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Massimo
Foreign. What's up, angry designers? My name is Massimo and this is the Angry Designer podcast. Do you ever wonder if you're pricing yourself too low, too high? Or if you should move from hourly to project based? Or maybe if you're missing out on the value based gravy train that everybody's talking about in this episode, we're calling BS and all the talk on the Internet that isn't actually giving you the full picture on pricing, you're going to discover the pricing roadmap that will actually work for every single designer. How to actually come up with an hourly rate that works, the truth about value based pricing that experts never really talk about, and how to sell a retainer if you dare. Don't forget to sign up for our newsletter, Anger Management for Designers. It's packed with stories and strategies and more of this kind of stuff to help you get where you deserve to be in your journey. And sign up through our profile or on our website. Now let's get into this and start getting you billing what you're actually worth. I'm coming at you solo this week because my co host, my good old boy Sean, unfortunately, in true Canadian fashion, slipped on a piece of ice and totally messed up his foot. Now, I wish it was a cool ice story like he was stepping onto a hockey rink about to kick some ass for a final game, but no, he just kind of slipped on his driveway and now he's laid up on his butt. Not on this episode. So, ha ha. So I'm going to come at you this week by myself and I'm going to try to talk about a topic that I know we constantly getting, you know, asked about, you know, from our angry designers and from freelancers and from other agency owners. And this is. The whole episode is going to be about pricing. All right, if you've ever googled online how to price design work, you know, you've seen tons of people yelling on, you know, hourly sucks and you have to be project based. Or better yet, no, no, don't worry about hourly. A project you need to be charging based on the value that you're going to provide and, and you know, that's the only way to do it. And then we have a cute little banter with the customer and, and blah, blah, blah, blah. You know, the reality is, though, is that, you know, most of that advice, the way we're getting it is garbage. It's not that it's wrong, it's just that they're not actually giving you the full picture on pricing. Just little Parts of it, which is what's frustrating. So designers get stuck undercharging because they have absol Roadmap getting from. I have no idea what to charge to. I'm confident in my rates and I'm going to be charging this on a regular basis. I am going to share my roadmap. That worked for me. Now again, I'm not saying that it's the definitive way of doing this, but what it does is I'm going to outline in a very logical way how to go about it as you progress through your design process journey. I started in my parents basement, all right? I had nobody giving me advice. There wasn't the Internet, there wasn't books. You know, nobody was actually telling you how to do this. So I was learning the hard way. I was making mistakes, okay? I was losing thousands of dollars on these jobs. I was taking a hit on this, you know, scope creep caught me on this, guys. One year I actually wrote off over $40,000 in bad debt because I had no idea how to charge, let alone the whole business side of, of, of, of, you know, how to actually recoup some of that costs. So I don't want you guys to have to go through the same type of thing, all right? So I took my little basement business and turned it into a seven figure creative agency. Just creative work, okay? And we were a niche agency and we eventually got acquired by a billion dollar company, an awesome billion dollar company. Now I have the benefit of being the creative director and CEO to the company that I started. But I'm working underneath this amazing company that's giving us so much freedom, so much work. This, this is a dream that I wish everybody could share. And I am going to share all this with you guys so you don't have to go through all the hell that I ended up going through. All right? Trust me, if I can do this, you guys can do this. So why is pricing such a mess? The hardest thing that I had to learn in business is how to charge. There needs to be a natural progression for designer, for a freelancer or an agency. As you gain experience, you have to like it or not, start hourly. Then you move from hourly to project based pricing. And then once you've got some credit, then you can start actually entertaining value based pricing.
Sean
Okay?
