Why Design Can’t be Billed by the Hour
by Steve Zelle, Graphic Designer, Ottawa Canada
“But it will only take you an hour or so . . .”
As a graphic designer, I hear this comment a few times a year — a client is unclear as to why I won’t simply charge them by the hour, sometimes by fifteen-minute increments. I can sympathize. When spending my money, I want to know I am not being gouged and that I am getting what I am paying for. It’s this concept of getting what you are paying for that sometimes needs clarification when discussing logo design.
My creative process typically involves coffee shops, walking, driving and not sleeping. Taking time away from the creative problem is vital to finding a solution. I will catch myself taking a break from working on an identity only to have a sudden jolt of inspiration. It is often these moments away from my desk, times of incubation that are worth every penny a client is billed.
You really can’t force creativity to happen. There are ways to encourage it and a process is there to help direct it, but in the end it has to just happen. So while a project may only take an hour at a desk, I can assure you more time was spent thinking about it.
I think it’s a better idea and more appropriate for clients to understand they are paying for a solution and not for the time associated. A graphic designers’ job is to solve problems. One of these problems is helping clients understand the creative process, and, in turn, the value behind design.
What has your experience been with hourly billing? What do you say to clients that want to pay for graphic design by the hour? Please share your comments using the form below.
I fully agree, but don’t think this only applies to design. As a web developer, I often come up with solutions to complex problems laying in bed at night, or driving, or eating, etc. Just as designers draw inspiration from all over, developers are constantly thinking about how to solve problems, and the solutions often come at times when we are doing something completely irrelevant.
I am a web developer also and I usually solve problems when driving. My wife is always yelling because I miss my turn. Something about being away from the problem causes me to see the problem and the solution clearly.
Yes indeed the same principle does indeed apply to developers. Key here is design thinking, which is a process that involves coming up with a solution to a problem. This can’t be translated into ‘desk time’. It applies to anyone who deals with the indeterminate. Architects, engineers, any designer, developers and indeed marketeers.
First off.. wow so many great comment on this topic because it is always so relevant!
I think that selling your creativity hourly is selling yourself short. Like the diagram illustrates you can not pick, choose or dictate when your brain goes into creative mode.. should i write down the 4min on the train that i thought about the project or the 2 hour that i was inspired while visiting the museum?? clients will never go for that…
We just figure out what it the best way to incorporate our knowledge, skill & time to make a flat rate that is competitive and fair to all involved. ( I have figure out a base hourly raer to help me figure our that number) but once that is revealed to the clint they always want to nickle and dime you..
they really do not understand that just becasue it took you 1hr to finish the solution, doesn’t mean it didn’t take you 10-20 years to be that good! They need to pay for that too.
I always think back to this story i heard about Picasso and the napkin sketch:
The story goes that Picasso was sitting in a Paris café when an admirer approached and asked if he would do a quick sketch on a paper napkin. Picasso politely agreed, swiftly executed the work, and handed back the napkin — but not before asking for a rather significant amount of money(I heard somewhere int he range of $40k). The admirer was shocked: “How can you ask for so much? It took you a minute to draw this!” “No”, Picasso replied, “It took me 40 years”… Exactly!
In the end, the time spent on the design is not even relevant.
The point of design is not how it makes your client feel, but how it makes your client’s customers feel.
Realistically, even if I only spend 1 minute creating a logo or design, it’s true value is it’s ability to represent my client to their customer in one “impression.” How does it make their customers feel? How does it resonate? Do they understand what my client does? Does it express my client’s “flair” to their target market?
What really matters, and this is what needs to be stressed to your clients, is how much credibility it creates/maintains for them in customer impressions.
Design is your expression, based both on intrinsic and learned creative, artistic, and marketing ability to turn your client’s imagination into a powerful symbol that is easily recognized and will define their core brand. Hopefully, this brand will become the keystone in many lucrative years ahead for your client and their company.
