How to cost and price your work

How to cost and price your work

By Rachel Segal Hamilton IdeasTap 23/07/12

Last week Patricia van den Akker, director of the Design Trust and experienced creative business coach, hosted an IdeasTap Spa for designers and craftspeople called “Are you charging enough?” Here are some of Patricia's tips for ensuring  that you are…

Money is an emotional topic. It can be difficult to say how much you charge – whether that’s £200 a day or £2,000. A lot of creatives think, “I’m no good at maths” – forget that attitude. First, ask yourself: are you selling a product or a service? Then go to the Design Trust website to calculate your freelance fee rate or product cost.

Always quote for the job. Don’t give clients your hourly rate because it can change: you will charge more for a chaotic or irritating client and less for a nice client offering a nice job that will add to your credibility. Never tell your client the total hours you will work on a job. Say, “It will take four to six weeks”, for example. Keep timesheets because you always underestimate how long things take. 

Studios, office space and shops cost a hell of a lot so it’s probably a good idea to work from home when you’re starting out. But put aside £250 to 300 each month in case you want to get a studio eventually as this makes you more aware of that cost. 

Take a step back and ask yourself what kind of business you want to be. Say, you are a hat-maker. Do you want to create 10 hats a year or 10,000? Think about where your product will be sold. Will it be in Bond Street or one in Brick Lane? Presentation affects pricing. 

You should double your product cost price when selling to retailers. They will then double this again when selling the product in the shop, to cover their overheads. Your price can go down if you get a very big order from a retailer because you will often be able to get materials cheaper when buying in bulk.

Don’t undercut your retailers. When selling a product direct to the customer you shouldn’t charge them much less than the price at which the retailer sells it. So generally charge four times the cost price, although you can go down by 10 to 15%. Alternatively, create cheaper ranges that you sell exclusively at markets or through your website

There are many different ways to price your work. The Design Trust website lists 14 of them. Be aware of the going rate. If you quote a fee or price too far above or below the going rate you will look stupid and the client will think you don’t understand the market. A bundle price is when you offer a discount to people if they buy several products or services in one go. A credibility-building price is when you work for little or free if there is a clear promotional opportunity for you. There is also a psychological price. People are more likely to buy something that costs £225 than £224 and you should stay under £100 if you want to capture the gift market. People tend to value things more when they are paying for them so be careful about undercharging. 

You are not your clients. Don’t make the assumption that you are selling to people like you and your friends. Most customers for crafts are middle class, wealthy women aged between 40 and 60. Always think about what the value is for the other person – not about what you feel that you are worth. 

Be prepared to negotiate. It’s part of the game. Clients want to feel that they have a good deal. Add 20% so they feel that they have got 20% off. What’s the worst that can happen when negotiating? You can always walk away.

 

IdeasTap Spa

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Image: Animals + Monsters by abbey*christine on a CC BY-NC-SA 2.0 license.

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