Pricing Structure

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Pricing Structure

Generally speaking (and this will vary according to the specific services you offer) it’s best not to present an a la carte menu of options with price tags on each service. If you do, the client will pick and choose in the way that leaves you with the least possible amount of money, and holes in the final outcome. For example, imagine you’re a pattern maker. A client wants to pay you to create and submit patterns, but not approve fit samples. Now you’ve got a final product entering the world, potentially with your name on it, that someone else has likely screwed up.

If you can work on a project basis, do that, and, divide the project into phases, with a cost for each phase:

  • 50% for phase 1

  • 30% for phase 2

  • 20% for phase 3

This front-loaded pricing model encourages the client to stick with the project because they’ve already paid you most of the money. Play with these percentages if you like, but I encourage you to ensure that the smallest payment is correlated with the final phase. The final phase is where clients are most likely to get off track, and if they’ve already invested substantially in the project, they’ll be incentivized to continue being a great partner and finish clean. It also enables you to build a cash cushion and protect your business from risk, without having to demand an arbitrary up-front deposit or “start work fee,” which can be difficult to explain to a client.

If you’re applying a discount, do so as a percentage and highlight it in your proposal. Before sending, call the client and let them know why you are extending this one-time friends and family discount (if you’re doing the project at a discount because you love the brand or want the opportunity, you can still call it a “friends and family” discount—you want to be friends, right?). You have a personal interest in this project and you are willing to invest in this relationship.

The above may seem like a lot, but once the process becomes habit, you will be able to cruise through it pleasantly, quickly, and smoothly without exhausting yourself or your client.

With this in place, the “due date” of each payment will not be left up to the client’s imagination. And, if for any reason the client fails to remit a payment, you hold the power: assets are exchanged at time of payment.

important Important to note: tying a specific payment to a specific phase of work is not applicable to every type of freelancer. You might be a baker. Your client might think of it like the Mitch Hedburg joke: “I give you the money, you give me the donut! End of transaction.” And this is rightfully so. The easier you make it for your client to pay you, the more likely you are to get paid.

The main principle here is that when you are investing up-front time and effort into a client project, it is prudent to require that your client invest up-front as well. Use your judgement to create the system that’s best for you. If you are dealing with a client who has proven troublesome in the past, you’ll want to do your best to tie payment to deliverables, so you can deliver the work after payment has cleared your account.

This all may seem harsh, and yes, if you wait until there’s a problem before sharing these guidelines, they are harsh.

But if they’re part of the proposal, and you review the proposal verbally in a nice “to keep everything clear and easy I’ll just walk you through the process” tone of voice before kicking off the project, your client will appreciate it, and respect you.

Scope Your Work

Often omitted from a proposal, to the detriment of everyone involved, is the scope of work, or SOW.

Sometimes the SOW is present, but lacking. Your SOW should be broken into two sections:

  • Scope In is the list of services that the client is asking for.

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