approach) or if it’s a client I really want to work with but their budget is a bit tight.
- Sometimes market rates are artificially high (see Psychological Approach) to lend an air of expertise to a company – as the saying goes “if costs more it must be better”. In my experience it’s pretty easy to tell when a rate is artificially high for this reason – it’s 30%+ higher than everyone else in the market.
If you’re going to use the Market-Based Approach to set your rate, then to get a true sense of what your market is charging for a service try to find the rates of at least 4 companies of varying sizes and average those prices together.