Sweat The Business Stuff: How To Price Yourself
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Maybe the most common question I get from artists is "how much should I charge my clients?" My response is usually:
[youtube http://www.youtube.com/watch?v=miSP9YwhktQ&w=420&h=315]
I understand why I get this question. Artists at the beginning of their careers are concerned with how they look in the marketplace, so they think that comparing fee structures is a good way to measure success. They hope that, as a lawyer, I'll be able to rattle off price points like trivia - "You're an illustrator? $1000 an hour! Graphic Designer? $700 an hour! Camera operator? $4 million a day!"* I can certainly do that, but I won't, no matter how much I like you. I'm not that short-winded! To get at the heart of this answer, you need to ask yourself what kind of business you want to run. And if there's one thing I've been consistent about in this blogspace, it's that as an artist, you are a business owner whether you like it or not. And sometimes you just gotta sweat the business stuff. That means knowing the value of your time, your work, and YOU.
So how do you do that?
Well, you'll want to do some very math-y things to figure out what you need to earn to survive (i.e. determining your overhead, profit margins, etc.), some of which may require an accountant. I won't go into that now because Lifehacker has already done a good job of that here and here.
That's the easy stuff anyway and it's not sufficient to understand your real value. You have to go deeper, and I don't think "my competition charges X for their services" is, alone, a compelling reason to decide what to charge a client. How do you want your clients to see you? How do you want to spend your time? There's no right answer, and what works well for one business owner may not work for another. For example, I charge flat fees for legal work, despite the industry standard being hourly billing. I chose that billing strategy for one very simple reason: I don't want to chronicle how I spend every minute of my day. That doesn't seem like a good use of my time or energy. I've had other lawyers tell me I'm making a huge mistake, but this works for me, and the time I don't spend tallying up my billable hours is time I can use to work for another client, write for this blog, or go on a bike ride.
Here are some questions that I asked myself when I started this law practice. You may want to consider them as well.
- What are the industry standards? Do those standards reflect the kind of business I want to run? Can I deviate from those standards and what would that deviation say about me to my peers, friends, and clients?
- What fees are my competitors charging? Are those fees fair in a geographical context (e.g. fees that are fair in New York may be exorbitant in Kansas)?
- What's more valuable to me: my time or the project? If I choose time, will I bill hourly, weekly, flat fees, or by some other metric?
- Who are my prospective clients? Who is my potential audience? What does my billing structure say to them about my business?
Ultimately, what you choose to bill a client is in your discretion and I think whatever you decide should have a very solid philosophical and economic foundation of reasoning. A lot of this is going to be trial and error at the beginning too. No business starts out fully formed. In my early producing career I was loaning myself out for $150 a day, which I thought was so astronomical that I felt guilty for robbing my clients blind. Only later on did I realize I was dramatically underselling myself and that producers routinely earned $250-500 a day. Whoops!
What I'm getting at here is that you should do things YOUR way, regardless of how everyone else does it. That will set you apart from the competition. You'll look more thoughtful, and I think clients respond to that. Over time, they'll flock to you, and then you won't care what others charge. You'll only care about how to find time for all the work you have.
