How to calculate a deal

Let's face it, calculating contracts is a total nightmare. However, the truth about the design business is: you not only need your design skill to succeed, but carefully and wisely calculated contracts to keep you business going smooth without troubles from the financial side, or frustration from the client side.

As a design shop or as a freelancer there are essentially three ways to charge a customer: time and materials, flat fee, or something inbetween.

Time and materials

Charging by the hour and by materials used is quite straightforward. As long as you have a thorough listing of the hours you spent on your clients project and the materials you had to use this seems a no brainer. No risc by getting your estimates wrong and no uncertainties. But wait - if you think about it, how does this account for your experience as a designer and for your flash of genius?

It takes a long time, a lot of effort and practice to become a versatile designer. Shouldn't this be reflected somehow in the bill? Just because you're such a beast in coming up with great design ideas, why should your idea only be worth the time it took you in a particular project? That seems quite unfair.

On the other hand, why should your client have to spend more just because you are NOT an experienced designer yet and you had to work night and day to deliver something meaningful? That seems quite unfair too, this time for the part of the client.

So while there are a lot of studios and freelancers who generally go for t+m, we think this not the best way to make e deal, not for the designer and not for the client.

The flat fee

Coming up with a fixed amount for an entire project is quite difficult. You need to estimate how much time it will take to complete the job and there are factors that may affect the outcome of the project. And your client is one of the most important factors in this puzzle. So you have to know your client well enough to be able to estimate this factor in the equation, or you're in big trouble.

On the other hand a fixed rate is what clients often ask for. They want to know upfront how much they will have to spend to get the job done. And they are right, it's understandable. You probably think the same way when you're the one asking somebody else to do something for you.

Unfortunately the chances are very high that at the end one party in this game looks back frustrated, because the fixed amount was too high or too low, depending of the side of the frustrated is on. And in consequence this leads to very short designer - customer relationships. Who wants to continue to work together with the other if he has the feeling that the last contract was unfair in some kind.

So this is probably not the best way to make contracts as a designer.

The inbetween

When we are making design contracts with our clients, we generally come up with a mix of fixed and hourly fees.

The fixed parts are the basic idea or concept of our design, and sometimes the implementation per page. Consulting, illustrations, image editing, corrections, changes, and meetings are all billed by the hour. This way we are sure that we can bill a certain minimum for our services, and we are backed in case the client has a lot of changes or requires a lot of meetings and consulting.

Getting the amount of the fixed parts right is still quite difficult depending on the job and the client. Even after 20 years of practice in this area, every new client is a challenge in this regards. But since these parts tend to be the smaller ones in the calculation of a job there is not so much of a risc with it.

99 designs ...

We have to say some words regarding 99designs, too. We understand it that this service (and of the other ones too like 5er, ...) may be a good way for customers to get grafic services. But we are convinced that most of the times the designer or the customer will be disappointed at the end.

The creation of say a professional logo is not something you can spit out in half an hour. So should customers count on getting top of the notch designs on this platform? Probably not.

And while we're at it: Maybe you want to take a look at werkherz, a new service we've started most recently. werkherz is a tool to write proposals in minutes, document you're work and processes, taking out the guess work from your business administration.