Pricing

Forgive the rudimentary nature of this question. I should know this stuff by now, but I don’t think I’ve been living in the real world about pricing for a long time.

A small but very successful business would like my to do an illustration that would be used as branding/logo for a new service they’d like to provide. Not a logo for the entire business but just this one service. They know my work. I think it would be a pretty smooth project. I have no idea what to charge.

There is the fee for the drawing itself. And, since it will be used in perpetuity, there should be some compensation for universal rights as well, correct?

Since they are a small business (also a fairly influential one locally) my instinct is to go low. $xxxfor illustration. $xxxfor univeral rights. Am I way off the mark?

Again, forgive me. I’ll get better at this.

This depends on the time, edits and their budget.
If the price is worth your time, $xxx seems fair.
My Uncle told my cousin back in 1984 that $xxx was nothing to sneeze at.

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Keep all discussions on pricing to general terms. Do not discuss specific prices for services.

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I’m a little puzzled by your reasoning. They’re successful and influential, which makes you want to “go low.” Why? I noticed RKK removed the prices from your post, so I won’t mention them, but, yeah, they were much lower than I would consider as someone working in the U.S.

If you were doing this kind of work full-time, you’d go broke undercharging for your services. By the time your rent, utilities, insurance, taxes and other bills were paid, you wouldn’t cover your costs, let alone making a profit.

If you want to do this person a favor, that’s one thing, but let’s assume it’s purely a business transaction. What difference does it make whether this is for a small or large business? When you fill up your car with gasoline, does the person who owns the gas station charge you less or more based on what he thinks you can pay?

The owner of this “very successful” and “influential” business understands the need to, first, cover costs and, second, to make a profit. This person didn’t become successful by undercharging, so why would you be inclined to low-ball your prices?

Quite possibly, this person might not realize how much time goes into these kinds of things, which wouldn’t be unusual. He or she might be mislead by the crowdsourcing sites that seem to indicate the going rates for logos is, like, $40. If so, fine, let them use one of these sites and, maybe, a pimply faced 13-year-old with a pirated version of Photoshop will do the job for them.

Even if that’s the case, do you really want to compete with a 13-year-old (or whomever) for bottom-feeder business? Personally, I just won’t do business with people who fail to respect the time and expertise that good design requires and who won’t pay for what my time and expertise are worth. This business, if they really are successful, likely expects to pay for what the job’s worth. If not, personally, I’d decline the job.

In addition, it’s not standard practice to charge extra for people who want to own their logos as opposed to only buying usage rights for them. Business owners would be foolish to allow designers to retain ownership of their logos. For that matter, most graphic design is custom work and can’t really be resold to others, so again, it’s not standard practice to think in terms of charging extra for “universal rights.”

This reasoning doesn’t hold for photographers and illustrators who can potentially resell their images to others and where limited usage rights are common. For most graphic design work, however, this logic falls apart given that, as a practical matter, the work can’t typically be resold to others down the road.

The standard practice for something like you’ve described is to simply charge enough to cover your costs and make whatever profit is needed with the expectation of signing over the copyright to the logo upon payment. In other words, build that extra fee into the base price rather than itemizing it as an add-on, like you might do when drawing an illustration, for say, a magazine that only needs the illustration for one issue.

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Great response, Just-B. Thank you. Almost immediately after I posted my question my brain kicked in and made a plan.

Say I want to make XXK a year from freelance graphic design from 20 billable hours per week. That would be (XXK ÷ 52) ÷ 20 = Hourly rate

Estimate time for project. (Include phonecalls, meetings, emails, conferencing. Sketches, Roughs. Semi-Finals. Finishing. Delivery. Build in usage considerations (will it be used forever or is it a one time thing?). Client market ($, $$, $$$?) = arrive at fee.

I am surprised at your remarks about rights. But that’s a topic for many very long posts all by itself. Thanks again!

B is spot-on about the rights involved.

In addition to custom, bespoke graphic design, I also design typefaces and sell fonts.