Massimo
And then retainers are just a pricing model, okay? They're a method of getting paid on a monthly basis. And really they can work for almost any pricing structure. I don't know why people hate on them so much. They're a blessing for me. But we'll talk about that a little later. Most designers just want to skip hourly and jump straight to project based pricing. But if you don't know how long things are actually going to take, you're just making wild ass guesses. Charging by the hour lets you figure out things like how efficient you are, how much time that you're actually spending on projects, where you're losing money and where you're actually gaining. Some people argue that hourly pricing punishes you for, for, for getting better because as you get better, you know, you work faster and then you get paid less for your experience. But I have a huge issue with this statement because unfortunately, it's not 100% accurate. It's not true. Hourly pricing is not your end game, okay? It's your training ground. What actually happens is you're gathering critical data, project after project, how long jobs take, what clients are willing to pay, where you're actually losing money, and where you're actually efficient. Okay, so let's say early on you take on a job that's six hours. We'll say it's social media posts.
Sean
Okay?
Massimo
Somebody wants you to create a set of social media posts and you charge six hours for that. Amazing.
Sean
Okay?
Massimo
Few months later, you've refined your skills and the same job now takes you four hours. The client doesn't know that. And the reality is the client probably doesn't care because they're happy with what they were paying before. And ideally, your work has improved and they're happy with the process.
Sean
Okay?
Massimo
It still has the same six hour value to the customer. But the thing is, this is now how you start transitioning to a higher hourly rate or a project based fee. Hourly is not about staying there forever. It's about gauging yourself and the market so you can actually price yourself smarter. So how does a designer come up with an hourly rate? All right, let's break this down, okay? There's a lot of factors to consider when you know when you're trying to come up with your hourly rate. Right? You have to have an idea of, you know, your business expense, your overhead. Right? Your software licenses, your rent. And then once you know what your fixed costs are, right, you figure out what you want to take home thereafter. So let's just say, hypothetically speaking, for this exercise to keep it easy, we'll just say 60 grand a year. 60k is what you want to make. That covers your rent, your Internet, some of your software licenses. It's a good, easy number to do this math on. So 60 grand a year means that you need to make five grand per month. All right, 5,000 bucks. 5,000 bucks means that's 1250 per week.
Sean
Okay?
Massimo
So divide the five grand by four weeks, that's 1250 a week. You have to make 1250 a week. Divide that by five days.
Sean
Okay?
Massimo
1250 a week divided by five days is 250 bucks a day. Now, if you're working towards billing, on average, five hours a day, okay, it's not much. It doesn't sound like much, but it's actually quite realistic if you take into consideration networking or your business admin, or maybe the YouTube videos you're going to watch to learn how to do something. Five hours a day is actually really good billable hourly rate for the day. So if you now get five hours a day, a billable time, that works out to 50 bucks an hour.
Sean
Okay, Boom.
Massimo
Now you have a starting hourly rate. It's not just a random number that I threw together. It's backed by real financial needs.
Sean
Okay?
Massimo
So again, 60 grand a year breaks down to 5 grand a month, which breaks down to 1250 a week, which breaks down to 250 a day. At 5 billable hours a day, your rate is 50 bucks an hour.
Sean
Okay?
Massimo
Now, this isn't where you're going to stay. This isn't your end goal rate, but it's your starting ground. This is your foundation. So how do we move from an hourly rate to project pricing? So once we have a solid understanding of your hourly rate, okay. And how long projects actually take you, now how do we move into project based pricing? So project based pricing does give us more control and definitely better profit margins because we can add to them if we need to to compensate for other. Other things that come up. But this only works if it's based on real data. Okay? So step number one is we have to review your past projects.
Sean
Okay?
Massimo
So let's take, for example, our social media posts.
Sean
Okay?
Massimo
Let's take the last five or ten social media projects that we've done, okay? Look at the actual time that we spent on each one of those projects, okay? Of that list, drop the highest and drop the lowest outliers.
Sean
Okay?
Massimo
The ones that, you know took too long because the clients were being difficult or they got sick, or the ones that, you know, you know, took too short and we got lucky the first time around and there was no revisions.
Sean
Okay?
Massimo
Let's get that good average in the middle, okay. Once we average out the other eight, okay. That becomes our baseline for a project price.
Sean
Okay?
Massimo
So now we know Approximately, it takes us x amount of hours to finish this project. So let's say we've done, you know, five social media slicks, okay? And the average time of each, you know, set was 10 hours.
Sean
Okay?
