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Understanding the 5 ways to price creative work.
Over the past 20+ years, I’ve comprehensively tested each approach as both a client and a creative.
You certainly don’t need to memorise all of them, but I’ve added this information below for a few reasons:
Regardless of the budget or requirements, I believe everyone deserves to feel confident and excited about the value they’re receiving.
Often, people are vaguely aware of alternative models, but don’t always understand how they work (or how to ask)
Working with clients and partners across dozens of timezones and cultures for the past 9+ years has required me to become extra clear in my language and expectations
So whether you decide to fill out the form above or negotiate a deal with someone else, I hope the information below allows you to feel more informed throughout the process.
Hourly Rates
Cost based on the time spent on a project, offering flexibility but less predictability for both parties.
Best suited for young creatives or simple briefs.
BENEFITS
Transparency: Clients can see exactly where their money is going with detailed time logs.
Flexibility: Easy to adapt to changes in project scope or requirements.
Simplicity: Familiar and straightforward pricing method.
CHALLENGES
Unpredictable: Total costs can escalate if the project takes longer than expected.
Optimised for Inefficiency: Clients may worry that freelancers are taking longer to increase their pay.
Administrative Burden: Great creatives are rarely also great at tracking their time.
Fixed Cost
A flat project fee, providing clarity on costs but requiring accurate scope estimation.
Best suited if you’re prioritising a strict budget over winning awards.
BENEFITS
Predictability: Everyone knows the total cost upfront, reducing financial uncertainty.
Budget Friendly: Easier to plan and allocate budgets.
Cost Certainty: Clients know the total cost upfront, reducing financial uncertainty.
CHALLENGES
Scope Creep: Additional work or late changes can lead to financial loss.
Optimised for Speed: Protecting the profit margin often takes precedence over innovation and / or quality of the work.
Inflexible: Change is inevitable, which can make accurately estimating fixed projects very challenging.
Retainer
Ongoing work with regular payments, amortising costs over time and ensuring steadier cashflows for all parties.
Best suited when you have worked together previously or have high trust in the creative.
BENEFITS
Steady Cash Flow: Predictable, regular payments help manage budget planning and spreads project costs.
Collaborative Partnership: Over time, often leads to deeper understanding and higher quality work.
Priority Access: Clients often receive priority service or faster response times.
Ongoing Relationship: Builds a long-term partnership, ensuring consistency in service quality.
CHALLENGES
Over Dependency: Risk of becoming overly reliant on either side. Resentment can build without clean communication.
Difficult to Adjust: Changes in scope or needs may not align with the fixed retainer, requiring renegotiation.
Value Added Calculation
Price based on the perceived (or projected) value added to the client, aligning payment with impact rather than effort.
Best suited when you need champagne results on a beer budget.
BENEFITS
Aligned Interests: Payment is tied to the impact or value delivered, ensuring the creative is motivated to maximise results.
Potential High ROI: Clients will see significant returns if the project delivers high value.
Custom Fit: Pricing reflects the specific benefits clients expect to gain.
CHALLENGES
Subjectivity: Estimating value can be difficult and lead to disagreements over pricing.
Shifting Perceptions: Risks of perceived value shifting over time, leading to dissatisfaction on either side.
Shared Risks
& Rewards
Base rate plus a percentage of ownership or profits, sharing in the project's success.
Best suited for existing relationships or entrepreneurial creatives who can clearly understand and add value to your vision.
BENEFITS
Reduced Initial Costs: Lower upfront payments helps with cash flow.
Shared Motivation: Having everyone invested in the project's success can drive higher commitment and quality.
Long-Term Partnership: Encourages a long-term relationship and mutual success.
CHALLENGES
Complexity: Negotiating equity terms can be time-consuming and legally complex.
Uncertain Value: The future value of equity is unpredictable and might never materialise.
Dilution of Ownership: Giving away equity means less ownership and potential control for the client.