I have been seeing so much bad advice out there regarding creative business pricing of late that I felt compelled to call it all out. You might not like what I have to say, might vehemently disagree, even think me naive. All is your right. That said, consider the source of who you are listening to and what underlies their advice. They are not only just wrong, they are actively destroying the very industries they seek to support. So here goes.
Anyone telling you to lower your creative business’ prices today is a charlatan, woefully ignorant and doing so much harm. It just cannot be underestimated and it needs to stop. It might not come in the form of absolute cuts but can be capping hours, taking on lower budgets, lowering a percentage — equates to the same thing: you are making less for the same amount of work.
A few underlying facts. Nobody needs a creative business. No one. If you want to get married, the license costs around $35 depending on the State. Every other dollar spent on the wedding is discretionary. You can order a complete house of furniture in a matter of minutes from any number of retailers. Some of them even include interior design services. So every dollar an interior designer makes is discretionary.
Next, inflation is definitely real. It costs more to live today than it did 18 months ago. Unemployment has also stayed remarkably low. It means that, for the most part, wages are at least staying steady if not rising to account for the increased cost of living.
The vast majority of creative businesses are micro businesses serving only a relative handful of clients per year. The very promise most make is that the attention given to any single project is really significant. As in most creative businesses serve less than 30 clients per year, with the vast majority of those serving less than 10, especially those in the luxury/ultra luxury space.
Finally, creative businesses get paid to create and do some form of what has not yet been done. Most certainly, they are not commodities like toothpaste. Price elasticity (i.e., how sensitive demand is to changes in price) is extraordinary for commodities — no-one is paying $5 for a bottle of water if the compare is $1. As businesses become more unique and focused on what it is they provide (i.e., iconic), prices become more inelastic. A $50,000 price adjustment in the cost of a new Bentley will likely not sway a buyer one way or another. Price matters but not all that much.
So let’s put it all together. You need more money to maintain your standard of living. Your employees do too. Your creative business is a discretionary spend to a micro market. You need to make more money and everybody knows it. Clients hire you to do your best work.
If you lower your price in our current inflationary environment as the main way to attract new business, here is what will happen — you will have broken EVERY. SINGLE. PROMISE. you and your creative business has ever made. Your client (rightfully by the way) will question every thing you are doing as you will have told them that your business is a commodity, that you were overpriced before and are now unable to meet their demands as you will need to take on more to make up for your lost income. Simply, you no longer pass the smell test because you lowered your price when you should have at minimum stayed the same or raised your price. You will have called into question the very value of your discretionary business and you will be forced to make it all about dollars — the world your clients are far more suited to than you. Good luck.
Yes, you might not get some clients for a while, but you should be working on effective value delivery to make your work that much more compelling. Here is how you do own effective value — learn how to own the following statement — If there is a $1,000 total budget and you will keep $400 for your creative business and spend $600 on the cost of production (and presuming the $600 will represent work you are deeply proud of (i.e., willing to stake your reputation on)), you will state with absolute conviction that finding a creative business that will charge $300 and spend $700 or even $600 on the cost of production will be wholly inferior to what you would do. More for less is not.
The value of creation is the implicit social contract that what is created will have a profound impact on those it is created for. As creators, you need to be paid no more no less than what you need to do the work.
I am not naive that the environment is difficult for so many of you right now. Fear is an overwhelming emotion that can make you do really irrational things. Listening to those praying on that fear can only take you away from yourself and the real work of refocus, redefinition and evolution. This work of honing purposeful intention and effective value will serve you far better than cheapening and debasing the very value you have worked so hard to create ever will by making it all about price.
