For so many creative businesses, there is a grand debate about how to charge— a flat fee, commissions (known by the client), retail mark-ups, even kickbacks (i.e., commissions NOT known by the client); maybe even some combination of all three. Truly, who cares? If you have no idea what the basis and import of what it is that you are charging means to both your creative business and your client, then how you charge is a fool’s exercise. Here is why.
Every dollar your creative business earns is not the same. There are four principal components of value to any creative business – reputation, design, production management and installation. Each of these components has relative value that you and only you as an artist and creative business owner can assess and assign. The assignments are based on the scope of the project and the time involved. The scope is for you establish and live to both based on the overall size of the project and the time necessary to make it come to life.
Scope creep is not on your clients, nor is a ballooning production budget, it is on you and your creative business. If you are going to charge a percentage to protect yourself from scope creep or ballooning production budget, you literally start your relationship with your client by saying that you do not trust them or, worse, that they should not trust you.
Transparency is NOT lifting your proverbial kimono, it is being plain about what it is that you do and for what. For instance, showing all invoices and prices gives an insight into nothing as your selection of a particular production partner is based on your own individual needs and standards as an artist. You can ALWAYS get it for less. Period. Instead, you need to assess scope, assign a production budget, design to said scope and budget, then set about producing just that. If there are additions to the project that, in your own estimation, only gild the lily but do not change the fundamentals of the project, by all means add them in, for the price you need to add them in (i.e., the further down the road, the more expensive they will be). However, if the additions change the game, start over as if today was the start date but the end date stayed the same. The entire point is that you and your creative business are THE expert when it comes to what YOU do. Live there. The stage is for you to set and your clients to abide by, not the other way around.
All of which brings me to kickbacks. Commissions or percentages are known to clients and represent mostly production management. Kickbacks are hidden from the client. Kickbacks are gap revenue that creative businesses receive because they have put out an artificially low price to win the business or simply because they believe their market power so strong as to be able to bully dependent players into paying them. Pre-internet, commissions were the price of doing business, client be damned. Today, not so much. Clients are too savvy and the idea that production partner commissions will flow from client to production partner to you sucks. Like tariffs, all commissions do is shift requisite flows and create distrust. So we hide them and some players literally take kickbacks AND receive a percentage from clients. Pigs get fat, hogs get slaughtered.
I hear all the time how this client started at $x and wound up at $10x and thank goodness for commissions, percentages and kickbacks else the creative business would have been taken for a ride. The level of cynicism that goes along with this statement is staggering. ALL of this is on you and your creative business as you chose to hide from frank conversations about scope and production budget (whether from the start or through the design process), and to hide the extra revenue you were making with kickbacks. When it does not work out because a client becomes jaded, you are the problem, not the client.
We need to work harder to lay out what we need as creative businesses for each component of the business (reputation, design, production management and installation) as the component relates to the scope and timeframe of a project. Have better conversations on topics that matter. We also need to be able to say when a change in scope becomes another project and when it is just gilding things. After that, we can talk about model. If not, we will all continue to argue about which igloo works best in the Sahara.
One final point, continuing with unclean hands because you would have to admit your hands are not, in fact, clean is no reason not to. There will be pain because you acknowledge the wedge you have created. However, you need only reveal the dirt if being clean brings you further than being dirty. Yes, every creative business should stop taking kickbacks because it is the right thing to do. But if it means the end of your creative business, how about working on what you will do to replace the practice that will raise you higher? Leave the altruism to the monks. Scale might require a different level of kosher and if doing the right thing is also the smart business thing (hello alternative energy), we will all be better off. How about we turn our attention there instead of answering tough questions to irrelevant issues? Just saying.