Massimo
If our hourly rate is 50 bucks an hour, that means each project should cost 500 bucks. So instead of quoting hourly, we can now confidently say that a set of social media slicks start at $500. You're not guessing at this point. Your pricing is actually based on your real experience. The benefit, of course, of, of being able to say a project prices. There's less admission men involved in trying to track every single hour because you know for a fact that the client is willing to pay $500 at the very least for that social media slick. You know, you get to start gauging the customer's interest. Okay, A small startup might still be interested in that $500 range, but a corporate client might expect to pay more. All right, you need to test that price now in different markets. If they say yes too quick, maybe you want to raise that rate, but at the very least, you never, ever want to lower that rate because you know, that's how long on average it takes. So there's nothing wrong with padding your rate based on what the market will pay. All right, so you can consider adding a buffer or a value consideration to those clients who are willing to pay more. You're going to give them just the same amount of work. Maybe you'll give them an extra little bit of love because you want to shoot for, for bigger projects thereafter. But the reality is this is still a business and they are willing to pay for this. Okay, so what you want to start doing at this point is you want to start transitioning your conversations from time to outcomes.
Sean
Okay?
Massimo
You want to stop, you know, when talking to these corporate clients, you want to stop saying that this project is going to take me 10 hours, and you want to start changing that, that, that conversation to this package includes research, design and two rounds of revisions, and it starts at $500. Clients aren't now paying for your time. They're paying for the outcome. They're paying for what you're going to deliver them. This shift, okay, makes your pricing feel more premium, you know, and definitely prevents scope creep. And it also allows you the opportunity to grow that project as they add elements to it. How to know when to adjust your rates. You know, is there ever a time to to up those rates whether it's hourly or project? Well, the reality is as you get faster and more Experience, your price should increase because it automatically does initially. If you're consistently finishing in half the time, it's time to either raise that hourly rate of yours or increase your project pricing. Okay, if you want to, you can start building bundling additional value into things to justify higher fees. Okay, but just remember this, okay? If it used to take you 10 hours to create that social media package, but now you can complete it in five hours, okay, you're still charging $500 for that project, but now you're making $100 an hour instead of that $50 an hour. And this is where project based pricing really shines over time. This is how you naturally graduate from an hourly rate to project pricing. And this is how you maximize your profits. All right, now the truth about value based pricing. And now a word from our sponsor.
Wix Studio
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Massimo
Now the truth about value based pricing.
Sean
Okay.
Massimo
For most designers, it's overhyped.
Sean
Okay.
Massimo
Everybody loves to throw around value based pricing, but the reality is you can't just wake up and start charging based on value. The problem with how people are pitching value based pricing online is that it's completely misleading. They act like any designer can just flip a switch and start charging premium rates. I mean, Again, like, if you can explain your value of, you know, work better to clients, they're just going to magically pay you more. You know, the reality is they that's not how pricing works in the real world. The reality check on value based pricing is there are four key considerations that nobody ever talks about or takes into consideration every time they talk about value based pricing. Okay, number one, of course you do need the right clients. Okay, Most small businesses, they don't care about brand strategy or long term value. They want something that looks good. They want a nice corporate identity. They want to look like a big shop. Ultimately, they want something fast and cheap, maybe not necessarily long term. Finding clients who understand and appreciate value based pricing is definitely half the battle, maybe even more than half. These are the clients that are usually more established and they have more serious revenue and systems in place and they already understand the ROI of branding. So if you're pitching a $20,000 rebrand, you know, to a local bakery, you're definitely in the wrong game. But if you pitch that 20 grand to a giant real estate developer and they don't blink, that's probably somebody who's comfortable with those rates and understands the value. Number two, your reputation dictates your value. Nobody is paying huge fees. Even if you found this giant real estate for work from a designer who's got absolutely no proven record, Nike isn't hiring a random freelancer for their next campaign and paying them millions of dollars. They pay top dollar to proven agencies with a track record of success. You build that reputation by consistently delivering results, not just designs. Okay, number three, it's not just about your sales skills. Okay, yeah, sure, they're fun to watch online and it's great to watch all these rebuttals and try to talk them into it. But again, a killer sales pitch doesn't mean shit. If your portfolio and your reputation can't back it up. You can't talk your way into a higher value client. You have to show them that you can actually deliver. This is where experience comes in. Case studies, word of mouth, this all plays a really huge role. Experience and positioning matters more than pricing models. All right? That's the most important part. Yes, value based pricing works, but only if you've built the credibility to demand those rates. It's like trying to sell a Tony Robbins course under your own badge for the same price as he does, even though the content is exactly the same. Nobody's going to give me $25,000 to read my version of Tony Robbins, even if the material is exactly the same, but they will pay Tony Robbins for the exact same material. So no matter how good your sales pitch is, you can't sell high ticket design work without trust and proof. Here's the missing link to how to actually get to value based pricing. Value based pricing is a process and you're a fool to think that you can snap your fingers and start doing it tomorrow. So the first thing you got to do is you got to start by building case studies, not just a portfolio.
