Why Creatives Struggle With Pricing

Rob HarrAnyone who’s heard me speak, listened to my podcasts or read my book, The Creative Professional’s Guide to Money, knows that I am not a big fan of hourly pricing. But I know there are exceptions and strategic ways of pricing hourly that can make it work.

That’s why I invited Rob Harr, VP of Dayton, Ohio-based web design and development firm, Sparkbox, to come speak as part of the Creative Business program at HOW Design Live (coming up this May 4-8, 2015 in Chicago). That’s also why I asked him to share a taste of what he’ll be speaking on for Episode 2 of our HDL Speaker Podcast series.

Here’s an excerpt:

Q: Why do so many creatives struggle with pricing?

A: “I believe we have an inherent fear of talking about money with our clients… because we think these [creative] things we do are for some “higher calling.” It’s an uncomfortable subject. So we push the money conversation to the back burner. But business is an exchange of goods and services for money. That’s what we’re doing with our clients and they are willing to pay because they want a higher value in return.

Q: What kind of mind shift is required to go from fear of talking money to “here’s what I can offer you for the money you have to spend?”

A: Focus on the value you bring. The value you will bring is worth more than the money. We end up in this situation over and over because most of us didn’t study business—I started as a software developer. So we think and believe that the skill sets to be a good designer is the same skills required to run a business—but they are totally different skill sets. We have to unlearn things to become good at the business side.

design pricing

Q: Why did Sparkbox choose hourly pricing and how do you use hourly pricing and weekly invoicing to keep the scope of projects from creeping and the cash flowing?

A: Sparkbox chose hourly pricing because we were doing everything fixed pricing and we were hemorrhaging money and constantly over-delivering, constantly trying to find ways to use that work to springboard into the next thing. When we shifted to hourly, we shared the risk of what we were building with our clients so that if we ran into problems or they wanted to change scope, we could do that easily.

The way is works is we do everything by the hour and we do weekly invoicing. That means everything is up to date, there are no surprises and we are constantly talking about money and the effort required to do what needs to be done.

Wow, weekly invoicing—talk about regular cash flow! Anyone else working this way? If so, share your experience in the comments.

Listen to the rest to hear what Rob has had to unlearn and much more in Episode 2 of the 2015 HOW Design Live Speaker Podcast Series with Rob Harr, VP of Sparkbox, on his session, “How to Make Hourly Pricing Work,” which takes place Monday, May 4, 2015 in Chicago.

Z6476_1Not only is there much misinformation regarding money and apprehension in dealing with it, but it’s also a subject that is mostly taboo. People working in creative fields don’t talk about it and are afraid to reveal their ignorance or share their secrets with potential competitors. As a result, they may not know how to handle money or what financial techniques will help them succeed. The Creative Professional’s Guide to Money provides a collection of tools and ideas that will address financial questions common to many creatives.

2 thoughts on “Why Creatives Struggle With Pricing

  1. Roberto Blake

    This is a very important topic in Graphic Design. It’s true, most graphic designers or other creative professionals are uncomfortable talking about money. I think it is equally important to note that they are also devalued for that same reason and that others view what they do as a “paid hobby” rather than “work”. Adjusting your mentality and understanding that you need to value your time and creativity appropriately is the only way to truly become successful and stop worrying about cash flow.

  2. arezendes

    At my full-time job we do weekly time reporting, and I think it makes sense there. I actually don’t do weekly pricing as a freelancer. As a freelancer I prefer to do per-project pricing. It forces me to time-box things into appropriate amounts of billable time and allows me to stay within scope. I really like the bit about knowing your value in the article. Pricing has been a passion of mine for the past couple of months. I’ve actually built a small mobile app for iOS that helps me keep track of the pricing I do as a freelancer. It’s called Quote Roper (www.quoteroper.com) and it essentially allows me to send clients pre-defined project estimates on my hourly rates. I’m actually in private beta right now if anyone is interested in signing up to check it out/kick the tires. Feel free to email me at howdy@quoteroper.com and I’ll get you on the list. If anything, it’ll show you how I’ve structured my projects.

    Another thing I find completely annoying with modern pricing/calculator tools is this dependence on stop watches where the freelancer is supposed to start/stop the clock as they’re working on projects. I can tell you, there is nothing that gets you more OUT of your creative flow than these things. I’ve tried them, and invariably have given up simply because my day is too harried to remember to turn on and off those things. I believe they actually cause more stress than they’re worth. That’s why I believe a per-project pricing model is the way to go, but again you have to know your value. I know how much time a given project should take me, and anything beyond that is outside the scope and requires me to create an addendum project. The way per-project pricing works is that the client pays a percentage up front, then as you go along, there are milestones where they pay in increments. It’s nice and neat and doesn’t make me fret about alarm clocks. I’ve got other deadlines to consider and a stopwatch shouldn’t be one of them! 😉