How to Determine Your Hourly Rate
To set a flat rate for a project, you must first determine an hourly rate. That is partially determined by what the market can bear, but the following process can help you decide what to charge by the hour:
Estimate Your Hours
After you determine your hourly rate, estimate how long the design job will take you to complete. If you have completed similar projects, use them as a starting point and adjust for the details of the project at hand. If you haven’t completed similar projects, think through each step of the process and estimate how long it will take you. Estimating hours can be difficult at first, but over time, you will have a body of work for comparison. A project involves more than just design. When coming up with a time estimate, include other activities such as:
Several rounds of changes (the number of rounds should be in your contract)Client meetingsProject researchEmail and phone communicationsContact and negotiation with outside vendors such as printersContact and negotiation with subcontractors such as illustrators
Calculate Your Rate
To calculate your rate up to this point, multiply the number of hours needed by your hourly rate. Take note of this number; it’s not your final project rate. You still need to look at expenses and necessary adjustments.
Add Expenses You May Incur
Expenses are additional costs not related directly to your design work or time. Many expenses are fixed and should be included in your quote. You might want to separate the expenses from your estimate to help the client understand the overall fee. Expenses include:
Stock photography and illustrationPrinting costs, including paperCost of materials, such as in package design
Adjust Your Rate as Necessary
Whenever possible, you should make adjustments to your rate before presenting an estimate to the client. As time passes and you estimate more jobs, you can look at the hours worked after the fact and determine if you are quoting properly. This helps you determine if adding a percentage is necessary. Designers typically adjust for:
The type of work. For example, logo designs are highly valued and are often worth more than just the hours needed to complete the work.The number of prints to be made.The intended use of the work. An illustration for a highly trafficked website is worth more to a client than one that appears only in the employee newsletter.
Negotiating a Design Fee
When you have determined your flat rate, it is time to present it to the client. Inevitably, some clients try to negotiate. Before going into a negotiation, have two numbers in your head:
Lower your price to land the job.Educate the client about the costs. With more information, the client might adjust the budget.Let the job go to someone else. If you have a well-established clientele, sometimes this is the best course of action. Your experience is worth more than that of someone just starting out.
Your flat rateThe lowest fee you’d accept to complete the job
When negotiating, evaluate the value of the project to you beyond money. Is it a great portfolio piece? Is there potential for followup work? Does the client have a lot of contacts in your field for possible referrals? While you should not be underpaid and overworked, these factors can affect how much you’re willing to reduce your price to land the project. As with creating the initial estimate, experience will help you become a better negotiator.
