Way back when in pre-COVID days, it used to be that you could get away with just about any business model. Charge by the hour, get a percentage, take a flat fee, it really did not matter as you would likely get what you needed at the end of the day. Yes, there was A LOT of slack in the system. At the end of the day, the power of art could cover for a host of business sins. Sure, this disconnect with business structure and strategy to the intended business process was getting eroded by all things technology pre-COVID. It was just that it was more of a glacial erosion than, say, ice melting in a glass.
Thank you COVID.
As I have said ad nauseam since COVID, we have had a perfect storm of massive emotionality, hugely increased demand for transformative creative business, and a surge of awareness by all involved as to the inner workings of a creative business. I love it because nothing exposes pretenders and those who do not fully embrace what value they provide and when than raised expectations.
So here we are talking once more about knowing what you need, no more no less, to do the work you want to do and how much you would like to work to get it. Otherwise, you will be based on maximizing revenue from each project. Pricing from the bottom up is a recipe for greed and it is a fools errand. I am not talking about other sources of revenue here. I am talking about certainty of value delivery. That certainty is your responsibility and COVID has forced you to own it. Thank goodness.
More afoot here is understanding philosophy and purposefulness about what your creative business is all about. Do you get paid once the work is done? For product driven businesses, and, more broadly, all capital asset businesses, I get it. Pay for you food once you have it prepared for you, not before. Even more, pay for the service based on the volume of service provided. Want five hours, pay for five hours, and so on.
Most creative businesses are set up that way today. Payment after or just before delivery of the final product. Umm, never made sense and makes even less sense today.
If you are paid after the fact, you are constantly chasing money by using yesterday’s work for pay for current expenses. Or, if you are on a percentage, looking to maximize the sale (long in the future by the way) to pay for all that has come into the project.
It is axiomatic that you would rather have $10,000/month than $120,000 up front since most of us suck and managing cash flow. Certainty.
If you know what you need and when, then you are able to communicate that value directly to all involved. You will be able to control time because decisions will occur when you need them to happen, not when a client wants to make them. And energetically you will be agnostic to price, of course, but also to the vagaries of a project. Meaning, you will be getting what you need every time you need it — you will not be worrying about whether the client is going to give you their production budget in order for you to make payroll; or if they are going to accept your hours this month given how far and how much you have already billed.
So why does it all go kablooey? Because you do not know what you need and how much you want to work and pricing becomes an exercise in greed — how much can I get from this project vs. what do I need to do my best work for this project.
Which leads me to the final point of this post. If you are getting what you need to do the work, you then have to focus on the second promise you make as a creative business: will you stake your ENTIRE reputation on this project. Is it big enough to matter? Do you have enough money to do what you do? If you cannot answer that question with a straight face either to yourself or your team, you have to walk away. Both promises have to be true — do only your best work (not your best work under the circumstances) and stake your entire reputation on every project you undertake.
I love Shel Silverstein’s The Giving Tree. You, your art and your creative business might be simultaneously the boy or the tree. You might find solace in the unconditional sacrifice but the abundance of your apples will be lost forever. Oh and the desire to ask everything of the tree is myopic. The reason you price as you do has nothing to do with the project at hand. You price as you do so that you have permission and enthusiasm to embrace the next one.
