Four Types of Project Pricing for Designers

For Designers

20 Sep

How do we know what type of pricing works best for us as a designer?

Do we charge hourly to make sure we’re covering all the time we work on a project? Do we charge a flat rate and try to fit our different services into packages? Do we want to increase our earning potential with value-based pricing? Or use day rates for smaller projects?

For me, there are four main ways for a designer to price your services:

Packaged set-pricing
Hourly pricing
Day rate
Value-based pricing

I have tried out all of these at different points in my business so can give a bit of insight into how each of them works and what might be best for you.

Whichever way you price what you do, we want to make sure we get the same outcome - you are receiving enough to cover your bills, reach your goals and make sure you are getting the right value for the work you’re doing. But as with everything, I always think there are pros and cons to everything and then it’s totally up to you to figure out what works best for you and your business.

Packaged Set Pricing

The first type of pricing we’ll talk about, mostly because it’s the type of pricing that works best for most designers is packaged flat rate pricing or set pricing. With this type of pricing, you want to create packages for all the services you do and then you create pricing for each of those services and charge the same rate for everyone who works with you on those services.

Pros:

You can manage and predict your income more accurately as you charge the same price for all of your clients who work on the same package.
You can also plan your calendar and clients more accurately as you can set aside slots for each of these packages and plan them into your diary.
You know you are getting what the package is worth as you have calculated the value of the package beforehand.

Cons:

Projects that take longer aren’t accounted for in the price. As with any project, variables mean they most likely won’t all end up being exactly the same.
You may feel like you want to get the work done quicker leading to poor quality. Because you know if you work quicker you get better value for your time, you might be tempted to rush certain parts of the project.

Overall, I think packaged pricing pros are way better than the cons, especially if you’re just getting into pricing your services a little more professionally and are trying to plan the admin side of your business a little better.

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Hourly Pricing

So next, let’s talk hourly pricing which is most likely the type of pricing you might have started with or would be most familiar with when freelancing. With hourly pricing, you track the time you work on any project using a tool like Toggl and then you bill a set amount for every hour you work and charge for the time you’ve taken for the project.

Pros:

You get paid for all the work you do if the project overruns as you track the time and charge for that.
Clients get a clear guide of what they are paying for as you can set out and agree with your client a list of deliverables.

Cons:

It’s hard to predict your income with hourly pricing as it’s much harder to predict the timelines for your projects.
It discourages you working more efficiently as the quicker you can get your projects completed you are punished with earning less.
You can feel under pressure to get work done when you have predicted a certain timescale.

Overall, I’m not the biggest fan of hourly pricing as it feels like the only thing you charge for is the time you are physically sat down and designing. But what about the time you take planning your project, answering emails or doing the admin for the project? This isn’t covered and adds extra pressure on our income.

Day Rate

Finally, we’re going to talk about value based pricing which is when you price your project based on the value of the offering to the client. So instead of pricing depending on what works for you, you take into account your clients revenue, goals and budget. This is most likely a pricing structure when you’re taking your business to the next level and wanting to limit your income less.

Pros:

You can book out a full day for work which includes your lunch break, admin and communication
You are under less pressure to finish your work in a specific time (to the hour)
It is easier to predict your income based on how many days you can work per month or year

Cons:

You are still technically swapping time for money and sometimes undervalued
You will generally be working on smaller projects which means you have to book more clients
There is still some calculation to figure out how long a project will take (especially if it’s a longer project)

Overall, having a day rate is much more preferable to charging a day rate but it needs to be used in a way that works for you. If you are still working on big projects which take weeks, you should think about flat-rate pricing which you don’t have to calculate for every different project, whereas one-off work or smaller projects can work great with day rates.

Value Based Pricing

Pros:

You don’t have a ceiling to your earning potential as you can work on bigger projects and make a lot more money.
You get to show your expertise more and be treated like a great asset to the businesses you’re working with and valued.
You are given you a greater range of projects to work on because every project is completely different.

Cons:

It can be hard to work out pricing for each project as it takes more research into the business.
You need to get on calls with all clients and talk about money which may make some people uncomfortable.
Some people don’t always put the value on design work which can mean that you might get more no’s and knock your confidence.

Overall, value-based pricing can be great for the right businesses, especially if you’re ready to take your business to a new level and increase your income without pushing yourself to work more.

If you want some more support with your design business, join us over at The Daring Designers Club Facebook community! It’s completely free to join and we have accountability, exclusive workshops and so much support from amazing designer business owners.

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