I have problems charging any flat fee for this service. Frank Mason Robinson is the guy who designed the Coca Cola logo — one of the most recognized designs on the planet. What was his design worth?
Coca Cola
Market Cap: $130B
Sales, 2009: $30B
How well would Coke do if they changed their logo every Year? Every month?
Design is foundational to brand. Substance supports it (product, marketing, service, people, consumer demand, etc). Solid branding and solid substance will create a lasting company, but the image that company decides to project is the only thing that a potential customer sees before a decision. And they do decide, every time.
You only have once chance to make a good first impression. Ask your clients: What is that worth?
Sorry — compensation:
Flat fee? No.
Fee per production (each time logo is produced, in any format)? Yes.
%of sales, or company worth? Yes.
This is the correct form of compensation. Just like other copyrighted works — music, books, movies, etc. There needs to be a residual income that we enjoy just like authors, entertainers, and song writers. Our work is exactly the same thing.
(Has anyone convinced their clients to go in for something like this?)
Great graphic. My most “productive” time is when I’m laying in my bed at night before sleep. I also often get ideas when I’m laying down with my kids as part of the putting them to bed ritual. Like others have mentioned, I also come up with solutions in the car (plenty of time to think in slow traffic every day.) Staring at the monitor with my IDE or Photoshop open is not always the best way to come up with a solution.
This is an issue that I struggled with a great deal and I do agree with the theory behind what all the flat raters are advocating. 100% in agreement with the theory – but I’ve found loop-holes in the application of that theory.
You’ve all had that client, that you quote a flat rate for, complete the work as per their instructions, make the minor changes after reviews and then inevitably the completely alter the concept because they had an epiphany or a cousin of their’s suggested it. Now they want the project redone based on their new concept and they’re not willing to pay anything more than the flat rate you quoted.
There are numerous other types of scenarios where you have people trying to take advantage of the flat rate concept… …like the client who doesn’t know exactly what they want and revise and add as the project goes, so you end up with something far larger in scope than you had ever imagined.
Now, don’t get me wrong – the client’s aren’t right here and you’re fully entitled to argue with them, struggle with them and fight hard to ensure you’re getting paid. But, that’s not what I got into this business for. I am not a designer and developer because what I wanted to do was debate with clients about costs.
So here is the solution I propose to all of you – factor in the times you do feel creative. (For me, and a lot of others, driving inspires and solves a lot of dilemmas… …but also, the shower. Early morning showers are code havens for me and I solve a large number of code related issues while showering. Weird I know.) Once I factored that into my daily routine, I was able to justify a rate increase to myself. I essentially add $10 to $15 per hour to what I think I should be charging to cover for all those “off the clock hours” where I find inspiration, ideas and solutions. And to me, it works out fairly well and I find myself content.
I also find that it is much easier to explain this to clients and it prevents them from trying to take advantage of me by under-stating the scope of a project or design.
If they inquire about the hourly rate, I explain that I’ve invested 10+ years of my time learning the best possible ways to give them exactly what they want, to the best of my ability and as expeditiously as possible. They have a hard time arguing with it.
Hope my perspective is useful to some of you.
Wow, I was thinking about what my comment would be and then got to tdjukic’s comment. It’s virtually identical to my thoughts.
I spent several years using the flat fee model and essentially lost money every project – meaning that I would estimate a certain amount of time toward a project and agree to that fee, but by the time the project was finished I’d have spent many more hours on it.
I’ve never worked in the sort of environment where people were willing to pay for the value of the work based on how it makes people feel and such. My experience has been more small to medium businesses that wouldn’t be willing to pay $4 million because that’s what a logo is “worth.” I’m not complaining, because I like the scale of projects, but I’d be willing to be a lot of designers are in the same boat.
Lately I switched to an hourly-based pricing system (thanks to the pricing philosophies of Forty where I work) and I’m so much happier.
