When you work independently in a creative industry, it can be challenging to decide what to charge for your services. To make it even harder, many times your clients have different expectations of the cost for creative work, or they simply don’t understand how much time actually goes into it. If you are building a business or digging into freelancing, here are some things to consider before giving your first quote.
1. Your Location
In big, metropolitan cities, videography, editing, and similar creative work can fetch more than in smaller cities. The Bureau of Labor Statistics website has data for how much people make in different job categories. For example, here’s a breakdown of how much editors make, and it includes geographically-based averages in the US. You can find similar statistics online for your industry to help guide you to the right price points.
2. Your Competitors
In addition, knowing what your direct, local competitors are charging can help you gauge what you should be making. Try to find a sweet spot in your pricing, so that you can offer a good deal to your clients, without selling yourself short. There is some psychology to this too, because while people don’t want to pay too much for something, they also don’t want to pay too little. If you set your prices too low, compared to others, customers might think your work is cheap, in a bad way. If they are truly looking for quality work, they will be willing to pay for it.
3. Your Experience
If you begin working at lower-than normal prices, it can be hard to raise your rates once you already have a client base who know and expect lower-than-average prices from you. To avoid this predicament, you can start out advertising full-rate prices, but offer discounts. If you have little experience, it’s a good strategy to discount your prices, or even do some pro-bono work to build up your portfolio. But once you have some experience under your belt, it’s okay to raise your prices (or remove your discounts) in accordance with what you can offer your clients. They are not only paying for the end product or service, but also for the skills and knowledge you bring to the table. As your expertise grows, you have even more to offer to the client.
4. Your Equipment
Does your work require special equipment, and do you own it? Is it top-of-the-line, or a few years old? Do you have to rent equipment? Does the work require special software, such as editing or graphic design programs? Production freelancers, such as DPs and gaffers, may choose to break their pricing down by the day rate + the equipment rental rate. Consider your investments when you set your prices.
5. Your Time
It’s important to track your time with every project you do, paid or unpaid, so you have a solid idea of how long it actually takes you to do certain things. Projects usually end up taking longer than you think, and using just a guesstimate will often mean you spend more time on a project than you planned, strain to meet a deadline, and make less money than you really deserve. [Speaking from experience here.] There are debates about whether it’s best to offer an hourly rate or a flat rate for a job. It depends partly on what kind of work you do and whether the client will want lots of revisions. Here’s an article that presents the pros and cons of both approaches for the freelancer, and here’s an article discussing the pros and cons for the client.
I tend to think flat-rate pricing is usually best, especially for work that involves a fixed cost for you, such supplies for a certain type of project. For example, if you are a DP, you could do a day rate or half-day rate. If you do an hourly rate for your work, also include an estimate of how many hours you expect the project should take. This is a good approach if you expect the client will want lots of revision drafts or changes later on. If you do the same kind of work over and over again, think about developing packages for clients to choose from. If you are a wedding videographer or headshot photographer, you can bundle different products and services at different pricing levels. Regardless of your pricing structure, it helps to break down those costs on paper for your client, so they understand the scope of work and time that they are actually paying for.
You have to work hard to build a reputation for your work, and this takes time. Even though it’s good to do pro-bono work when you are just starting out, be on your guard for people who want your work for free or super-cheap. There is a lot of misunderstanding about how much it costs for creative work, and sometimes people don’t expect prices to be what they are. People may not realize the amount of time that goes into designing a logo or making a video. It’s your job to set a fair price and explain how that price breaks down; if clients balks at it, that is not your fault. Your ideal client is out there, and they are willing to pay the right price for quality work. As the saying goes, you can have Fast, Cheap, or Good…pick two. In my book, if you are Fast and Good, and you set your price accordingly, you are on the right track.