- Hey everyone, today I'm here with a very special guest
you probably recognize from The Futur,
which is a YouTube channel about design.
Right? - Yes, that's right.
- Do you want to introduce yourself and like,
what your thing is? - Sure, yeah.
I don't know if we have a thing, but we talk a lot
about the intersection between business and design.
What we wanna do is help people all over the world
live a creative and fulfilled life,
and to get their share and to increase their value.
- That's what I'd love for you to talk today about
to my audience because I'm a firm believer in this, too.
In designers being paid what they're worth
and being paid on time. - Amen.
- What's the main issue with designers
not being paid what they're worth?
- I think the main thing, it's starts at the very beginning.
It's a lot to do with mindset, and how they view themselves.
To have the self confidence,
and to have a couple of communication tools
to ask for what they're worth.
A lot of us are conflict adverse,
so we don't like the friction.
We don't like to talk about money,
we don't wanna talk about terms,
so what we do is we constantly punt.
We're always punting at the conversation down the line
until it gets into the proposal.
Sometimes it's not included in the proposal
and then it becomes like, okay, so the 17th revision now.
Like, what am I gonna say to the client?
That slippery slope that you go down in dealing with all the
changes without asking for a change order,
a change in scope of work document.
Those kinds of things come back to bite you in the butt.
Long before short, you'll wind up working at minimum wage.
And that's definitely not a way to sustain a life.
The other thing that creatives struggle with, is guilt.
It's something that we enjoy doing, making things.
Whether you're an illustrator, graphic designer,
you build websites; you enjoy doing this,
so it feels like it's wrong to charge people money, right?
- Especially when you do it for fun, as well.
Like, just for you own personal projects,
it feels weird when you start out I think
to be charging people for it.
I remember feeling grateful when someone paid me
for my first design job.
You know, I was like, "Wow you're paying me to do something
"that I would've happily done for free, to be honest."
- So how have you gotten over that?
- I think just as I learned more and improved my skills
and realized that this is going to be my career
and so, I kind of want to earn money from my career,
and I want it to be my living.
- You want to be a professional?
- Yeah. - You guys know
what a professional is, right?
When your main source of income comes from the thing
that you do.
If you're waiting tables and you act on the side,
you're a waiter.
When you're acting full time and you wait part time,
then you're an actor.
This is how we have to deal with this.
- That's kind of that mindset thing
you're talking about, right?
- Mm-hmm. - I like it.
If someone is working design, they've got some clients
and they're wanting to raise their rates,
I think a lot of the time designers feel
like if they've already started out at this level,
it's really hard to increase their rates
and make people pay them more for essentially the same work
even though, they've been improving their skills
so it's not really the same.
How do you advise people get over that
and start charging more?
- How do you change your rates is a very common question
and if you start out somewhere
it seems like it's impossible sometimes.
Heres the first rule of thumb.
If people keep saying yes, it's time to change your rates.
So if too many people say yes, you're charging not enough.
My rule of thumb is to double your rates and negotiate down.
Anywhere between the 2x rate and where you started off
is a good place.
You can simply have this one of two ways.
Any new client, just tell them the new rate and that's cool.
You get to reinvent yourself every single time.
That's cool.
The other way to do this
is that next time the client calls you and says,
"Hey, we got to do this work," and then you say,
"That's great, appreciate it.
"I need to let you know, since working with you last time
"I changed my rates and I feel like the work is fair
"given at this rate,
I hope you feel the same," and you go from there.
- I worry with starting high and then negotiating down
is am I then giving in to the client, and am I then saying,
"Well I think I'm worth this much, but oh okay,
"you don't think I am."
Does that look weak, is my concern.
- Okay, I'm not so worried about perception.
Let's look at it this way.
First of all, when you ask for double,
sometimes they just say yes,
then you realize you're still charging too little.
(laughs)
The point is to actually have some friction
so what I like to do is,
I like to price bracket and I want to anchor high.
Those are the two terms you need to know.
Price bracketing gives people a range
and you're allowed to explore with them
based on their reaction where you need to net out.
I want to anchor high because I want them
to not negotiate down from the lowest point,
but negotiate down from the highest point.
Get this, if you charge 1000 dollars to do a logo,
great, good for you.
If you charge 2000 dollars and when you work it out
and there's a negotiation process,
lets say you get 1600 dollars.
I don't think that's a loss.
I think that's 600 more than you used to get.
That's not a problem at all.
This is just business.
- Another thing on pricing is that,
I know that you believe this, too,
is that you don't price based on the hour
- That's right. - But based on the value.
- That's right.
- People always ask, "What's your hourly rate?
"What should I charge?"
And I'm like, "Well, I can't really answer
"that because I charge based on the project."
I evaluate with the client what the value
is they're going to get from it,
what's the end product you're going to do for them,
and that's how I figure out my price.
That's a really hard thing to get into, though.
- It can be. - And I've not had much
luck with trying to explain it to people.
Is there any advice you can give? (laughs)
- Yes, I will try.
Let's see what happens here.
If you're really interested in changing rates
and getting the value of your work,
you need to understand a couple of things.
There's basically three pricing models.
Pricing model number one is this.
Is you charge based on time and materials.
It's an estimate, so if you wind up working more or less,
you charge accordingly.
If the client runs the project long,
you get to charge more.
