you want to know how to price your services as a creative agency or freelancer I'm here to help and there's a couple different models I'm going to teach you and depending on where you are and how confident you are in the market that you serve you're going to pick one that is most applicable and relatable to what you're doing number one is let's just say you're a freelancer and have very specific definitions as to what a freelancer is freelancer is typically considered a temporary employee meaning somebody has an opportunity they book you for a period
of time and the way that you calculate your rate is based on either hours or days or weeks and so when you're first entering the market space someone will see your work and say hey let's say your name is Bob Bob would you consider working with us we need help with the project that we're doing so they have a temporary need they have overflow work and they want to hire you the presumption is it'll be you doing the work the first thing they need to know and the thing you have to communicate and get real
clear is what is your rate and if you're asked what is your rate I would suggest you do this especially if you're new in the industry I would just say what do people like me charge people like you if they're being honest and they should be honest because typically these are coordinators or project managers he doesn't behoove them to totally lowball you on this thing because they want to get good talent and they should be fair I'll give you some signals to look out for if they're not being fair to you so they're gonna say
oh okay yeah typically we pay people like you who are straight out of school 250 a day to do this and you're like Okay sounds pretty good and what are the hours in which people are working it's an eight-hour day perfect and is it okay if I work remotely everything's cool and then most of the stress about working for them is resolved now because now you know the rate you know the hours they expect you to work so they're not going to be calling you at midnight and saying hey why haven't you finished this work
well it's been eight hours I gave my best eight hours to you and I'm gonna stop working now okay let's just be clear couple other things I want you to look out for is how they speak to you their tonality do they seem like they're open and respectful or they look like they're just trying to grind you and you can tell because they're hesitant they say funny things and their expressions are a little weird and here's why when you tell the truth it requires no brain power at all what's your name it's Bob how old
are you I'm 24 right but it's like uh who have you worked with before um well a lot of people you see that's a vague generic answer with some weird pauses in between that's how you can tell usually somebody's making up something how they're fabricating a piece of information so if you're a straight shooter hopefully they're a straight shooter too and this is perfectly fine it's how I worked when I first started out when I was a new person a newbie in a professional design world and I was just happy to get to work and
you should be too so do the work and here's what you need to know pay attention to this part when you're doing the work if possible see how you compare to other people doing the work at your level so this is much easier to do if you're working in person so let's presume for this case here that you're in person and you're looking to your left and to your right you're like oh my gosh I'm twice as fast as everybody here maybe I brought in more skill sets than they thought okay so they gave me
a baseline pay based on what other people are doing but if I'm producing more I should get more so this is kind of a hint into where this is going to evolve into you may want to after you complete your booking to say I really enjoyed the work here thank you for giving me the opportunity producer person coordinator person and just letting you know I'd love to work here again but I noticed that I'm producing twice as much as work as everybody else so moving forward I like my new date rate to be 350. so
you just went in one opportunity from 250 bucks a day to 350 you could ask for a little bit more if you feel like it but having these adjustments based on your productivity and your output and if they're really happy I think that sounds really fair so over time you're going to keep moving this day rate up and it's helpful if you do this for multiple Design Studios or agencies as a freelancer a fastest way to get paid more is to keep working with different people and every new place you work with raise your price
by 50 bucks a day or raise it up by 10 20 bucks an hour and see where you get at some point your skill set is going to top out for how people pay for this position it's not an unlimited ceiling I don't think you could hit say a thousand dollars a day which would be a lot of money for a lot of people and that would be fantastic if you're getting that but at some point people are going to say well we can't book you anymore because you are priced out of the market we
have no money left to make on this and we have to make our margins and so now you have a new new problem what are some problems with pricing hourly or based on day rates well you only make money when you're working and you're incentivized to work longer versus more efficiently because if you get all the work done what do people do they just give you more work and so you wind up working two three times as much as everybody else and getting no Financial incentive to do this so what will you do well people
call it I guess quiet quitting these days that's the new term people are using which is you'll artificially slow down you'll give it a little less and that might rub against you your integrity your sense of self-worth the wrong way so the better way to do this is continue to raise your prices to match your output you're going to want to evolve hey before we get too far I just have a really simple as I'm not here to sell you anything but it would mean a lot to us just to help with algorithm and how
it runs to leave a comment right now you can type in what city you're from type in your name type in anything it'll help other people find this video and if you're truly getting value don't forget to subscribe the next way is the pricing that I'm going to talk about are really for people who are no longer Freelancers who are now working as in independent business owners a team of one and you could be that person and this is a different way of working now previously another agency subcontracts work out to you as an individual
so that they make the margins they talk to the clients they take the risk so if you wind up becoming an agency of one now you need to be able to acquire the skill sets they have so things like estimating a job building out a timeline building out terms and conditions in which you'll work with a client now you're working directly with a client what's happened here just by looking at the economic model is you've removed one person in the middle of pipeline so you have the client and you have the vendor before there was
