It’s no secret that charging by the hour is a tough way to make a living as a graphic designer. In this article, I’m going to show you how to escape the hourly grind and start charging based on the value you provide your clients. By pricing your services based on what the client needs, not on how long it will take you to do the work, you’ll be able to command higher rates and attract more high-value clients. So if you’re ready to start making more money for your creative efforts, read more about value based pricing below!
Value Based Pricing Brings Better Clientele
Hey guys, what’s going on? It’s Adrian Boysel from Adrian Agency, Inc. Welcome back to another article. I have some important information to share that’s going to be super impactful when it comes to raising your prices as a graphic designer. Many of you guys are working for scraps. Many of you guys are having to compete against people overseas in this article. I want to give you some practical knowledge and some practical advice – things that I’ve used and implemented in my own business to help me raise my prices, attract better clients, and eliminate a lot of the bad faith clients, or the nightmare clients if you will.
How Do I Set Value Based Pricing?
So you probably came to this article because you’re wondering how you can go from charging a hundred to two hundred dollars per piece or twenty, thirty, forty dollars an hour for graphic design work to charging for thousand, ten thousand, or hundred thousand dollar packages. That’s a loaded question, and there’s a lot that I need to cover with you on that. But first, I want to just give you some context by telling you a little bit of my background story.Â
My Pricing Evolution
I started doing design as a club flyer designer, charging thirty dollars for a club flyer that would take me two to three hours for one flyer design. The impact that those club flyer designs had was turning out more people to these events. I had one in particular that I did that was a nightlife flyer, that just happened to have two girls kissing on the front. That thing brought hundreds of people into these events for this bar and made them tens of thousands of dollars.
The Value of Impact
Because of the impact that it made, my mentor Larry, at the time who was paying me thirty dollars to do these flyers, ended up saying, “Hey, I’m going to give you more. I’m going to pay you fifty dollars per flyer.” I think, at the most, it was seventy-five dollars at that time. The impact of what I was doing for this bar compared to the value that my design brought to them increased, and as my skills increased I was able to do these flyers in less time – now down to an hour. The value of my skills increased, and so did the value of my time and my hourly rate, as I continued to scale from there.
Exploring Value Based Pricing with Packages
My hourly rate went from doing an hourly rate to doing a flat rate because now that I know I can do a logo project and let’s just say 10 hours from start to finish, as opposed to 50 hours when I first started, now I’m able to get that done a lot faster and hopefully be able to help that business move a lot quicker. I’m able to raise my prices from the $100-$200 for a logo then, to where I had a $995 package about six years ago.
Key Aspects of Value Based Pricing
My prices have come a long way over my 15-year career. You have to learn and gain the skills and the experience first, in order to be able to raise your prices. But more importantly, there are three things that I want you to walk away from this article to look at when it comes to raising your prices from where you are today, to where you want to be.
Value Based Pricing Sells Value, Not Time
The first point I want you to take away is to sell value, not time. You’re pricing the client and not the job. The job you’re selling, whether it’s a logo design, a vehicle wrap design, or a web design, has a specific value to that business; but that value can dramatically change depending on the type of business. If you’re dealing with a smog shop, it charges fifty dollars for a smog inspection. If they only have twenty dollars in profit, they’re not going to pay you thousands of dollars to design a logo. It’s just not going to happen. It’s not in their budget. The value of that logo doesn’t really mean a whole lot, especially if they’re a brick and mortar.
Compare that to a company like Louis Vuitton, if you take the Louis Vuitton logo and put it onto a shirt or a purse or a bag, how much is that blank bag now worth? It goes from being worth whatever the materials are to all of a sudden being worth a lot more because of the Louis Vuitton logo that was created. The difference is that identity, that high-end brand. You can do the same thing with Nike or McDonald’s. When you put a brand on something that has a significant value because of the number of people that it reaches. There are a lot of things that come with that.
Know Your Worth
You really need to understand that you’re selling the value, versus selling time. What is the value? What does this logo actually mean to the business? The more important that brand is to that company, the higher the value is. For example, there are companies like Virgin Airlines. If they want to rebrand their whole company, they have to change all their planes, all their signs, all their websites. That’s millions of dollars worth of rebranding. Compare the value of that to rebranding a plumbing company, which is a sole proprietorship with a single operator. He may have to change his vehicle wraps, his business cards, his logo on his website, and his URL. That’s worth a few thousand dollars at best.Â
Understand Implied Value
So understanding the value that is associated with the different types of companies is very, very important when you’re sitting down with your client. I really want you to get a good assessment by asking the right questions. You need to determine what is most important to them in this decision. Is it price? Is it speed? Is it quality? Understanding those elements is going to help you get a very good idea of where your client is and how much they value this logo or this design project.
If they don’t value the logo project at all and it’s not something that you really want to work on for a low price, then it may be something for them to visit Fiverr to buy an inexpensive five, ten, fifty, or hundred-dollar logo. If they’re not willing to make the investment into their brand, if this is not a brand that they see growing, and they’re just going to stay a small mom-and-pop operator, their logo isn’t a big deal to them. This is probably not the type of client that you want to take on because you’re going to get paid much less for something with more impact and value than they’re willing to pay for.
Foundational Criteria
The second point about value based pricing that I want to share with you is these foundational pieces: speed, quality, and price. You should tell your client to pick two out of these three things. What are the two most important things – speed or quality, or price? When it comes to speed, the designer with so much skill and so much experience can do this logo project in nine minutes or nine hours, as opposed to the person who takes nine years or ninety hours. The person who can do the job quicker is the one who brings more value to the business, so when you ask those questions and find out what’s most important to them, you’ll be able to make an informed decision.