When a client asks for a change to the scope that they were originally so sure about, it’s no problem. I just remind them it will be x more hours and let them decide if it’s worth it.
My thought is that if you spend time working out a challenge while not at your desk, simply record that time and charge for it. Just make sure your rate reflects the experience you bring to the project.
It’s not for everyone for sure, but it’s been a great fit for me.
Thanks for all the comments and opinions. Really great to have so many people share how they deal with this subject. There are too many comments for me to reply to each individually without repeating what I have already said but Amy’s comments brought up a question:
If you are choosing to bill by the hour in part so can recover any extra time spent beyond the quote, do you offer your client a discount if you are able to complete the project in less time?
If not then would you agree that you are still billing for a solution — you are just putting a cap on the amount of time you will spend.I think here is where I differ in that I would not change any extra to develop an appropriate solution, regardless of the time it takes. I think we all have some idea of the value we provide and none of us would bill a few hours for a logo even if by some stroke of fortune we could complete it in that timeframe as it is the solution we are offering not the time to get there.Really great comments and lots to think about — thanks so much.
(Visit my other site — Processed Identity for Case Studies, Discussions and Articles about the creative process. In particular, the recent articles “Revisions, Redesigns and the Creative Process” (http://processedidentity.com/article/revisions-redesigns-and-the-creative-process/) and “My Clients are Paying for the Process First and the Logo Second” (http://processedidentity.com/article/my-clients-are-paying-for-the-process-first-and-a-logo-second/) address some of the issues that have been brought up in this thread.
Interesting question – do we discount if we complete the project in less time? I don’t consider it a discount, but rather the client pays for the time invested. So if that’s fewer hours than originally estimated, the invoice reflects that.
If I were to complete a logo in a few hours, I don’t have a problem charging for that time. I’m not sure how I’d go about deciding what a logo “should” be worth. Mainly it comes down to client budgets and having a lot of conversation about what they’re looking for. If they can only pay for a 5-hour logo, then the product reflects that and they have to be OK with that.
I think it’s a common thought: If I design a logo in an hour, and only charge an hour of time, wouldn’t I be getting ripped off? But there’s so much more that goes along with a logo design than just creating a picture – research, competitor analysis, thought, sketching, trial and error. And it’s going to be experienced in some kind of context, and showing other branding elements is part of the project, which takes time to work through. It’s my opinion that if a logo is finished in an hour, the designer hasn’t done his or her job.
I am curious to hear what other people charge for designs. It seems like it varies wildly by region. In Phoenix, it’s tough to get people to pay the same fees that L.A. or New York get…
Amy,
Absolutely agree with you that design time is only one factor in pricing and can often be a fraction of the actual time spent. My personal process certainly tends to see more hours go into research than design. (http://www.idapostle.com/visual_brand_identity_creative_process/)
I brought up the “logo in a few hours” idea because I was recently approached through Processed Identity (my other site) by a very talented designer about a logo she designed in an hour or two. I think she would agree that in addition to the design time, the logo would still need to go through all the process check points to make sure it is the right solution for her client.
I don’t believe reduced hours equals a reduction in the value of her solution, just as having to put in more hours due to a rough couple of non-creative days increases the value. The value of the solution is independent of the time spent.
How to determine value? I don’t know of any good designers that share their pricing — including me. My pricing is determined by my experience and abilities, the project specifics and what the market can handle. I think you are correct in saying location plays a factor in what clients will pay as well.
Thanks again Amy!
We’re selling a package: expertise, skills, research, pondering, creativity, and a desire to share same with our clients to provide them with a solution. As stated and restated here, some very important parts of the process have nothing to do with our desk, computer, or even our office. Great post! Thanks.
Very interesting discussion, thanks for sharing everyone.
