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You need to to raise your prices if you want better work.
I first covered this topic in a blog post titled It's Time To Raise Your Design Rates. In this episode of my graphic design podcast Resourceful Designer, I expand on the topic and tell you how I first discovered the connection between higher prices and better work and I explain how if you raise your prices you'll be better off as well. Make sure you listen to the podcast for the full story.
Pros and Cons if you raise your prices
Let's start off with the cons since there really aren't that many.
- Con – Harder to land work.
- Con – May loose clients
That's about it. These cons may be areas to concern yourself with but they are the only two cons, and chances are you won't have to worry about them. So let's move on to the pros.
- Pro – More money for less work
- Pro – Higher end clients with bigger budgets
- Pro – Higher perceived value for your work
- Pro – Clients who can afford your higher prices will probably have more work for you as well
- Pro – You will be taken more seriously as a designer
- Pro – The ability to compete with other high priced designers
- Pro – More interesting projects to work on
- Pro – Less one time clients and more recurring clients
As you can see, there are way more pros than there are cons, and I only listed some of the pros. As for cons, I Googled it and those were the only two I found.
The fact is, after your raise your prices you will be in a better position to attract higher end clients with bigger budgets and recurring work. It all comes down to perceived value and people taking you seriously. A large corporation looking to rebrand will have more confidence in a graphic designer that changes them $8,000 than one that charges them $800. It's perceived value. Both designers may have identical skills, but the higher priced designer will be taken more seriously.
It's just like layers. Would you prefer have a high priced attorney represent you or the appointed public defender? The high priced attorney of course. Why? Because of the perceived value. The public defender may be just as competent as the high priced attorney but he/she will never be taken as seriously as the high priced layer. The same theory applies to graphic designer.
Do pricing strategies matter?
No. It doesn’t matter if you charge by the hour, the project, or by value. If you raise your prices you will project an image of having more value to your clients. And if it looks like you offer more value for your clients you will attract bigger and better clients.
Why do you think companies like Pepsi Cola pay so much when they create a new brand? It's not because the designers or agencies they hire spend tens of thousands of hours on the project. Nor is it because the designers or agencies are more talented and more creative than you are. It's because the designers or agencies have created a higher perceived value for themselves that make large companies trust them more and take them more seriously and in return large companies like Pepsi Cola are willing to pay a premium price for them.
You can accomplish this as well. Maybe not land a client like Pepsi Cola, although never say never. But you could land some very lucrative accounts and get the ball rolling. Because once you land one large client more tend to follow suit.
Do you tell your clients when you raise your prices?
This is entirely up to you. The few times I've raised my own prices I didn't tell my clients and they didn't question it when I sent them an invoice billed at my new higher rate. People are used to prices going up and wont be as surprised by an increase as you think they will. Now if you feel this is a little back handed then go ahead and inform your clients when you raise your prices. Chances are you wont hear anything negative from them. And if you do end up loosing a client because of the increase, they were not loyal clients to begin with and you are better off without them.
What do you think?
When was the last time you raised your prices? How did it work out for you. Let me know in the comments section for this episode.
Questions of the Week
I have another Question Of The Week to answer. If you would like me to answer your question in a future episode please visit my feedback page.
This week’s question comes from Norman,
Hey Mark I'm loving the podcast since my discovering it a few weeks ago. I've learn a ton! My question for you is how did you find/get your first leads and clients, aside from the obvious strategy of working within your current social group or doing work for family/friends, but the first time you had your eyes set on a client that you wanted to work with and how did you go about approaching them? Thanks a ton Mark for all the knowledge and help!
To find out what I told Norman you’ll have to listen to the podcast. But I'll give you a hint. In my answer I refer to my blog post on attracting new clients.
Resource of the week is HostGator
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Running a graphic design or web design business all by yourself isn't easy. If there are any struggles you face running your design business please reach out to me. I'll do my best to help you by addressing your issues in a future blog post or podcast episode here at Resourceful Designer. You can reach me at firstname.lastname@example.org
Love the site, and the tips you give are invaluable.
I realize I’m VERY late to the convo, but this topic is something I’ve been wrestling with over the last year or so as I grow as a freelance designer.
While I agree with a lot of what you said, there are 2 counterpoints I’d like to throw in:
1. Graphic design is NOT subject to a different set of rules as other industries. There is a reason why companies will seek multiple bids for the same project; they want the highest quality product for the lowest cost. Cutting costs is important to any successful business, so why would they pay a higher cost for something that they can get cheaper w/comparable quality?
