Part of our continuing series on "Getting Clients"
Design Templating for profit
by Fred Showker
I know what you're going to say -- and usually I would say the same thing. But hold on a minute and let's take a look at the big picture. Just about every business these days is suffering in one way or another. As the economy falls and rises, so do most business.
The design business is no different. Yet at the same time, we'll all remember that Madison Avenue really found it's gold rush days coming out of the 1930s depression. So as far as marketing, advertising and promotion goes, those are enterprises that will lead the parade out of any recession. Graphic design, as a profession and career, will follow that trend because marketers, advertisers and promoters all need graphic design services and skills. If you're good, they'll beat a path to your door. If you're smart, you'll turn those opportunities into a real return on your time and money investments. ROI, it's called.
So, when I mention using canned templates, don't rush off in a huff. No matter how good of a designer you are, there are tools in the toolbox that help your ROI and bottom line without detracting from your design prowess. Some tools are a part of doing business, and the smart entrepreneurs know how to leverage those tools to make money. Yes, you'll have those opportunities you'll want to pour your creative energy into and we wouldn't have it any other way.
On the other hand there are also opportunities that can be exploited quickly, as a side or parallel to your "passion" work that pays the bills and pads the bank account. That's what profitability is all about. So don't immediately sluff off the use of selling aids, and production aids just because they are called "stock" or because they're designed by someone else.
Remember that the best art directors and creative directors in the world now how to use other talent to get the job done. Bill Bernbach, of the famous Doyle Dane Bernbach (DDB) agency in New York always said "Never do anything yourself if you can hire someone to do it for you -- especially if they can do it better." That's definitely the philosophy to make money, and that's what we're going to investigate in this article.
Look at the profitability equation
Keep in mind that profitability is the act of receiving MORE pay for a project than it cost you to produce it. Every penny above your cost is profit. So business practice rules say, build your costs plus markup into every project, THEN add the GPM on top. GPM is "gross profit margin." The problem with so many designers, illustrators and other creatives think with their creative side. Creatives will have a tendency to go over the creative cost -- and eat into the GPM without realizing it. That's one thing that seriously railroads profitability. One way to do that is compressing the job life.
Compressing the job life
Every design project has a "life" -- from initial client meeting to delivery, or publication. Within that 'life' certain procedures and milestones will take place that are unavoidable:
A. Fact gathering
B. Initial layouts and roughs
C. First level approval of concepts, layouts
D. Production - process images, typesetting
E. Second level approval - or final approval
F. Revisions, changes, fine-tuning
G. Final production - implementing revisions
H. Production - printing, transfer to publisher, etc.
I. Billing
You can compress that 'life' as much as you can, but at least most of those milestones will have to be met and accomplished. Each of those milestones represents a "cost center" -- or an area where you incur costs. Whether it's hours you spend, or materials and services you buy, each of those areas will carry their own real cost. That's the business we're in.
To be profitable, the shrewd business person will dissect each of those cost centers and ask what costs can be reduced and what can be costs skipped in order for the final outcome to pay more.
In short, if you can take a $100 cost center, and accomplish it with $80 while charging the expected $100, you've peeled off a 20% profit.
Let's take a typical project. I'm going to talk in general, hypothetical numbers, so don't take the numbers as what you should be expecting. These are for example purposes only.
Scenario 1: 3-fold brochure
You're working along on that favorite design project, grinding along spending the creative sweat equity to make it really a killer. You love it. The phone rings with a prospective client who needs a 3-fold brochure. I know what you're thinking -- "I'm busy on this really fantastic project and can't be bothered until it's done!" But look, you don't want to say that! Profitability dictates you layer this job along with the other one, without letting it distract from your mission.