I just told a client that I would be charging a fixed fee for the design of a website and then an hourly rate for the development, and then I came across this post!
nice post and I totally agree. So much so that I blogged about it: http://bit.ly/Hrly1cmnt
i spent a lot of time in front of my mac to have an idea (i’m a graphic designer) but usually the idea arrives when i’m driving my motorbike..but i forget it when i’m at home
)
Hear hear, for copywriters too! It would be lovely if the words would flow on command, but sometimes they just don’t. And I could be working on one project then experience a brainwave for another. Should I then stop the imaginary clock for the first, crank it up for the second and keep notes about 3 minutes here, 8 minutes there? It’s really not possible nor practical. The best solution for me is to have an hourly rate in mind (derived from the complexity of the job, my familiarity with the business, the volume of wording involved and other factors), try to estimate a number of hours that it would take me to complete the job, and multiply the two elements. Work follows me on to the treadmill, through the supermarket, in traffic and at the movies. Best I start billing for all of those billable minutes!
I haven’t gotten to the point where I charge for my designs but your point is very clear and I think should be used with all designers including my-self. I sit at my desk all the time but sitting at your desk just make you more aggravated that you can’t get an idea but just sitting and watching the game will spark and idea in you and in-turn help you create a smoother, clearer design that most people like and will want to use.
If I drew out the image at the top, mine would have a whole lot more Dark Grey and a whole lot less red.
I see a lot of good comments, I think you need to charge hourly for production. I have many clients that want a website overhall halfway through production of the original, or come back for extra rounds of change with a flat fee. Hourly help curb that need to keep changing. When it comes to concept I charge a flat fee and give my self ample time to mill around ideas. I try to keep a field notes book and a pen on me for that moment the idea slaps me in the face. But charging for me to sit down and draw you a logo in 3 hours will get you a logo I drew in 3 hours. Know what your time is worth also http://www.jeremywheat.com/2010/01/a-tool-for-freelancers/
I usually try to get clients to appreciate the benefit of a quote rather than time estimate.
Once, a new big client asked for a price which I estimated at around $10,000. He was so surprised he asked me to do it at an hourly basis. The job came in at $23,000, mostly due to all his changes. And changes. And changes. So I now have mixed feelings about hourly vs. quote.
Excellent! Thanks so much for verbalizing this. I would love to see more in-depth study on this issue. I agree 100% though, having seeing it done both ways.
I definitely generate a lot of ideas for clients while thinking of ideas for personal project. All the time I spent in the Starbucks of Barnes & Nobles, flipping through a stack of design magazines and books taller than I am, looking for ideas for me, but jotting down ideas for them. Or vice verse. I wouldn’t know where to begin trying to figure out how to charge that hourly.
Ah the age long issue of the value of your time. We in design will always in some way be a slave to our work if you think in these terms. If we could afford to, we should develop our own work and just sell it. But first you must be recognized to incite demand to be able to even charge $40K for a napkin sketch. Most great designers wold only be able to get the real fees they deserve after they are dead, for that is when they are truly in demand, as the supply has now been extinguished (except for may Michael Jackson). I hope that I will someday be compensated for the true time on something before I die.
Great discussion here. One way around the flat rate fee and the creep in scope is to give clients a fork in pricing. So first outline the scope, including deliverables and number/types of revisions + what the hourly rate is for additional revision, then specify a bottom number and a top number for your fat rate (say $10-12,000).
Most of us are not very good at accurately estimating the number of hours required to get a project completed to everyone’s satisfaction. Making the client aware of the variables at the outset (such as the number of time changes come one at a time instead of grouped in a single email), allows them to feel comfortable with the numbers whilst giving you some leeway in the hours spent/remuneration ratio. It’s not infallible but it helps.
Agree totally with Isabelle. I’d add that it important to remember what really motivates clients. When we understand WHY they tend to turn to hourly rate solution when dealing with creative services we can redirect. The hourly rate is really a symptom of fear.
In my experience, what mid-level clients really want is safety and leverage. For better or worse, the final goal of the project (increased sales, traffic, mind share etc…) are not the issues our direct contact is primarily concerned with. Usually, they are being evaluated on delivering a project on time and within budget. Strategy is their bosses problem.