an agency in the middle and the way it works is as many people between the person who makes the work and the client the less money you make farther you are away from the client it makes sense right because everybody in the production pipeline or chain has to make some money let's look at a different way so you understand what I'm saying let's say you are a farmer and you grow wheat most people don't go out to the environment just get unprocessed wheat because it's just too much work so the farmer sells the wheat wholesale
to a price processing plant sometimes they own the processing plant sometimes they don't processing plant buys a bushel of wheat whatever that price might be but they cannot sell it for their cost of acquisition because they'll go out of business immediately they take some risk they put in some labor and they package it in a way that someone can buy so then now they're selling processed flour they've done the process of removing the husk or whatever else they do to just the wheat from the chaff or whatever and they're able to grind it up so
it's much more usable they go and sell a bag of flour now to other people probably to a distributor because they don't want to deal with any of that they don't want to hold the inventory they don't want to process things if things go wrong they don't want to deal with that so they sell it to a wholesaler the wholesaler has to charge a little bit more than what they're buying it for for them to be in business too so this general rule whatever you buy you charge twice as much so that if you buy
something for a dollar you sell it for two dollars so you make a dollar profit what happens now the person who sells the flour to a wholesaler who then sells it to a baker who then takes that flour and then adds salt baking soda eggs or whatever and they make bread or they make a pie and so they're doing a lot of the work here and they might then now charge 10 12 times as much and then you ultimately as a customer craving for some blueberry pie I'm just getting hungry thinking about this myself you
might order one slice of the pie for which you'll probably pay four to five dollars probably in the city less if you're in a rural area right so how did they transform all this well everybody adds some value to this create something that's going to save someone time and add convenience and so they charge a little bit more let's get back to our example now you might be the farmer growing the wheat but if you are the farmer growing the wheat and also baking the pies and selling it in a restaurant or a cafe or
Bakery you should reap the most amount of profit you own the entire pipeline production chain but you have to be able to learn how to track customers to you you have to deal with things like customer service front of house back of house inventory a bad inventory so you're inheriting risk and you're adding additional work that goes beyond just making the thing now the mistake you don't want to make is is now that you're the independent agency or Studio working directly with clients is to continue charging by the hour it doesn't make sense at this
point you've acquired too much risk in the process so the next way of charging is something that's referred to usually as fixed fees or charging based on output what I mean by that so somebody might come up to you and say look I need an identity system which includes a logo letterhead email signature and a couple things from our website so you itemize the things that you're going to deliver the output and then you go back into your cave and you think about how much should I charge for this the most fundamental way of doing
this is to sit down and look at each item figure out how long it's going to take you to do it what's your hourly rate is and add in some padding because projects oftentimes go sideways and if you don't account for that you'll be cutting yourself short and probably subsidizing the project Yourself by paying for it with your own time and not charging appropriately now here's the thing the client already knows this and assumes you're going to pad the budget a little bit it's going to cost more than if they were going to pay hourly
now why would they think this and this is like one of those mental puzzles that a lot of creatives can't figure out the reason why is because if you were to charge them hourly they have no control or transparency over what's happening so what they do is like they're going to manage your time and it's not what they want to do you know what I mean you ever have a contract to come over who's billing you hourly and you're like uh are you eating lunch and are you charging me for that right now or it
seems like you're on your phone checking social media so now I become a manager of your time versus do what you need to do I just want you to repair that hole in the wall I really just literally need you to do that and for that there's a value in my mind so what I'm asking you to do is now to take on the risk and I don't want any of the risk whoever takes on the risk makes more money so in the case of the identity system they need a couple of pieces you do
your thing I don't want to manage you I just want what I want at the end of it and for that I'm willing to pay three thousand dollars five thousand twenty five thousand whatever the price is so now you get to go and work at your own pace and hire whoever you need because now the expectation isn't anymore that you must do the work yourself and you're now incentivized not only to do a great job but to do it as efficiently as possible you will invest money in upgrading your equipment you're more incentivized to hire
like a really proficient and qualified people to help you because all the other people are going to burn your money and eat into your profit you're probably asking yourself well Chris how much more should I charge based on what I estimate the time taking well apparently anywhere between 10 to 100 of what you think so if you think it's going to take you ten thousand dollars worth of man hours to do the work you can charge twenty thousand in fact you can actually charge a lot more than that and this is really built upon the
customer's appetite to create the change that they're looking for how healthy their business is if it's growing or shrinking and how much value they see in what you do in helping them achieve their goal is really important so I think at some point in your life you need to graduate from charging hourly so that you can move into more fixed fees or project-based pricing or pricing based on outputs there's obviously more models but you can be super successful your entire higher agency career by just charging fixed fees matter of fact I used to run a
design firm that did somewhere between four to six million dollars every single year and for the vast majority of that time we did fix fees the reason why we did that was because we worked with an agency who then served a client and they needed transparency on the price what do they care about most of the time they just care about the bottom line so over time we learned that it did not service anymore to itemize each and every single item with the title the rate and the amount of time because all they do is