For the sake of discussion, let's say a typical 3-fold job is going to bill out at $300. The client has all the copy and is ready to have the piece designed. Where are your cost centers? Dissect it:
A. 1 Hour = Fact gathering (client discuss)
B. 3 Hours - Initial layouts and roughs
C. 1 Hour = First level approval of concepts, layouts
D. 4 Hours = Production - process images, typesetting
E. 1 Hour = Second level approval - or final approval
F. 1 Hour = Revisions, changes, fine-tuning
G. 1 Hour = Final production - implementing revisions
H. NA = Production - printing, transfer to publisher, etc.
I. .25 Hour = Billing
You could feasibly spend 12 hours on the typical 3-fold brochure, and since the photos and copy were supplied, then the only "supplies" for the job was your time.
Let's say you have done your homework thoroughly and arrived at a $50 per hour rate which covers all your overhead like rent, utilities, phone, office supplies, annual software updates, computer depreciation, plus a slush percentage for surprises and then a 20% to 35% GPM.
The job bills out at $612
Scenario 2: Templated 3-fold brochure
There are tons of design templates available. They offer a wide array of designs that are professionally designed and will produce a great job for the client. Some come with actual stock photography and graphics pre-created and in place leaving little else to do other than dropping in the client's text and fine-tuning headlines, taglines, etc. Good templates will even have style sheets built in so when styling the client's text you just skip through the document selecting text and applying the styles. Let's see if we can change the dynamics of the profitability formula:
A. 1 Hour = Fact gathering (client discuss)
B. 1 Hours - insert client logo / photos
C. .5 Hour = First level approval of concepts, layouts
D. 2 Hours = Production - process images, typesetting
E. .5 Hour = Second level approval - or final approval
F. 1 Hour = Revisions, changes, fine-tuning
G. 1 Hour = Final production - implementing revisions
H. NA = Production - printing, transfer to publisher, etc.
I. .25 Hour = Billing
Using the template, you already have samples to show the client. In fact, you may even have several samples. So you dramatically cut hours on the initial layout to get your client to the proofing stage faster. This time, you've delivered the job in about 7 hours.
You still bill out the $612, at $50 per hour rate, however since you cut your time almost in half your GPM now is about 35%% to 55%. The 4 hours or so you saved, now translate to $200 to $250 directly into your pocket. Since the job was done as a parallel to your other project, it's like making double.
For the small copy shop or quick printing operation, templates offer a viable solution for many of those customers who walk in without a design for their project. Some template vendors even offer professional, polished, presentation kits to preview layouts and designs for prospective customers. Here, the up-front selling job can eliminate several of the steps in the job life all together. For self employed or small businesses, it amounts to a decision to hire a designer, or dig for appropriate templates.
But if you are a skilled graphic designer, templating can be a boom to business by providing the luxury of parallel jobs as well as utilizing the templates and stock photography as launching pads for your own designs.
Put it on the street
If you're a design studio with an extra person in the front office, sales aids provided by the template vendor can turn that person into a sales person -- in the field selling jobs right out of the sales kit. Now, you're loading up several parallel jobs. When you add a second or third freshman artist or designer, the templating jobs can be moved to them while senior designers tackle the truly deserving high-dollar original design projects.
It's up to the designer to decide if the job is worth an all new custom layout, design, graphics and so forth, or if a template will do the job. But with several parallel jobs going at the same time, overlapped, your hourly GPM suddenly takes a major hike. Rather than making a $20 per hour profit, you're making $60, $80 or even over $100 per hour gross profit margin. Multiply that by the number of hours worked in a week and you're starting to talk real money.
Our stock templates provide what you need to cut quickly to a deliverable job: stock photos, all necessary style sheets, all integrated graphics, and press-ready, pre-proofed mechanicals. It's your decision.
If you follow the discussions in the Design Cafe BIZ department you'll see many people have questions about charging clients and building a better bottom line. I hope others chime in to this discussion and share their knowledge with the rest of us!
... Good luck, my friends, and thanks for reading!
Fred Showker, Editor / Publisher of DTG Magazine
Also see:
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Getting Clients
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How much should I charge
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Business margin
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Operating margin
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Profits
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Gross profit margin
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