The problem with this model is two things.
One is, you're not incentivized
to finish the project quicker
because if I'm smarter, faster, better,
I do it for less money.
- Which makes no sense.
- Which makes no sense,
so the client already knows this so they're thinking,
"How do I protect myself from it going even higher?"
You put the risk on the client
with pricing model number two, is based on the fixed fee.
"You know what,
"I don't want this to be a never ending scope,
"I want to lock this thing down.
"I want you to give me one flat fee
in which I will pay you."
Now you take the risk.
If you run it better, faster, now you're incentivized
to finish the job quicker, you'll make more money.
The only problem is,
if it goes longer then you will lose money.
What happens is, you have to estimate on the higher end.
Both parties understand that, so if they got a lower rate
and they're willing to deal with expanding scope,
no problem.
The benefit to them is this is a fixed fee,
but then you have to price a little bit higher.
That's how most people price projects based on that.
The third model, the most interesting model,
takes into account the value it has for the client.
This one we say, price the client and not the job.
This goes counter to a lot of ways designers think today.
They think it's unfair, it's disingenuous,
and it's criminal even in some degree
to charge different clients
different rates for the same work.
What you don't realize is the clients
see different amounts of value to the work itself.
If I were to ask each and everyone of you guys,
let's pretend you're the client and I'm the vendor.
I'm going to ask you guys,
how much is it worth to you to get a solution
to a problem that you haven't been able to solve?
It doesn't matter what kind of problem.
Let's say I'm selling time, even.
Let's say I'm selling two hours worth of time
and I guarantee you I can solve whatever problem
it is you're trying to fix.
Each and every single one of you guys
is going to have a different price set
because you're solving different kinds of problems.
If you need a logo,
some of you guys might price on the lower end.
Let's say you need to do marketing and sales
and that's going to be worth a lot more to you.
That's the difference.
I'm pricing it based on how you see it versus how I see it.
This gets us away from charging for time and materials.
There's a lot of different things
that you need to be able to do in order to charge for this.
The first thing is,
you need to be in front of decision makers.
You have to speak to the founder, the CEO, the CMO,
somebody in the C suite executive suite
and in order to speak to them,
you can't be having these conversations
about colors, textures, or feelings and moods.
You really have to get into the business
and help them solve a business problem,
then you can determine the value with them.
- What are some questions
that someone could ask to start getting into this?
To start figuring this out
and getting that information from the client,
because you do need to pull it out of them.
- Yes, you do.
The first thing that's going to happen is the clients
are going to be coming at you
and they're going to start prescribing things.
"I need this done by this time.
"I need this kind of logo,
"it needs to happen like this, this, and this."
They're prescribing to you,
kind of giving you orders so to speak
while you sit there and happily
and dutifully write those notes down
and then you do the work.
You have to change that relationship
because the instant somebody orders you to do stuff,
you've negated all the potential value
that you bring to the table.
You can't let the client come in
and dictate how to solve a problem.
Not only have they diagnosed the problem,
they're also prescribing the solution.
When they come in and they say,
"I need this and this done."
I say, "This is fantastic.
"Thank you for calling me.
"I'm curious, what's motivating this call today?"
You make them stop and think, and retrace their steps
as to what the original problem was.
Usually this is, they got an awareness problem,
meaning they need to get the word out on something.
It could be a conversion problem.
Their website is not performing,
they're not getting enough clicks.
They're not getting enough click through
or they're getting too high of a bounce rate.
You can solve that kind of problem.
What I would try to do is retrace it back
to what their original motivation is
and why they called you in the first place.
From there you want to stay in the diagnostic phase
as long as possible to ascertain two things.
What do they have to gain and what do they have to lose?
If they solve this problem,
how much value is created for the company?
Even more powerfully, what do they have to lose?
If this goes horribly wrong,
how will this impact their business in an adverse way?
When you start to have those two conversations,
you'll start to realize with the client,
what they were prepared to spend 2000 dollars on
is disproportionate to the value gained
and the potential mitigation of the value lost.
Now we're talking about millions of dollars and you can say,
"Well, does it sound reasonable
"that you would spend 10% to achieve this goal?"
That's how you enter into value conversation.
- I think that's also kind of your duty as a designer
to get to that root of the problem
and be the one prescribing the solution.
I don't think you're doing your job as a designer
if you just do exactly what the client asked.
Well thanks so much for sharing all that value, Chris.
If you're watching this and you feel like,
"I want more," where can they go
to find more? - There's a lot more.
Go to youtube.com/thefuturishere.
The future is spelled without an 'e' because you know,
we're cool like that, without the 'e'.
- There we go, we're going to film a video
over on Chris's channel as well so go and check that out.
There'll be a link in the card - Come check that out.
in the description and all that.
Thanks for watching and I'll see you next time.
- Smash that like button,
(laughs) hit subscribe, you guys.
- All right, thank you for saying that so I didn't have to.
- (laughs) I'll do that for you.
- See ya!
- All right and cut-o, roman-do.
(beep)
- My back is super warm and then my legs are super cold.
(laughs)
- Nose is runny now.
- Would you like a tissue? I have one in my bag.
- Thank you, please.
Or I'll just use my, the human tissue
which is known as my hand. (laughs)
Him from the future!
(claps) (laughs)
Okay.