Marketing Mentors, Ilise Benun and Peleg Top, are up to it again. This time they’re teaming up with FunctionFox for a webcast titled, “What Every Creative Professional Must Know About Hourly Rates.”

More information can be found on the FunctionFox site. Here’s a link to an article by Ilise to go along with it.

Until the next
Marketing Minute
all the best,
nt

When it comes to marketing, you’ll often hear about the four Ps – Product, Price, Place (Distribution) and Promotion. The one that’s often forgotten when it comes to marketing is price.

Price can be used as a positioning tool because of perceived value. Consider cars. You can buy a low end Chevy or drop tens of thousands (or more) on a decked out Mercedes. Both will get you where you’re going. But, the latter will get you there in a lot more style. Folks drop that kind of dough because of the perceived value and prestige associated with the Mercedes brand.

For instance, a designer can price themselves on the low end and focus on volume or go for the high end and target fewer, but higher profile and more profitable clients. Granted, being good at what you do is important, too, along with the value and experience you bring to the table.

Unfortunately, many designers, especially those just starting out, don’t have a fee strategy in place. They tend to pull a number out of the air, make their best guess about the going rate or what the client will pay.

A while back, I read a report by copywriter Richard Armstrong titled, How to Make More Money by Writing Less. It’s thought provoking and I suggest you read it.

In the report, Armstrong mentions a potential client he didn’t want to take on. So, he jacked up the price tag … way up … and told the guy he couldn’t possibly start the job for at least a month. The client said, “No problem.”

Many people associate higher price with higher quality. Conversely, if you’re offering the sun, moon and stars for a buck and a quarter, people tend to be a little suspicious as to whether you can deliver the goods.

Before you develop your fee strategy, it’s a good idea to figure out your base rate. That’s the number you can’t go below. If you’re charging a fee that’s too low, each hour you work digs the hole a little deeper. On the flip side, go too high and you risk pricing yourself out of the market. So, working out a fee strategy is a bit science and a bit art.

To figure out your base rate, you’ll need to account for three things:

Salaries – the money you pay yourself, staff if have one, along with costs associated with salaries like insurances and taxes.

Overhead – All the stuff you need to pay for to keep your boat afloat.

Profit – The money that enables your business to grow or pay for unexpected things, like when your computer takes a nose dive.

As luck would have it, I wrote an article on figuring your rate a while back. Here’s a link to it onCreative Latitude. This will give you the nitty gritty on how to do it.

Once you know your real numbers, you can begin to make sensible decisions about the direction you want to take.

Until the next
Marketing Minute
all the best,
nt