Graphic Design: Designers discuss How to calculate charges? Hourly or Flat Rate?

by Fred Showker

Logo_vs_branding As a graphic designer or creative specialist, whether employed, or freelance, how do you charge for your services? There have been many articles, probably hundreds, and many books written about running a creative business. It all really boils down to how much it costs you to do business, how much you want to make, and how well your market supports your talent and price level. That's simple enough. Yet the question on the lips of many creatives is not necessarily how much to charge, but how to charge it.

Do you bill by the hour? Or, do you bill by a set fee or contract price . . . or both?

If you've been in business a few years, it's easy to use all three methods in concert -- billing appropriately for the particular job or client. You have overhead, equipment, experience and professional expertise that must be built into your fees schedule because those elements are not immediately obvious to the client.

Design Work - Time Tracking or Flat Rate?

Let's talk to some graphic designers who all volunteered their answers to this question in a LinkedIN discussion forum. I have selected just these few, less than 10% of the thread, as those with the most effective comments.

  • Do you keep track of every minute and bill clients by the hour, or do you estimate about how much time it will take and do a flat rate...or do you do a percentage of the project budget?
  • Do you do it differently? What have you noticed clients prefer?
  • Pro's and Con's to both.. curoius to see what designers are up to and what is working / what is not.

There is a dual purpose for time tracking

I typically bill at a flat rate, as most clients prefer this way. I have a few clients who give me quite a bit of steady work, and they are billed hourly, against a flat monthly retainer.
      The other reason I try to keep track of my time is simply to help assess my productivity as well as profitability. Many times, designers will charge a flat rate, then when comparing to the actual time they spend, find that their "hourly rate" is far less than what they hope to earn. Most seasoned designers can gauge their own workflow, and this obviously lends itself to flat rate charging, but I think keeping track of time is helpful in many respects. BTW: Having proof of time in black and white also helps should a client question work done, as many are under the impression we have a "Design" button on our keyboard which instantaneously performs complicated design tasks! ;-)
UGNN by Rocco Cerullo

By The Hour

I have primarily billed by the hour. That way, clients know exactly what they are paying for, and I (perhaps foolishly) billed for the actual time if I came in under the estimate, and had some flexibilty if I came in over the estimate. That approach is now breaking down, however. It seems to me that graphic design is devalued more every year. Although the quality of my work is unchanged, I'm now forced to bill 50% to 65% of what I was getting seven or eight years ago. A flat rate solves that problem, because the hourly rate is hidden, and you can charge for what you think the work is worth. The caveat is that you have to be an experienced estimator. Otherwise, you're going to lose money every hour you work over the agreed-upon flat fee, or you're going to overestimate and not get the work to begin with.
UGNN by Stephen Hawk

Hourly in 15 min. increments

I bill hourly in 15 min. increments. If it's a new customer I always estimate the entire job based on how long I think it'll take me and make sure to say something like "Includes X rounds of changes". I tell them that they'll be told once they get to a point if I see it going over. That way if it goes smoothly I stick with that price but if it's starting to go on and on, a lot of times they'll find a way to finish up if they know the price is about to increase.
UGNN by Laura Symanski

The problem with hourly rates is the issue of task tracking

I had a professor who mentioned this issue a few years ago. As a designer, she charged an hourly rate, but would often get into disagreements with certain clients who wanted to know just how she was spending her time. They wanted to know just what they were "paying for", and would ask for receipts or lists of tasks she did while working on their projects.
      As all of you may know, there's a lot of thinking going on when working on a project, but it's not easy to explain that to clients. If they don't see actual physical work being done, they may think that there is no work being done. Add to that the whole "customer is always right" mentality, and the idea that everything a worker does must be accounted for, and you can see the potential for disagreements and pay disputes.
      Not to say that flat rates are the perfect solution, or that hourly rates aren't worth it; after all, my professor never mentioned that she stopped charging an hourly rate, so obviously for her, it was worth it.
UGNN by Keshia Pace

Flat rate

Design is not exact science, so some jobs you would get done faster than others due to many intangible factors, but in any case, do not forget, it is not just the time that you are selling. I think "the quicker you get at the job, the less you earn", says it all.
      Hourly rate might sometimes confuse some clients. Say you have two designers. One charge $40/h and anther $100/h. The difference in price might scare off potential clients as the second one surely seem to be much more expensive. Now here is the catch. In addition to delivering results twice as fast as the first one, the second one also brings the higher value of the work produced. Which of the two now seem to be far more expensive?
      Besides, that confusion, there is another one as well: with hourly rate, as Stephen already noted the client often does not have the clear picture what the project is going to cost at the end of the day. With flat rate, at least that confusion is taken out of the way.
      However in any case, you would still have to know how to properly calculate your expenses and know what the hour of your time actually cost, so the only difference (from designers perspective) between those two types of charging methods is just how good one is at predicting how difficult the job would be and estimating the time needed, but that comes with the experience.
UGNN by Aleksandar Topolac

Flat rate is an easier sell to clients

I agree with Suzanne Conyers, I've found a flat rate is an easier sell to clients. It's simpler for them to equate one number to one project, and less intimidating than an hourly rate that can sound high, especially if they aren't exactly sure how long their project will take. And if it's something I can finish quickly, often times the flat rate ends up paying me more per hour than what I would have charged hourly anyway.
UGNN by Mike Leister

Flat Rate, plus Hourly in combination

We use a combination, depending on the classification of project, and the experience level of the project team.
      For strategic / creative and initial design work, we quote a flat rate or "guaranteed price". For example, a senior creative director may well be able to develop a successful logo concept in less than an hour, whereas a junior may take several days to narrow it down. The end result is the value of the finished work, not the number of hours it took, so we will generally price something like a new logo, as a guaranteed flat rate. We will still track our hours on the project internally, but that is more for scheduling than calculating value.
      However, for production / desktop-publishing projects, eg: floating text into a pre-designed InDesign template, or adding pages to an existing website - we will bill that work by the hour within an estimated budget. We generally have different rates for different tasks, but we estimate based on the average of all those rates, but bill to the actual rates.
      This billing model would probably be hard to support without a customized billing / task tracking system, but we developed that at the start & find it to balance the best of both worlds. Hourly billing, also, has the benefit of not requiring a quote for every little project - larger clients have a pre-set monthly studio budget which is based on their average workloads. Smaller clients tend to be billed at flat rates until we have enough history and experience to estimate monthly accruals.
UGNN by Tobias Crichton

At the end of the day . . .

So there, you've gotten some input from designers.

After you've been around the block a few times, you'll settle into what's comfortable for you. However, let me encourage you to experiment -- Go back trough many of your past jobs and size them up. Did you feel good about those jobs? Did you actually make money? Did you match fees and charges to the real delivered goods?

Through the years at Showker Graphic Arts & Design, we always ran every job through a Filemaker database, accounting for materials and hours. After nearly 7,000 individual jobs, that database became gold in terms of pricing future jobs. Between 1972 and 2014 I had designed more than 250 logos, 2,700 brochures and some 1,900 newspaper ads among a myriad of other jobs from landmark signs to menus to tshirts designs, to web sites.
      At the end of the day, your job is to make money. If you make your clients happy and successful, you'll make lots of money.
photo retouching and editing Follow the LinkedIN "How Much to Charge" discussion


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Good day, everybody . . . and, thanks for reading

Fred Showker

      Editor/Publisher : DTG Magazine
      +FredShowker on Google+ or most social medias @Showker
      Published online since 1988

 


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