Like any creative project, the Creative Money Maker pivoted. I have been incredibly lucky to develop and launch this column with the DIY Business Association. While the DIY BA takes a pause on developing new content, I decided to continue the Creative Money Maker here because got such a great response to it and have so much fun writing it. Join me every other Tuesday right here for more financial advice that feels good!
You know the old adage “time is money.” Guess what? It applies to creative people whose work is driven by passion and as well as profit.
When you create a project budget it is important to include a line item for paying yourself, even though you may not anticipate making any money from your project at first. Your budget is a plan for a time when your project is profitable and compensating yourself is a key element. Remember, your budget tells the story of your project in numbers, and you are important part of that story!
Compensation is about the value you put on your time, experience and expertise. “Value” is an intangible concept, but here are factors to consider before determining your fee or hourly rate:
- Have the confidence to know that your time is worth money
- Clarify what skills and tasks the project requires
- Consider your experience and expertise. Do you have a perspective or level of experience that is not common for your field?
- If creating a budget for a client, consider the value your project brings to your client’s life
Once you have a clear idea about the criteria above consider whether to calculate your fee on a time basis, a project basis, or a package basis.
Time-based is how much you charge per hour for your services. This helpful when you offer services such as consulting, administrative or technical support.
Project-based is a price based for an entire project that has a concrete end point. When pricing based on a project you want to calculate about how many hours it will take, what the project requires of you, how much the client values the project, and your overhead such as the tools and space you use to create the project.
Package-based is similar to project-based pricing, but it puts more conditions around a project. You offer a certain amount of time or number of consultations for a flat-fee and, if your client demands more changes or wants additional services, you can charge by the hour or an agreed-upon additional fee.
There are no hard and fast formulas for determining how much to charge hourly or for project-based prices. Musician Greta Gertler, who also runs the PR agency Goldfish Prize, shared her simple strategy for pricing her time, which she uses as a baseline to determine her hourly and project-based fees.
Simple pricing strategy:
- Determine your overhead costs such as tools, software, studio rent, insurance, taxes, as well as living expenses for the year, month and week
- Determine how many hours a week you want to work
- Divide to get with your starting number for your hourly rate
For example, if my expenses are $2,000 a month and I want to work 30 hours a week I will divide $2000 by 4 (for 4 weeks in the month) and get $500 per week. Then I divide this by 30 to get about $17 an hour. I will have to work at least 30 billable hours each week and charge at least $17 to cover my expenses.
If you are making a budget for a client remember they are only paying you for the time you spend on their project. Thus your “billable” time should cover your expenses incurred during “non-billable” hours. Therefore, I may determine that I will work about 15 hours a week on my clients’ specific projects, so I could raise my rate to $30 an hour to cover those expenses.
Before deciding on your fee find out the going rates for your field. Project fees and hourly rates will be in a range, and you want to know where you stand. Reach out to the professional associations that provide guidelines for pricing your work within your discipline. Talk to other professionals and those who hire creatives about how they determine their fees. For those of you who are selling goods, next time we’ll talk about pricing the creative products you produce.
You have skills, creativity and expertise to offer to your potential clients, your project, and yourself. You must value yourself first before expecting anyone else to do so and planning to pay yourself fairly sends a message to the world that you are valuable. As a creative person educate yourself and your community members about your worth.
How do you determine your fees?
What challenges do you encounter when it comes to paying yourself?
What does value mean to you?
For the first three installments of the Creative Money Maker please visit the DIY Business Association’s website here.