Sean
Okay?
Massimo
Instead of walking in and here's a logo I made, you know, and show them how, you need to show them how your work increased engagement, increased sales conversions. Okay, this is business talk and value based is business driven work with businesses where you can actually track results. Even if it means doing lower paid stuff at first. Those case studies pay off massively in the end. Okay, I'm a fan of niching down and dominating one industry. Generalist designers often struggle to sell value because they just kind of blend in with the rest of the crowd. However, if you're a specialist, okay, you can charge more because you've got a deeper understanding and insights and proven results and industry credibility that generalist agencies may not have. You're going to need to get referrals from people who already trust you. High value clients don't come from cold emails. They come from referrals and relationships. Nobody's going to pay you value based for your services just because you hit them up off the street. Work with someone once, blow their frickin mind and turn them into a megaphone for your business. We call that clients for life. And then last but not least, you need to stop selling design and you need to start selling business growth at this. When it comes to value based design or value based pricing, nobody cares about fonts and colors and in corporate ID packages they care about making more money, looking bigger, standing out, growing their brand.
Sean
Okay?
Massimo
Learn to talk in terms of business metrics, not just aesthetics. And last but not least, you need to create a personal brand that screams expert. It screams thought leadership, speaking engagement, social proof, testimonials, okay? Your reputation ultimately in the end, is your pricing power. And that's what's going to seal the deal more than anything else. Bottom line is that value based pricing is earned. It's not chosen. You can't just decide to charge a $20,000 premium just because some Twitter guru told you that you can. You have to become that kind of designer who can justify those rates. You have to attract the right kind of clients who see the value in It. And again, it's not just about pricing. It's about positioning. And most designers haven't done the work to position themselves at that level yet. I'm going to round this out by talking about retainers. Okay? In my opinion, retainers save sanity. There's a lot of people that hate on retainers right now online, but in my opinion, retainers are so frickin underrated for a business anyway. They give you predictable cash flow, which helps so much when it comes to. When it comes to paying bills, operating your business, paying a staff, you know, they make clients accountable for their own inefficiencies. The only downside to retainers is, unfortunately, you have to track hours. All right? But guess what? In my opinion, that's a hell of a lot better than constantly chasing new clients. If you're working on that, you know, billable hourly rate of five hours a day, it actually becomes pretty easy to start tracking hours. And to be honest, most customers, after a while, if they're happy with the results that you're. You're providing them, don't even challenge your hours because they're happy with the relationship you're building and the work that you're providing. How to sell a retainer to clients without confusing them. So this was. This felt like gold. Okay? This was like the jackpot for me when I finally figured out how to sell clients a retainer. Because initially, telling clients that they're going to pay you $1,000 a month and you're going to provide them service sounds kind of bogus. It makes people scratch their heads. But you know what? We have retainers now that are in the 50, 60, 70, $50,000 a month range. And I know, I know agencies that are doing double that. All right? So the way I approach it with customers is I sit down with them and I try to estimate what their needs are going to be over the next six to 12 months.
