One of the questions I often get asked is, “If I were your client, what is the first thing you would have me work on/change?” Easy. You have to control time better and the only way to do that is to have a business model that respects time in the way you want to control it.
We have to break it down though. There are two aspects to time that matter: absolute time and relative time.
Absolute Time — It is what you think it is — the definitive length of a project. For event businesses and all other creative businesses with a hard deadline, absolute time should not be an issue since there is a definitive date to a project’s completion. For other creative businesses where the end is not so clear, say interior design, architecture, even graphic design, controlling absolute time is a very big deal. The reason is straightforward: a dollar earned in six months is worth a lot more than a dollar earned in a year – twice as much.
The issue is not that projects extend, it is that they extend without additional compensation or without adequate compensation. The simple statement above proves the point. If your client agreed to pay you a dollar for six months worth of work and you did that work, how are you going to get them to pay you another dollar to do much less work? And an important and obvious caveat, absolute time matters if you are not the cause of the delay. If you are, you did the crime, you do the time. If not, then you earn less because of someone else’s issue. Should not and cannot be your problem. But but but you say, how can I ask my client to pay my creative business the same amount for SO much less work? Why can’t I just charge an hourly fee for the extra time I have to spend on the project?
Every. Single. Time. I hear this answer I realize the creative business owner in front of me has no idea about the difference between subjective and objective or the difference between profit and return. If you want a refresher on these concepts, have a listen to a podcast I recently did for This Week In Weddings. Basically, though, it means that the idea that every project a creative business takes on is constrained by time and has to have a price to use the resources of the creative business for that time. A project has a dollar number associated with it. Extend the time, extend the number proportionately, regardless of what work has or has not been done.
Practically then, for those creative businesses where absolute time is a risk, know how much a project needs to generate, divide by the number of months of the project, then multiply that number by 1.25. This is the fee your firm needs to charge for every month the project completion is delayed through no fault of your own. You are not going to like the number and your clients will think it is nuts. A) I do not care and B) client, do not delay the finish date or think that you will not have to pay a creative business commensurately for the delay.
Relative Time — Relative time is far more subtle but equally as fraught with risk as absolute time. Every creative business has an extended relationship with a client — some several months, others up to and over a year. Embedded in the relationship is a process to get from idea to finished project. Timeframes and deadlines for each phase of the project has to be established and stuck to for there to be a smooth ride to the finish.
If absolute time can shift, relative time can have some play. However, when absolute time is set, relative time matters A LOT. For most event businesses, the three phases are design, (pre)production and installation/manufacture. If there are not definitive timelines and breaks in each of your creative business’ phases, you are asking for trouble. Even more, if you do not establish the price/impossibility of going back to a previous phase, you are REALLY asking for trouble. And just like hourly does not cut it for issues with absolute time, percentages do not cut it for relative time.
If your whole process takes six months from design to installation/manufacture, with design taking six weeks, installation/manufacture two week and (pre)production the balance (four months), then if a client wants to effectively redesign the event after design is done, then you will have roughly four months to do the work you originally had six months to do. Your price for the constrained timeline should be what it would cost for you to do this work as if it were a new project. For arguments sake, let us say that to do something in four months where you would usually have six is a thirty percent premium (forgetting for now the increased cost of production expense). So if your creative business charged one hundred dollars for six months, you would need to charge one hundred and thirty for four. If you are paid a percentage, are you really going to be able to increase the overall production budget by thirty percent to accommodate these changes? Usually, the situation is where the client is seeking to save money. Good luck with that. Needless to say, the closer you get to the end, the more your rate rises exponentially, and the worse things get by making what you do on percentages.
If you have not done the work of laying out phases and not only what clients are paying for but when, time to get to work. When clients can know benchmarks and the cost of not reaching or respecting them due to their own issues, they will appreciate what it means to allow you to do your best work. They will also understand that if you have to reallocate resources to meet their needs, that you will do so on what is necessary as if the project was that in the first place. Again, if the delay is due to your creative business, you did the crime, do the time. If not, then you have to be all about making sure your creative business is compensated for the work it has to do to do its best work. No client will understand or value why the investment in your creative business will skyrocket if they make changes after the fact. That part is up to you. And, yes, defending your value means knowing it in the first place.