Clients want reassurance that there is a process that accurately defines what the project is and how much it will cost in a way they can EXPLAIN IT TO THEIR BOSS. Also, they want to know what their role is and what their leverage is in getting the most out of us.
During the planning/proposal phase I try to get them thinking about a project in these broad terms:
1. Time
2. Scope
3. Budget.
I tell the client they can pick any two. For example:
huge scope + tiny Budget = 10 year delivery date.
This is really just retorical rather than an actual choice. The fact is that they ALWAYS have a budget and deadline. The soft-spot is ALWAYS scope.
So, proposed scope must fall within what we know (or guess) the budget to be and what the timetable is. Then we can put limits and costs associated with deviation from scope into our agreement. For example:
Website XYZ proposal will put a limit on the number of pages or design templates. Say no more than 5 templates and 20 pages. Changes to the IA are billed hourly (or by the page sometimes). What makes a “page” is another argument. Design revs are limited (three generally)
Often problems with time line are the result of client delays approving designs or delivering content such as copy. Some basic rules need to be established upfront – not just for changes in deliverable dates but also the time it will take once they do get us the content – touchy subject – They don’t want to hear “But I’m really busy with other work now” Best to cover this upfront.
If the proposal is clear on scope and time and financial penalties are clear and agreed upon budget should manage itself.
Then it is just a matter of screwing up a bunch of times estimating how long it will take to really do the work. After a while you get really good at coming up with a flat fee number – And hopefully a good argument for why they should agree to pay it.
yes yes yes.
Steve, I just stumbled upon your blog from designworklife. And I must say, I’m a fan already.
I bill by the project. Not by the hours involved. Your post got me thinking about how I can better explain it to clients. You’re spot on.
Isabelle, you suggest a very fair and transparent approach that should work for most designers and clients. Thanks — no doubt many readers will adopt this.
Mark, like Isabelle, your approach is based on consideration and fairness to both parties. Nice of you to share it.
Danielle, Yes!
Benjamin, Thanks for the kind words.
Thanks to everyone else for all the great comments. This post has become a great source for opinions on the subject of costing projects, with the comments providing even more value than my original post. Keep the opinions coming.
This article is brilliant. Just thought I’d chime in.
Thanks for stopping by Tyler. Glad you enjoyed the post.
Good points, and relevant issues raised by many. We usually (all things aren’t set in stone) bill on a project basis, and relegate things such as production and revisions beyond original, clearly defined scope at an hourly rate. I’ve been at this for nearly 20 years, so I think I have a good handle on how long it will take to achieve stated goals. In my opinion, the most important thing to get right is the creative brief. Have clients complete briefs. Have clients create briefs for all projects, and be willing to walk away if they won’t complete the brief. I also require (but don’t always adhere to it) that clients state an approximate budget or range in the brief.
We make our project estimates based on info gleaned in the brief, initial meetings, and the first follow-up meeting. One thing we always wonder about, but haven’t had a good answer for is value of the work to the client.
Would you say a logo for XYZ company that aims to or currently brings in one million in annual sales should be the same project fee as a logo for ABC company that aims to or currently brings in $40 million?
Its one thing to argue the Coke logo should in some small part share responsibility for the $130b market cap and $30+b in annual revenue. But, good logos do not make good companies. And, great logos certainly don’t make great companies. There’s much more to success than solving the identity and brand problem.
I argue that proper attention to branding, a well developed logo, and thoughtful, adaptable and comprehensive brand guidelines can help companies in many ways. But, I would never argue that the logo is the reason for a client’s success. Maybe I’m not giving our profession enough credit. I’m eager to learn what others think. Also very interested to learn if you think the creative fee should be the same regardless of the size of the company?
