Hourly, Project-based or Value-based Pricing?

Our pricing strategy is a delicate balancing act that necessitates an understanding of your product’s value, your target market, and the overall key competitors.

By Hourly

By actual time spent on the task. The hourly rate is the amount paid to a freelancer for each hour spent on a project that has no defined scope. For tasks or deliverables that can’t be determined in advance and can change during on going development. It can be costly if the customer wastes their time, such as occupying freelancer time by asking the designer to attend meetings too frequently.

Time for Design Research

Market research, material/technology research, drafting, thinking, inspiration, etc. For something new or a work that demands considerable attention, invention, technical specifics, etc., add 20 hours. This depends on whether or not the client gives you a good brief. A very, very good brief could already have some of the design research done. For example, the client could already explain or show the available products or services, as well as the available technologies and methods. With a good client brief, you may reduce this to 10 hours. 

Time for Meetings

Clients often underestimate the time spent in meetings, disregarding the fact that it is an integral part of our work. However, these meetings can extend for hours or even days, occupying a significant portion of your valuable time. If we don’t include meeting charges, clients may take advantage of unlimited discussion, alterations, updates, and revisions. To strike a balance, it is advisable to set clear boundaries, limiting meetings to essential ones like the initial project brief, the kickoff meeting, and client training, to ensure efficient use of time.

By Project-Based

– How client intends to make use of the art
– Size and prominence of the client
– Client’s budget
– Urgency of the deadline
– Complexity of the art
– Graphic artist’s reputation

Company Size

Micro Business: 1 – 5 employees
SME: 5 – 30 employees
Medium: 30 – 75 employees

License & Usage Rights

Exclusive: if the design is only sold to one (1) Client.
Limited: design can be sold to one (1) Client per County and in a single Country.
Multiple if the design can be Sold to Multiple Clients per Country.

Criteria to Use Project-based Pricing

Provides a detailed project brief that includes complete list of requirements and specifications. Clear objective and target audience. If your target audience is “everyone,” you’re saying that you don’t specialize in anything and just offer basic products and services. There is a fixed deadline that must be met, and you can’t add more work or push the deadline back for free. If you do, you’ll have to pay extra by the hour or by the deliverable.

By Value-Based

With value-based pricing, the highest possible price is set, but it depends on: What the goods or services are worth to the customer; Demand, which is a basic economic principle; Data from your target audience.

For customer-focused projects, meaning any improvements and added features should be based on the customer’s wants and needs. Provide solutions fit your needs specifically. Will be using data analytical approach using Google Analytics to make design decisions. Client MUST be willing about their business goals and finances and answer some tough questions. They need to know how big of a problem they have and be willing to spend money on a good solution, not just hire a freelancer to do the work.

• Client pays what the result is worth, not deliverables and how much time spent.
• By outcomes, not activities.
• Pricing based on how much money you expect to make by providing customer interest and data.
• The value-based pricing model focuses on the customer and depends a lot on how much the customer thinks the product or service is worth.

What is the definition of value?

Value comes in many different forms. Not always how much money the business stands to make, but sometimes how much they stand to lose if something goes wrong (hire an inexperienced person, execute against the wrong goals, etc.)

How much could they make if the project works out and how much will they lose if the project doesn’t work?

Benefits of using value-based pricing

• Boosting profit margins
• Cash flow improvement
• Increased market penetration
• Increasing market share
• Increasing lead conversion

How to calculate?

With value-based pricing, the price your customers are willing to pay depends on how well you build their brand and explain the value of a certain product. It doesn’t matter how many features the product has or even always how visually appealing it is.

Competitor and customer research

Client MUST be willing about their business goals and finances and answer some tough questions. They need to know how big of a problem they have and be willing to spend money on a good solution, not just hire a freelancer to do the work.

In my experience, it is nearly impossible to change a client’s mindset from “I need a freelancer to complete this work as cheaply as possible” to “I have a significant business problem that only an experienced consultant can solve for me, and I’m willing to pay”

Is the value worth it?

Once you have all your data, you can start to figure out how much money your customer is getting out of it (money saved, money generated). These numbers can include:

• Ease of mind (hard to put a price on, but valuable)
• Risks are easy to see (for example, is there a good warranty or guarantee?)
• Cost management (is it cheaper to run or maintain the product?)
• Less admin (does it save valuable time?)