I sell usage rights to individual font packages at far below the cost of designing and producing them. I can do this because I sell those same usage rights to multiple people. If someone wants to buy the fonts outright for exclusive use, I would need to increase the cost dramatically to make up for lost future sales of the fonts. Similarly, if you spend several days on an illustration, you might be able to give the client a reduced rate if that client only needed limited rights. You’d make up the difference on subsequent limited rights sales to other people needing something similar.

A logo is a different matter. An organization’s logo becomes an essential and integral part of its or its products’ visual identity. A business can’t take the chance of becoming successful and having its logo held hostage by someone else owning it. Nor can they take the chance that it won’t be resold to a competitor down the road. Furthermore, it’s not possible to register a logo as a trademark if it isn’t owned outright by the entity registering it.

Much the same holds true with most graphic design. A designer is unlikely to ever have occasion to sell the same brochure, letterhead, website or packaging to another customer. And again, the business owner is unlikely to want to take this risk anyway. Therefore, the entire cost needs to be paid by the entity that commissioned the work since future sales of that same work are unlikely.

So with this considered, the standard practice for illustrators, photographers (and type designers) of selling only usage rights doesn’t hold up well when applied to graphic design. There might be exceptions here and there, like designing and selling templates or stock work of one sort or another, but beyond that, it’s not common.

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Still, usage DOES influence pricing. A one time illustration is going to be priced differently from a illustration that is used as a logo on into infinity. Perhaps “rights” isn’t the correct term for this, but it is a factor.

I’ve also understood for years now that usage is limited to the parameters of a project. Say, for instance, I agree to design a display poster for an arts organization that’s one use and is priced accordingly. If the organization then decides to use it as a print ad, that’s another use and would influence the pricing.

Time constraints are also a factor. If the poster is for an art event in May 2020 that’s one use. If the group decides to resurrect the event again in June 2021 that’s another use and I should be compensated - unless of course, unlimited rights are factored into the first agreement. Unlimited rights in any format are not assumed simply because the client pays for it once.

I’m not trying to be argumentative here. I’m just trying to understand. Designers and artist’s not fully understanding their rights in terms of usage is a big blind spot for most of us.

When things like photos, illustrations, fonts, software, etc., can be sold multiple times, that influences their prices. Selling something once, as is the case with most things, means it’s gone and can’t be sold again, which is, of course, part of what determines the selling price. This is why renting a house for six months is cheaper than buying it.

As I mentioned, with most graphic design, selling the same thing multiple times is unusual. Selling the same logo to multiple clients or retaining ownership rights to a company’s branding would be unusual, impractical and a bit wacky.

That’s more or less standard procedure with most illustrations, photos or anything else that’s rented instead of purchased outright, but it’s less common in graphic design. In independent contractor situations, the creator, in the U.S., retains the copyright unless it’s specifically sold. Photographers and illustrators take advantage of this since, in most instances, specific usage rights are all that are needed. This makes the cost a bit lower for the client and also gives the creator a chance to make some money down the road.

This kind of situation doesn’t come up nearly as often with graphic design, but it still does happen. For example, a client might have a brochure printed, give them all away, then need more of the same brochure. Rather than build subsequent-use clauses into a contract, most graphic designers just keep possession of the working files. That way, if the client needs more brochures printed, they need to pay the designer to have more printed. If the client wants to buy the working files outright, that’s negotiable for a fee.

Many designers don’t even do this — they routinely hand over the files to the client, which in many instances, the client won’t know how to use anyway. In your example of a poster being subsequently used for a print ad, it’s not often that a poster can simply be scaled down and used for an ad. Like most graphic design work, it would almost always necessitate considerable modifications, which would mean bringing a designer back into the project to make those modifications.

Personally, I don’t hand over the working files to clients. If it’s a steady client, I’ll consider it, but it’s not a routine thing. If the client wants the contract to state that the client owns the working files, I’ll typically charge a bit more. Even in those instances, they typically come back to me to make changes or reprints since it’s cheaper for them to do that than buy the software and learn to use it. Besides, I’m legally forbidden to turn over fonts, photos or illustrations that I only have limited rights to use.

There’s also the issue of royalty-free stock art, which is increasingly common. If I buy usage rights to a royalty-free illustration from a stock company, I can typically keep that art and use it again without paying additional fees, just as long as I stay within the parameters of the licensing agreement.

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