What should you consider before quoting a fixed-price job?
For freelancing to be sustainable as a long-term career path, it needs to be worth your while. After all, it is arguably far more straight-forward to join a creative agency and know exactly where your next paycheque is coming from.
Freelancing comes with several unparalleled luxuries, such as the freedom to work around your existing lifestyle and picking your own hours. But while your love and passion for your work is a key priority for freelancing success, it's worth very little if you're not getting paid a decent wage.
The average middleweight graphic designer in the USA earns $46,000, bearing in mind that the majority of these are working within an agency. Making the switch from working for a set salary to taking charge of your own income can be daunting, especially if you're not completely sure how much you're worth.
Therefore you must try to establish your Minimum Acceptable Rate (example for writers, but applicable to designers) before even attempting to calculate the cost of a potential job.
While it can be tempting to assign yourself an hourly rate, this pricing method can trip some freelancers up. Think about it, you might be able to design a high quality, customized brochure for a dream client in less than 4 hours. But is the product you've created really only worth the 4-hour rate you've charged? If you bill your client $200 for a brochure at $50 an hour, would it not be fair to assume that the same quality work could have been purchased for $1,000+ had you set a fixed price instead?
How much time is required?
It might seem like a no-brainier, but often when we commence a freelancing project we underestimate (or overestimate) how much time is required to finish the job. Calculating this figure can be complicated.
For example, if you're working on a logo or website graphic, you may only consider the time it'll take you to physically create the design. But there's so much more to factor in. You need to think about how much time it'll take to research the company, the meetings or conference calls that you'll be having with them and the multiple revisions they may ask for. Every moment you dedicate solely to that client should be reflected in the price you agree upon. Otherwise you're simply working for free, and that's no way to build a successful business.
Funny side note: a few years back a lawyer friend of mine told me his boss (who charged many thousands of dollars per hour) wouldn't think twice about billing clients for “thinking time”. He even wrote it on his invoices. Ever since then I have remembered the importance, value and cost of time spent thinking and always considered it in fixed-price work.
If you're an experienced freelancer, you'll have a portfolio of work to look back on, and many mistakes to learn from. This will empower you to agree on an accurate timescale.
If you are relatively new to working for yourself, a good tip could be to keep notes of your processes as you complete them, so that for future jobs you'll feel confident about your timescales.
Understanding the brief
There's nothing worse than handing in a piece of work that you've been slaving over for many weeks only for it to be returned, smothered in red pen marks. Revision after revision is laborious and time consuming. Therefore, the brief needs to be understood, agreed upon and stuck to before the project commences.
Sometimes you get the occasional client who changes the brief mid-project and forgets to say anything about this until the end. This is why continuous communication throughout is a useful strategy in maintaining clear goals. Don't be afraid to ask questions and clarify details.
How much research is involved?
Before commencing a job, you'll have discussed the brief with your client. You must then research a few things before you make a start. When quoting a fixed price, ensure you allow for time to do the following:
- You must research the company ethos, mission and overall ‘feel’ to ensure you really envelop their characteristics through your creative work. This will prevent dissatisfaction and show your client that you've understood the job in hand.
- You need to research company’s competitors. How to do this depends on what job you're completing and who it's for. As a rule of thumb, it's good practise to make sure your work stands out as unique and original, and certainly not too similar to any direct market competition. Independent brand consultant Michael Levy advises that “Staying smart on the competitive landscape helps you make very practical decisions around product development, promotions, messaging, as well as where you fit in the brand landscape.” While this is good general advice, it's something to keep specifically in mind when designing a website, logo, or writing promotional material for a new or existing business.
- Finally you must research general trends within the marketplace. What are other forward thinking companies doing? What methods are they using? Where is this particular industry going? This will help you to develop something ahead of the game and modern.
Are revisions and adjustments included?
When quoting a fixed price job, don't assume you're going to get the job right first time. Sometimes alterations and unexpected revisions can pop up towards the end. Make sure your quote reflects any potential time you're going to invest in making amendments. You may want to agree on a set number of permitted revisions prior to commencing the job.