2. The graphic design industry is completely saturated. There’s a PS app that comes preloaded in many phones. If you google the word ‘logo’ you’ll find hundreds of websites devoted to people & companies who want to obtain high quality designs for a low price, and designers chomping at the bit to win $200 contests. Anyone with decent MS Paint skills can copy a stock image and add text to it.
My point is, being a graphic designer is not what it used to be. The internet has become a double edged sword when it comes to the design industry (as well as many other creative industries) and as a result, the market is dictating the going rate for graphic designers. Why would a small business pay $1000 to an agency when they can go to logowhatever.com and sift through hundreds of quality designs and pay a few hundred bucks (if that)?
While raising prices is a good idea for those who have big corporate clients with big budgets, the majority of us are doing jobs for small and local businesses who can’t or won’t pay thousands of dollars. The way you make it sound, if everyone just raised their prices we’d all magically have clients give us all their money. The only thing that leads to is less or no clients; I’d rather charge less, have a steady flow of work & grow organically.
I’d like to hear your thoughts on this, as someone who has seen the changes the industry has made over the years.
Much of what you say is true, to a certain degree. Look at it this way. If someone is looking for a new car they have lots of options to choose from. There’s Ford, GM, Toyota, Hyundai, Audi, Mercedes, BMW, Aston Martin, etc. etc. Someone with a lower budget will stick to the Fords, Hyundais, GMs because they find the Audis, Mercedes and such way too expensive. On the other hand, there are some people who can easily afford the Audis, Aston Martins etc. and these people wouldn’t even consider looking at the Fords and GMs because they are considered cheap to them.
The same goes for design. There are some companies and people that want the best design they can get for as little money as possible. You will never be able to change those people’s minds. Those are the people that visit those ‘logo’ sites you mentioned or shop around for the best price.
Then there are the people and companies that would never dream of going to one of those ‘logo’ sites because they know the value of branding and what a designer can do for them. These people are willing to pay well for that good design.
By raising your design prices you end up attracting less of the first kind of people and more of the second kind. It’s happened to me and I know many designers who have experienced the same thing. When I upped my prices from $50/hr to $75/hr several years ago I stopped getting inquiries form those “cheapest price” clients and started getting more serious inquiries. The same happened again the next time I raised my rates.
The other thing to consider is landing one $1000 client is easier than landing five $200 clients because there is much more competition between designers and ‘logo’ sites for those $200 clients.
Your point of the market dictating the going rate for graphic designers is only somewhat true. The market is dictating the going rate for designers who want to play that game. Designers who don’t play that game are dictating their own terms and are winning bigger clients.
One last thing, you do not need big corporate clients for this to succeed. There are many small and local businesses who are willing to pay a premium price for good design. Maybe not in the hundreds of thousands. But many small and local businesses are willing to pay thousands for good design. I know, I have many of them as my clients and I don’t live in a big metropolitan area.
Would you recommend listing your base price (lowest starting price one is to begin work)?
Hi Sean, I think every designer should have a base price, but I don’t think it’s something that should be listed publicly. The reason I say this is you don’t want to scare someone away before having the chance to explain what they get for your price.
I’ve had many discussions with potential clients, who ended up hiring me for their project, that I’m sure wouldn’t have contacted me if they had seen my prices beforehand.
Part of our job as designers is selling our skills, knowledge and experience. Part of that selling is convincing clients of the benefits they receive and the relationship they form with you by paying your prices.
The downside to this is you will have people contacting you expecting to pay $20 for a logo. Don’t get frustrated by them. Instead, take the opportunity to educate them on what’s involved in creating good design and why your prices are where they are.
Thank you for the episode. I am very much delighted with this. This gave me a boost to my confidence and it’s really encouraged me.
Yes I did raise the prices for designing jobs within one year of starting the work and Yes I did realise that the chances of getting work declined however I take it positively as I was enjoying the challenge because of those few clients were actually very serious and also appreciating the efforts I was giving towards his task. I actually enjoyed it rather working for the jobs with a very low budget.
Thank you very much.
Exactly. That’s the whole perceived value I talked about. The more the client pays, the more they appreciate the work you do for them. Clients with low budgets tend not to care who does the work, just as long as it doesn’t cost much. That translates to very little loyalty from those clients.