To me, its all about scope. Small companies require a similar amount of our time invested in research, discovery, initial client meetings, brainstorming, scketching, design, production and presentation as large companies. The difference is in roll out and implementation. IF we design a logo, and then need to implement it and write guidelines for implementation across a fleet of 12 vehicles, 40 hard hats, three sets of exterior signage, a website and print materials. That’s much less labor intensive than rolling out a logo and brand identity across a fleet of 400 vehicles, 4,000 hard hats, dozens of signs, corporate trade show booths, and print collateral in multiple languages.
The production portion of that equation is very easy to target and account for. I also think the creative portion of it can be fairly estimated. The unresolved question lies in the value of the logo (or any design project) to the client. Should we charge more based on value? Should we charge more because one firm has annual sales of $100m, where another firm only has sales of $10m?
So Glad to read this post & i hope most of us working in creative industry would agree to this.
On first interaction, i generally tell clients about the possible range, for e.g.1500-2000 USD. Once, they brief me detail, i create a requirement & project scope document along with exact quote & expected dates for project milestones. For e.g. Concept drafts, refinements, development, delivery etc.
Getting asked for a hourly rate makes me feel like a design slut sometimes.
You can usually tell if a logo/design was created on an hourly basis – at least some times. I mean the type where the design appears to be more of an arrangement of graphics as opposed to an evolution of a strong intelligent concept.
Design service is an idea-based solution, in which there is no one answer. If you are a purist, and work from inspiration to perfection, it’s simply impossible to quantify the process.
How I handle this with a client is by giving safe time windows which I could only come to after years of getting to know my ‘process’ better and having enough confidence to say I need more time without the regret of letting the client down. Ideally, if there is no impending deadline for the eureka moment, the process following becomes easier to measure and bill, if that is your method.
In the end, I came to a flat, segmented fee. And still, sometimes you win, sometimes you loose but the problem is always solved.
If you can have your client understand that the design process is like baby making, then you both win
If a designer does a thing in two hours, and more experienced in one hour, why should the latter charge only half of the price?
This has always been one of the hardest topics to get across to a client. I look at it like this. You give me the budget and then we can talk about what can be done within that price point.
This may seem like a crazy idea but it has helped me to form lasting relationships with my clients. This way they feel more in control of their own spending and thus more inclined to repeat business.
Great post. I think the heart of the problem lies in understanding that you ultimately aren’t buying a hard product. In a sense, what clients pay for is the expertise, strategy and experience of the designer. It can be very confusing especially with logo design, because the item a client seems to be purchasing is simple in appearance. I try to educate prospects by explaining that what you’re buying longevity, flexibility and professional expertise. None of these concepts can be billed by the hour nor would you want to.
I love this quote – “You really can’t force creativity to happen. There are ways to encourage it and a process is there to help direct it, but in the end it has to just happen.” It really ties in with my view that clients who set impossibly short deadlines for a project are really just shooting themselves in the foot. To get the best possible product you need to give your agency enough time to let the ideas marinate.
This is a great article. I couldn’t have said it better myself. I like to charge based on my skill level and the complexity of the design.
Wow, a blast from the past! But still, timeless advice. You never know how long each step is going to be when it comes to creativity. I try to figure out a ballpark number for what I would make hourly on a project but if I go over or under, then it’s all gravy. There’s nothing worse than handing in your hours to a client and thinking that they might say “It took you THAT long?” I’d rather have the freedom to take as much (or as little) time as I need.
I bill by the project, but in the past have had to bill hourly on occasion for certain projects. These projects have always been problematic. The clients have a certain budget in mind, but don’t reveal it and then when the hours add up in the end they are shocked. This is even after I’ve keep them aware of where we are at hourly throughout the project because I hate the sticker shock reaction the hourly pricing gets in the end. I find that billing per project is so much better, the client is aware of all costs up front and you can both work on the project without the client being stressed or pressured about the hours accumulating. That’s just not how design works, we are not on a time clock to create.