Sean
Okay?
Massimo
We figure out all the marketing materials, all the design work that they're going to need within the next year. Presentations, trade show booths, marketing materials, social graphics. Right? Whatever they want to give us, okay? And we'll take it all, of course. Okay. And then, and then we're going to put it all together into one big price. We're going to sit there and say, okay, so we're adding up all this work, okay? And. And we're going to now see that it's $120,000 worth of work a year over the course of the year. Do you see that? Oftentimes the customers are like Yeah, I can see how that works. Then what you do is you offer to break that down into 12 months.
Sean
Okay?
Massimo
That's your starting point. And what you're going to do is you're going to back that up and let them know that $120,000 over the course of 12 months works out to about $10,000 a month. This makes their life easier to pay. It allows the customer to have a predictable, you know, accounts payable every month to a marketing resource. And then, of course, it starts guaranteeing you work on a regular basis.
Sean
Okay?
Massimo
The catch with a good retainer, of course, is now you. You as the agency, have predictable revenue every month. But now you can invest time and energy not into quoting individual jobs with the customer, but learning their industry, working with that customer, and developing a valuable deep relationship with them, with their business practices, with. With their competition. And now you've now changed from being a vendor to now a partner. In fact, what we do is we will also offer a discounted hourly rate for locking in a retainer because of all the overhead it eliminates. So instead of charging $100 an hour on demand every time, and then create an sow and quotes and this and that, we reduce the rate by about 20%.
Sean
Okay.
Massimo
And this gets them a minimum monthly commitment. Now, you definitely want to reassure them.
Sean
Okay.
Massimo
You know, because their biggest fear is, well, what if you're not using upper hours? Or what if you're using too many hours? You let them know that you are going to be tracking those hours on a monthly basis for three months.
Sean
Okay?
Massimo
For three months. And you will review with them at that three month. If hours go unused and you need to reduce. Reduce the hourly rate, or if the hours are actually more at the end of the month and you may need to consider increasing that hourly rate. We do have some language on this, if anybody really wants it, but I'm sure you can find this language anywhere. Ask Chad for help on this one. But what happens is, in my experience, we have never, ever had to reduce a retainer rate because we're investing time, energy, effort in that relationship, and we're finding more ways to land and expand into their business. And then all of a sudden, what happens is we shift our conversation from design work to a creative partnership. All right? Retainers position you as an ongoing creative partner, not just a vendor and not just a hired gun. Clients love the predictability. And when they know that they have a designer available, available, they won't hesitate to use you. In my opinion, retainers give designers power because there's no more feast or famine cycle, right? You have guaranteed income every month, and clients don't get to waste your time with endless revisions without consequences on their end. You stop constantly hunting for new projects and start building new long term relationships that lead to bigger opportunities.
Sean
Okay?
Massimo
Now, after 25 years of business, we have two ways to build a customer. We're either retainer based customer, or we have a minimum level of engagement of $10,000.
Sean
Okay?
Massimo
If customers don't meet one of those two criteria, we just pass them off to other agencies. It hasn't. It didn't take us overnight to get this. This didn't happen overnight. Okay? This has taken us 25 years to get to this part. But now we price based on value, we price based on project. And hourly kind of blends in with the retainer based model, which gives us that predictability and that relationship that clients and agency owners love. Pricing is not a magic formula, okay? But the reality is you have to earn your way up. You start hourly, you move to project base, you prove your value, and then you charge accordingly. There's no shortcuts, there's no fluff, just a logical process that actually works. Now stop second guessing yourself and start charging what you're worth. All right, angry designers, I hope you got a lot out of this episode, you know, or even just one little bit of useful information that's going to change how you bill, how you operate, how. How you're going to grow your business and your journey. All right, again, solo episode. You know, don't be too hard on me, but hopefully you got some value out of this one. Of course. Hit us up on our Instagram or on YouTube and don't forget to sign up for our newsletter, anger management for designers in the profile or on our website where we share a lot more of this stuff. And then you're going to join our community, which we're going to grow and who knows what, what kind of value we're going to provide there in the future. All right, angry designers, on behalf of Sean and myself, stay creative and stay angry. Ah, it just doesn't feel right without Sean, does it?
