Best of the Blog 2012: 3 Keys To Increasing Your Design Fees

Design firms routinely underprice their work. It seems as though they don’t trust their own value, thinking, “If I can do it, it must be easy.” Therefore “I don’t dare ask for…” whatever. It’s no wonder that the vast majority of design firms in the US, UK and EU have fewer than 10 employees. They’re never been comfortable asking for the kind of money that will adequately support profitability and growth. However, there are some easy to implement tactics that can tip the balance in your favor. Here are 3 pricing tips to try today:

The List

Make a list of documented contributions your firm has made to clients’ success and carry it with you everywhere. Then, when you are feeling anxious, pull it out and review. Tell yourself, “thank you very much and you (client) can’t get what I do anywhere else.” The list will help you remember that you’ve helped clients move millions, in some cases billions, of dollars in goods and services. Your work has sold stock, increased hits, changed minds. Remember these successes.

Step back from your work

Take a step back and see your firm’s work as “our work.” To escape the commodity trap you must create enough distance to see the forest from the trees. “My work” is too personal. Learn to care strongly about the work but with enough distance to remove yourself from feelings of neediness that result from it being all about me, me, me.

Understand your opposite

Corporations, and procurement officers, are people too, and their tactics, power trips, competitions and often-ridiculous processes can be turned against them. Step one – Only deal with the people who need your services. Deal only with purchasing on the quantifiable: price, schedule and deliverables.

See to the people with the need. Engage them in a discussion – ask lots of probing questions and listen carefully to the explanations of their needs, issues, and interests beyond the issues.

The purchasing mindset makes a single-minded pursuit of “more for less.” This is a severely flawed strategy for corporations because goals of growth, increased margins or changes in public opinion cannot be achieved by reducing project costs or skimping on deliverables. They are only achieved following a thorough analysis of the problem and a joint effort between corporation and creative to determine the appropriate path to achieve their goals. You can’t do that through an RFP.

Get an audience with those who have the need so the right questions can be asked.  By the way, If you can’t get a meeting with the folks who need your skills, walk away from the “opportunity,” because it isn’t an opportunity.

Key questions to ask include:

  • Why this project at this time?
  • What are the corporate goals for the project? What are your goals?
  • What effect will this project have on your company, division, yourself and the world?
  • How do you envision the project moving forward?
  • Have you or the corporation undertaken anything like this in the past? What was your experience?
  • What effect will this project have on the market place, on competitors?
  • Who will we report to and why?
  • Who will we need to gain approvals from as we move forward?
  • Who will be on the project team from the company? Why?
  • What are your competitors doing that will shape this project?
  • What’s the model for success? Failure?
  • How is this effort viewed within the corporation?
  • Are there groups who will be advanced by the project?
  • Are there groups who will feel threatened?

The more questions asked the better. Questions signal interest and intelligence. And, the more the client talks, the better they’ll feel about you. It’s much more powerful to ask and listen carefully than to tell. Through the process of exploration, a bond of mutuality will be formed between the creative and the prospect. This bond is key and will lead to a successful engagement and to an addition to your personal list of successes.

From confidence, distance and mutuality comes power and the potential for winning on terms that will let you do what you do best – create.

Ted Leonhardt has provided management consulting and negotiation training exclusively to creative businesses since 2005. He cofounded the The Leonhardt Group, a brand design firm in 1985 and sold it in 1999. In 2001 and 2002 Ted served as Chief Creative Officer for Fitch Worldwide, out of London. In 2003 through early 2005 Ted was president of Anthem Worldwide, a brand packaging design group.

3 thoughts on “Best of the Blog 2012: 3 Keys To Increasing Your Design Fees

  1. David Dewhirst

    We look at all of our design work as being a part of our brand identity — when people see our work, they are seeing us even if they don’t know it. That makes our design work a core part of our business, and we have to price it accordingly. That price derives from knowing how much we need to charge per hour to cover expenses plus make a reasonable profit, and then having a realistic idea of actually how long we’re going to spend through the whole design process.

    Those are the drivers of our prices, and we price accordingly. When we first started out it was hard to ask for the price we knew we needed. That’s because a lot of small proprietorships — the guy who mows lawns, for example — have no idea what good design costs; they are often in the mindset of “What could be so hard about clip art and my name,” they slide their nephew $25, and that’s that. Somewhat bigger businesses tend to have a more realistic expectation of the product and its pricing, and that’s the kind of client that we want.

    Ultimately, if you do good work and charge appropriately, things will sort themselves out. Why? Because people will come to you because they know your work and they want to work with you — not because you’re the very cheapest they could find. When that happens, you’re golden.

    1. Ted Leonhardt

      Hi David, I recommend that you use your hourly fees to set your baseline for pricing. Use your time keeping and hourly fee tracking to manage your business and to know what you need to charge to hit your budget projections for your business and the projects. But, that you charge new clients what the work is worth to them — we call this value billing. Thanks for your thoughtful comment. Ted