they flip to the last of the first page depending on where you put the grand total usually on the first page they go right to the bottom it's bold and they see the number 274 000 they either can afford it or they can't so they didn't bother going into little bits so over time what we evolved was we made that opaque they could no longer see what we were doing to be able to achieve the result so we spent more of our energy focusing on the deliverables to say this is what you'll get these are
the terms and conditions in which will work nine to five whatever those are our hours but and Monday through Friday and for each one of these things you're allotted three rounds of revisions maximum and revisions constitute tweaking not starting over and if you delay the project more than say two weeks we'll close down the project and we'll start again with the new bid because we can't afford to keep paying people to sit around and wait so those are terms and conditions but I don't want to overwhelm you with that kind of information you can run
a multi-million dollar successful agency Studio of even one person if you start to adopt this model and it's wonderful for other reasons too because you can finally get that client off your back managing your time you don't have to fill out timesheets anymore because you're not worried about that you're just worried about doing the best job that you can to help them achieve their goals at some point in your life you're going to get to a point in which you're going to evolve to pricing model 3 which is charging based on the outcome one is
we can charge by hour pricing based on inputs number two we can do fixed fees we're going to price based on output model number threes we're going to charge based on outcomes let's look at this now let's say there's an apparel company that's a multi-billion dollar payroll company like fashion business let's say outdoor living like for backpacking for outdoor enthusiasts and they need a new design and this design is going to be used on thousands if not tens of thousands even hundreds of thousands of pieces it's going to appear in mugs t-shirts bags caps it's
going to be a sign in 12 of their locations probably more than that if they're that wealthy so even if you charge based on output One logo One Design One illustration you're going to shoot yourself in the foot because the value to that company this Outdoors company is so much higher than the thing that you make so this is where illustrators artists and photographers have already figured out something that designers haven't so we can learn something from them they asked us one question which is what is the usage what kind of rights do you want
to own because what they're doing is they're thinking about licensing this image this illustration this design to them they don't even own it it's a wild concept that designers can't figure out it's not like it's never been done before so the reason why they asked about usage is they're trying to determine how many impressions are going to be created based on the thing that I do so oh yeah so we're going to print 10 000 posters that's 10 000 Impressions we're going to do 4 000 mugs that's 14 000 now and the list goes on
and on and what markets are you going to be releasing this to North America South America oh worldwide so it's a global project okay that's even greater reach and distribution so therefore outside of just doing the work we're going to charge something based on the value to the customer so we're getting into now value-based pricing what many would consider the Holy Grail when you're able to charge truly based on the percentage of value that you create for the company let me give you a different example so we can wrap our heads around this let's say
somebody is an e-commerce company they primarily do business online and they have a sales page and they sell widget for X number price so many people who visit the site actually convert to being a customer this is now in the realm of copywriting and design so they figure it at their rate right now they sell thousand widgets a month and you look at the site and you're like you know what based on my professional experience what I've been able to do for other clients I can easily increase your sales percentage by X number let's just
say 25 so now every single month instead of selling a thousand they're going to sell 1250. each of those 250 units has a price for them and a Prof for that the company let's say it's a hundred dollars so by changing a few things based on your expertise and your knowledge you're going to create twenty five thousand dollars of new net income for this company and that's just one month and if we were to for simple math multiply that by 10 months so now you've created net revenue for them 250 000 so the conversation should
be around what percentage feels Fair based on value created I want to capture some of that and you can say I want to get 10 of that I want to get 20 you can even get up to 80 or whatever number you can negotiate depending on your negotiation skills this is now value-based pricing and if it's true that you can do this and this result is desired most fair-minded entrepreneurs can see the value and will pay you some percentage of this and let's just take 10 percent of 250 000 that now is twenty five thousand
dollars so you can say look based on what I know I'm gonna guarantee your result or I'm gonna keep working on it until I get you that 25 Improvement in conversion and for that I'm going to charge you a flat fee of twenty five thousand dollars or fifty thousand dollars and they're looking at spending 50 or 25 to gain 250 it's a good deal every day of the week that's called value-based pricing there are other models involved including a royalty or commission where you're actually participating the profit of this but that's even more advanced and
just let me quickly explain what that means so here in this situation I'm going to charge you nothing up front but for a period of time or in perpetuity meaning forever I will collect a percentage of every sale that's generated and so this is a fantastic model especially if you a believe that the companies run well they have a good product that you can actually impact the bottom line those are fair and honest people I would not build an entire agency around this fourth model which is profit participation because it's a little bit of a
Gamble and you won't see money coming in right away so like everything it's a balance of having a couple different models of pricing so you can keep the lights on so you have some job security or that you don't stay up late at night worrying that you can't pay for the overhead that you've acquired but having one or two of these profit participating partners and we're Partners is used very deliberately here because you're actually in partnership with them their success and your ability to make money are tied together that's a true partnership so I hope
this helps a couple different ways of looking at how to price your creative Services hopefully you can find the one that fits for you and don't feel pressured that you need to be somewhere at a specific time that you're not doing well if you're making money you're making profit and you're living a happy life what more can you ask for foreign
