How To Price A Project

23 Apr

Someone asks for a commission and enquires how much. You freeze thinking, “if I say X amount is it too low that they won’t take me seriously, or too high that I’ll scare them away”. I have been there. I nervously blurt out a number which I think is right only to realise I’ve massively undercharged myself. Things changed recently when I started to approach these conversations about money differently.

Let’s bring up money early.

I used to get so anxious talking about money I would avoid bringing it up. We’d have meetings and calls about the commission, I’d get enthusiastic to start it, only to discover that their budget was way too low. I mean like ridiculously low. I had not only wasted my time with all these calls but also theirs. Not everyone who wants to work with you will be a right fit. It’s important to qualify a potential client early on. Bring up the conversation about money and budget early. I tend to ask after I’ve gotten a general scope of what the commission is. Being the one to bring up the topic of cash, gives you authority and shows confidence in that area. You’re more likely to be able to get the amount that you want too.

What’s their budget?

Before I suggest a price, I try find out what what their budget is.

It’s important to have an idea of how much they’d be willing to spend, so that you know you’d be hitting the mark when you send them a quote. If their budget is a lot higher than what you would have quoted them, I would suggest looking at your pricing again as you may be undercharging for your services.

As artists and creatives a part of our pay is put down to the ‘value’ we bring in the years of refining our craft.

Who defines the price of that value?

Well, it’s the market that’s willing to pay that amount and perceives it to be of that price.

As creatives it’s in our nature to undercharge for our work. However, by following this concept it will help you increase your rates and get a better understanding of what you should be charging.

P.s. Pay attention to what type of clients you’re meeting with. If their budgets are consistently too low then you might need to shift to searching for leads elsewhere.

Think like a business.

The best thing that has helped me grow my practice is to look at it through the lens of a ‘business’ rather than, ‘just me trying to figure out what I’m doing’.

You don’t have to have employees to think like a business. It’s a mindset shift. But will make you more profit and help you grow.

Key areas I cover when pricing a project:

• Materials

How much are the materials costs for the project. Add up the cost of the paint, brushes, digital software and anything else you’ll need. Add on 10% to cover contingency incase you go over. Materials are seen as a business expense and so won’t be taxed.

• Labour

How long will it take me? My day rate is £200. I work out the total price of labour and add an extra day incase it overruns. As a sole trader/self employed. This cost is seen as profit to HMRC and so will be taxed. That tax is included in my £200 day rate.

• Profit

You might think, ‘why do I need to add on profit if I’ll be paying myself in labour?’. I’ll be honest it’s something I’ve recently come to terms with too. But you need profit to grow your business. This profit can be used to reinvest in better equipment, expand a new revenue stream or even to save for those quieter months.

Upon doing my own research for creative businesses, you should aim to make around 25% profit.

This income is taxed 20% too. So if you made £500 in profit, you could be liable to pay £100 of that to HMRC.