A Little Design Service Pricing 101 • 9/28/2008

Money is the sincerest form of respect in business

Sensible business people know that ‘you get what you pay for.’ Why pay a premium to anyone for anything? The strength of a relationship can be gauged by the value that the client receives from you and their willingness to compen­sate you for the creation of that value. Think of the example where a reputable designer goes in to present a written quote to a prospective client and is challenged with, “but we can get this done for less!” If the designer responds by reduc­ing the project fee, what might go through the client’s mind? Either the designer is a sucker, a con artist or worst of all, doesn’t know what the project is really worth. None of these thoughts are particularly flattering in terms of the designer’s professionalism or integrity. If your prospective client really believes that what you are proposing to do is worth the fee you’re quoting, then they should be happy to pay. If there is a problem, go back through your descr i ption of work and deliverables to make sure that the client is comparing apples with apples.



Pricing is determined by value, not by cost

Luxury goods are great examples of the price = value, not cost. Perfumes and cosmetics cost only a fraction of what they are sold for, yet millions of consumers are happy to pay much, much more. Why? Saying they are all suckers doesn’t explain the sustained financial success of the companies that supply these goods. Design is in many ways a ‘luxury’ good. You don’t actually need design in order to do business per se, the way you need a product or service to sell. However, in businesses where competing products or services are physi­cally very similar, design is critical in creating the intangible differences between products--the ‘brand.’ So, if a client has a strategy where distinguishing their product from everyone else’s is of critical importance, the value created by an af­fective design would far outweigh the cost of creating that design. The relationship between price and cost should be that price covers cost and leaves enough to make doing the project worth your time. While price is determined by value rather than cost, it is still important to understand your costs on a project-by-project basis. If you don’t, you can easily end up losing money by consistently pricing your work at less than it costs you to do it. The basic cost items you need to under­stand are: salaries, consumables, rent and equipment leases.



Taken from “Pricing of Design Services” an article by Andrew Lam-Po-Tang