The client’s track record
Ok, so most clients are reliable, communicative and honest. But some of them will have poor track records, which may include a high level of disputes or financial troubles. If you're a member of a freelancing site or network, check your client’s references.
Talk to other freelancers who may have worked with him/her before. Ask them, specifically, if the client is dependable upon for accurate payment, and whether there have been any unnecessary delays or setbacks. This may impact on whether or not you think they are worth taking a risk over for a fixed price contract.
For less than savoury customers, or for those who haven't hired freelancers before, you may want to consider asking for some of the budget up front, and the rest on completion. This is not uncommon, and if your prospective client refuses, simply let them go.
A common mistake some freelancers make is to get sucked into a tricky cycle of working for free without even realising it. Yes, it's obvious you won't complete an entire website design free of charge. But think about how much you are giving away without noticing. Here's a scenario to consider:
You've been approached by a small startup company who are finding their feet in the marketplace. They want sophisticated copy and several graphics for their website. Prior to commencing, they say “We’re in talks with a couple of freelancers and are asking them to submit some ideas so that we know who to work with. Could you tell us specifically how you would write for this site to reflect our mission statement”. They then say “could we possibly send you some copy to edit just to ‘test’ your copywriting skills, simply so we can be sure we have the right guy.”
If this happens, RUN.
While it's acceptable to have an interview at the start of a project, it's not ok for the client to take advantage of free ideas or free work before a contract is committed to. If you agree to do this, it's likely you'll run into further complications later in the relationship.
Break down bigger projects
Sometimes when quoting a fixed price on a big, complex job, it's better to break it down into chunks.
So, for example, let's say you're re-branding a restaurant group with multiple outlets and restaurant types. You've got to redesign their logos, brochures, ads, websites, menus and more.
Phew! Jobs like this are demanding, overwhelming and great fun.
A useful exercise when quoting for a large scale project like this is to chop it up into smaller pieces. Provide a quote for each section and then add this up to produce an overall figure. Furthermore, you could request payment after the completion of each section for peace of mind that you'll get what you're owed.
Check your freelance competition
The World Wide Web has connected us in ways we could never have imagined. Never has it been so easy to log on, network and find some fantastic clients and jobs. No matter where you live in the world, this global freelancing village is accessible and profitable.
But what do your competitors charge and how do you handle it when someone undercuts you? Just because Bob from Berlin would complete a job for half the price you're quoting does not mean he's the best man for the job. In fact, you may have assumed that every client is searching for a bargain, when in fact it's quality and value they really want.
Think about this for a moment. Imagine you go online to browse luxury watches. You want to buy a watch that is good quality, unique, durable and stylish. You want it to ooze sophistication and class. One watch is being sold at $599. The other similar looking watch is being sold at $14.50. While both look fine, you're far more likely to go with the expensive watch if quality, style and durability are factors in your decision making. Surely a fourteen dollar watch will break easily and be made from cheap material? It'll hardly send out the successful image you want to project.
The same method should be applied to your pricing structures. If your clients want top quality work, they should expect (and want) to pay more. This mentality has the potential to make your competition obsolete. The added bonus of this strategy is you'll be more likely to draw in wealthier, larger businesses who are happy to pay high prices for good quality products and services.
Pro tip: my girlfriend (who is a freelance PowerPoint designer on Upwork.com) recently increased her hourly rate by more than double. Within days she had more than doubled her workload and was completely booked out.
Don't fear negotiating with clients
Negotiation isn't the art of fleecing your client, or getting worn down to your minimum acceptable rate. It's about both parties being comfortable and happy. Think about it as the beginning of a long term relationship. You must both make compromises in order to commit to the partnership.
A good way to start any negotiation is to ask the client directly about their budget and pricing expectations. If you're entering into negotiation with a huge private medical or law organization, you'll know their budget is bigger than, let's say, a local family run bakery. This will give you a better scope when putting forward figures. Never settle for less than you are worth, and approach negotiations with confidence and transparency.
Fixed price jobs have many advantages. You can agree on a price that works for both you and your client, so that you're both clear about finances from the offset. As long as you consider exactly what's needed for each job, the time it will take to complete as well as the history of the client, you'll be able to quote a profitable and accurate figure that both you and your client are happy with.