Podcast Summary: Graphic Design Pricing – The Truth About Hourly, Project & Value-Based Rates You’re NOT Hearing
Title: The Angry Designer - A Graphic Design, Brand, UX, Logo, Website Designer Podcast
Host: Massimo
Episode Release Date: April 8, 2025
Episode Title: Graphic Design Pricing – The Truth About Hourly, Project & Value-Based Rates You’re NOT Hearing
In this insightful episode of The Angry Designer, host Massimo dives deep into the often convoluted topic of graphic design pricing. Addressing common frustrations among designers—ranging from whether to charge hourly or project-based rates to the elusive concept of value-based pricing—Massimo aims to demystify the pricing landscape and provide a practical roadmap for designers striving to charge their worth and build rewarding careers.
Notable Quote:
At [00:00], Massimo introduces the episode with determination:
“...you’re going to discover the pricing roadmap that will actually work for every single designer.”
Massimo begins by critiquing the abundance of conflicting advice available online regarding pricing strategies. He points out that while many advocate for abandoning hourly rates in favor of project or value-based pricing, this one-size-fits-all approach often lacks the nuance needed for individual success.
Notable Quote:
At [02:30], Massimo expresses his frustration:
“The way we're getting it is garbage. It’s not that it's wrong, it’s just that they're not actually giving you the full picture on pricing.”
Before transitioning to more advanced pricing models, Massimo emphasizes the importance of establishing a solid hourly rate. He outlines a step-by-step method to calculate an hourly rate based on annual income goals and business expenses.
Steps to Calculate Hourly Rate:
Notable Quote:
At [08:16], Massimo reinforces the method:
“This isn’t where you’re going to stay. This isn’t your end goal rate, but it’s your starting ground.”
Once a reliable hourly rate is established, Massimo discusses the benefits of project-based pricing, such as better profit margins and greater control over earnings. He advises reviewing past projects to determine an average time investment, which then informs the project price.
Steps to Implement Project-Based Pricing:
Notable Quote:
At [10:03], Massimo outlines the process:
“Once we average out the other eight, okay. That becomes our baseline for a project price.”
Massimo shifts focus to value-based pricing, addressing its overhyped reputation and the reality that it requires more than just a shift in mindset. He outlines four key considerations often overlooked when adopting this model:
Notable Quote:
At [15:55], Massimo cautions:
“Value based pricing is a process and you’re a fool to think that you can snap your fingers and start doing it tomorrow.”
To successfully implement value-based pricing, Massimo advises:
Notable Quote:
At [19:40], Massimo emphasizes the importance of specialization:
“Generalist designers often struggle to sell value because they just kind of blend in with the rest of the crowd.”
Addressing another critical aspect of pricing, Massimo champions the retainer model. Despite its underrated status in online discussions, he outlines how retainers can provide predictable cash flow and long-term client relationships.
Benefits of Retainers:
How to Sell a Retainer:
Notable Quote:
At [27:45], Massimo shares his agency's criteria:
“After 25 years of business, we have two ways to build a customer. We’re either retainer based customer, or we have a minimum level of engagement of $10,000.”
Massimo wraps up the episode by reiterating that pricing is not a magic formula but a process that requires earning your way up. Starting with an hourly rate, transitioning to project-based pricing, and eventually moving towards value-based pricing and retainers forms a logical progression that can lead to sustainable and profitable design careers.
Notable Quote:
At [27:59], Massimo encourages designers:
“Pricing is not a magic formula, okay? But the reality is you have to earn your way up.”
This episode serves as a comprehensive guide for graphic designers grappling with pricing challenges. By dissecting hourly, project-based, and value-based pricing models, and advocating for the strategic use of retainers, Massimo provides actionable insights to help designers charge what they're worth and cultivate meaningful client relationships. Whether you're a freelancer or part of an agency, this episode offers valuable strategies to navigate the complex world of design pricing effectively.