This is where you can start to navigate your price by understanding that speed increases your value, quality increases your value, and price also increases the perceived value that your customer sees. If I charge somebody twenty-five thousand dollars for a logo package for their home improvement company, versus charging five thousand dollars for their package for their home improvement company, there are going to be a few things that happen. The client that pays more for the logo design will have a higher perceived value of that logo and what the branding services and their brand are worth. That is how value based pricing works.
So, if you can raise the perceived value of that by putting a higher price tag on it, you’re going to be able to do a few things. The first one is getting it done faster. The second one is being able to bring on more people into your team and collaborate on these projects, and come up with way better ideas than you could do on your own. This is super important. Being able to have collaborative ideas, collaborative meetings, and being in a team environment influences the amount of work you can provide. The volume of work, as well as the quality of work, will go way up. That goes to the quality point of what I’m saying.
Value Based Pricing Reflects Talent
The third piece is critical. As you start to charge more for these you’re going to be able to attract even better designers. If I wanted to go hire an Aaron Draplin or a Paula Scher, or a Chris Do, or some other top talent, there’s no way I’m going to be able to sell that project for less than a hundred grand. People that are really good at their craft and are very good at what they do require top-level dollars.
So, if you want to have the best talent in the world and you want to collaborate with them quickly, you have to remember this is a high-ticket project. This is the direction I’m going–from a $30/hour flyer all the way up to a $10,000-$15,000 branding project. This is my history and trajectory, and it’s something you really can do too, even if you’re not the most talented designer.Â
Your job should be to go out there and find the most talented designers so that you can serve clients on the highest level possible. One of the ways I wanted to position this article differently was to give you the result and give you the gold nugget that you needed faster than everybody else. And make it entertaining, make it fun, and add our video and helpful links. That is an opportunity to make the quality better, and I always want to give our readers the best quality content that we can produce.
Value Based Pricing Reflects Your Skills
The final point that I want to make is that it’s important for you, as your skills continue to progress and get better, to start learning more about how to be a better business owner. I want you to start finding better clients. The way to go from a $100 logo to a $10,000 logo or a $1,000,000 logo is by sharpening your ax and becoming a better leader, business owner, and designer.
How to Determine Your Pricing
You need to be able to offer more value in your presentation when you go to pitch. If you have a team of 100 people versus just being a solo person, the pricing will be on completely different ends of the spectrum. So, when deciding where your value based pricing falls on this spectrum, consider the following questions.Â
Is It Important?
Is the logo important to them? This isn’t something you ask them, but something you want to ask yourself. The person that’s sitting in front of you: is this logo important to them? If they tell you price is the most important, then the logo isn’t very important to them. So you want to ask specific, pointed questions like: “What’s most important – quality, speed, or price? Choose two.” If they want speed and they say quality and speed are the two most important things, then they should be expecting to pay a higher amount for that.Â
Are They Established?
The second thing I want you to take into consideration is knowing whether you’re dealing with a new or an established client. Brand-new businesses don’t typically have huge budgets, and they’re just trying to get up and running. In my belief, I think done is better than perfect; you don’t have to have the most world-changing brand in the very beginning. You can look at the history of companies like Apple and Microsoft, and all these different brands out there. They didn’t start with the world’s greatest logo, but they’ve evolved to that over time.
It’s a process of evolving your brand and growing your brand gradually to what it can become. Done is better than perfect in the beginning, and so knowing whether you’re dealing with a brand-new mom-and-pop business or a brand-new startup Silicon Valley tech type of company or a well-established brand that needs to either create a new brand or rebrand their current company is essential. These are important things to know, and that’s going to help you decide whether you’re going to be on the lower end of the spectrum or the higher end of the spectrum when it comes to pricing.
Where Are You in Your Journey?
The third and last point I want to make is super important. I want you to listen closely. You need to be real with yourself and your clients. That transparency, that vulnerability, will help you build lasting relationships. If you’ve only been in the game for six months, a year, or two years, you do not have the chops, the skills, or the experience yet to go charge a hundred grand for a logo. You probably don’t have the skills or have a big enough portfolio to charge thousands of dollars. So you need to build up enough experience, reputation, and rapport. Then you can demand these higher prices.
The skills that you need don’t just revolve around being a great designer – they revolve around you being a great communicator, being a great leader, being a great business owner, and being a great delegator. These are all important pieces and skills that you need to sharpen in order to start asking for these higher prices. Do you have an office? Are you doing your calls on Zoom? Are you doing them via phone? How you present your skill sets and the skill sets that you actually have today are completely different from what I had at the beginning of my career. So what I charge now is completely different.
Final Thoughts on Value Based Pricing
Something you need to be really honest with yourself about is just knowing where you’re at in your journey. When you’re just starting out, you know that you are a beginner and it’s okay to charge $500 in the very beginning for a logo design. I don’t want you to leave money on the table, I don’t want you to undersell yourself but I want you to focus on getting better clients, taking them through a better process, and giving them a better final result using value based pricing when you have the skills to justify it.
So that’s all I have for you guys about value based pricing today. Thank you guys so much for reading, and if you haven’t already, go check out the Instagraphics Pro Network on Facebook. It’s a private community where we’re all growing personally and professionally together. This is my invitation to you; I’d love to have you there. Make sure you fill out all the questions, or I can’t let you in. And I’ll see you guys in there! God bless, and until next time, keep looking up!