Pigs get fat, hogs get slaughtered. I have talked about pricing many times – about getting paid what you need, understanding margin and risk and the difference between subjective and objective. What I have not talked about is the amount of work associated with extracting the largest premium for your art as opposed to consciously leaving something on the table.
An example: let’s say you are a designer and work on a percentage rather than a flat fee. You know going in that there is an inherent conflict in what you say is needed versus what you need to get paid. If you are an interior designer, you might think to yourself that the project in front of you will take brain power and resources of your creative business for the better part of a year and you need to get paid $100,000 to make it worthwhile. If you work on a 30% fee on whatever is spent then you have to do everything in your power to get the client to spend $333,333 on the project. Except your client has no idea about the $100,000 or that you need to be done in a year. There is no problem if they want to spend $400,000, but if they want to spend $250,000? You can see the tension inherent there. And that is the every last dollar energy. You believe you can get them from $250,000 to $333,333 and beyond so you take the job and try to “get” the client to spend more. Up sell is what I hear so many creative business owners call it. Crap is a better description.
If you look to get every last dollar, you simply cannot live in transparency. If the client knew that $100,000 was the goal, they might agree to that fee but no more. The less they know about what you need and what is important to you, the more you can take advantage of your expertise of what things actually cost (or do not).
I believe in value for value with complete transparency. If the designer needs $100,000 then that is what needs to be said. The number is also a moving target based on time and, collaterally, the willingness of the client to make decisions, as you and your creative business would have them. You can and should trade money for the ability to complete the project as you wish. For instance, the designer could still charge a percentage, get a minimum of $100,000 and cap it at say $125,000 provided the project is completed in twelve months, if it goes longer the fee is and additional $20,000 per month.
Sure, the above project might go to $666,666 and the designer’s creative business would have “missed out” on the opportunity to earn an additional $100,000. Maybe you can absorb the tension of every last dollar. Just do not tell me it comes free. You have to work incredibly hard to maintain integrity between what your art demands and your wallet hopes for.
On the other hand, if you did cap your fee and were transparent, you also got paid. Your creative business got the freedom to do great work on its terms and its terms alone. There is no such thing as doing something for less, just doing something for different payment. If you do it for less, you will get what you deserve. Bargains belong at Wal-Mart not in creative businesses. And remember, the designer wanted $100,000 in the first place. If you get the money you want and have the freedom to do great work on your terms, what else do you need? Pigs get fat, hogs get slaughtered.
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HI! I couldn’t agree more. Transparency is the bestow ay to go. That has been my business model from the beginning. My estimates are sent with a document explaining how costs are calculated, what does into the design process – hours, creativity, practical and physical aspects of labour. Last week I had a bride in my studio who asked me but she still does not understand why I charge design and labour fee. First she wanted to make it absolutely clear that we do not mark up materials, 3rd party supplier services (which we do not) but once that was cleared up she still told me that we charge a very high amount and she cannot afford us and therefore we had to relook at our service charges. That afternoon I pondered at her question. Why do we charge what we charge… I know that I put hours into evaluating our fee vs our worth and our end product. After each wedding I go over the costs, I go over the expenses and analyse our profit margins. That evening after going over things in my head, I sat down and wrote this:
“I know who I am. I not trying to figure things out, I don’t need to prove myself or justify why I charge my rates. Over six years with hundreds of weddings under my belt, I know what is required of me when it comes to creating a beautiful wedding. I know that I have talent and passion, and I have experience. I sell that. I am running a business, a successful business that is financially supporting my family and families of my employees. We are unable to negotiate as this will undermine sustainability of our company. ” This is why I am always transparent and people either get it or they do not. Love your line – Bargains belong at Wal-Mart not in creative businesses!
Amen! Thank you this is a terrific article.
That is such great advise! I am under bidding myself all the time. I am clearly the hog!