At PaperBoat Media we are often asked if a client should commit to a certain campaign, how much should they spend, and how much do we charge?
I want every client we work with to feel as if they made a good investment. One of the ways I do this is to show them the value of a new customer. If the lifetime value of a customer makes their company a certain amount of money, then the cost of our service should recover the cost of the program in order for it to make sense for the client to proceed. For example, the lifetime value of a new client to a cosmetic surgeon may be 25-100k so spending 10-20k on design and marketing make sense. A little restaurant that has a small operating budget has to make HOW many meals to break even? They’ll clearly have a different budget.
When pricing a project for a client, I try to understand their entire business, not just “here is my cost.” Sometimes we feel that a client needs more than they think; sometimes they need less. Every digital marketing solution should be customized. We build relationships, show value, and go into the meeting as a true business partner, not just a design house: that’s our philosophy. From experience, I can talk to a client and know a ballpark amount based on average fees charged to past clients of a similar nature and scope.
When professionals in our industry get together to talk shop, the matter of how we establish pricing always comes up. When someone new to the business asks our opinion of what they should charge, here are some of the factors we suggest they consider:
What’s your resource load?
If you have too many things on your plate, then nothing will get done right. Take the business into account. If you have to scale up your team, how much does that affect your operating cost and communication plan? Effective sales management and client expectation is imperative to finding the right balance between not enough work and too much work.
Can you repurpose things you have already built?
Superclient wants a reservation system; you built a similar thing in the past; there’s no need to reinvent the wheel. The best designers and developers at PaperBoat have a huge library of scripts, applications, and other previously built assets that they can recycle or use as a foundation for something new.
How much work are they bringing you?
If it’s a huge long term project (i.e. a govt. project paying your bills for many months) then you may consider giving a small discount or rebate at the end-deliverable.
Is it for something you really believe in?
Once you are managing to keep the lights on, feel free to give discounts or pro-bono work to things you believe in. (you can use valuation of project on your tax return depending on your corporate structure). At PaperBoat, I like to offer each person in the company one non-profit cause or small business they want to do for free twice a year. It feels good to use our talents to give back for things we give a damn about.
Are they a long-time client or a first-time client?
Many companies offer an introductory price to get a client’s foot in the door. To me that sets a horrible precedent, as they’ll always expect a discounted rate. Even if you are upfront about how much of a discount they are receiving, they will always see you as a low-cost provider and will be in sticker shock when you present your full price for future projects. Know your worth!!
Watch Out For Friends and Family.
Sometimes we are too close to the situation. At a party a couple weeks ago, an IT friend of mine was wearing a t-shirt that read “No, I will not fix your computer.” I am not saying don’t help your friends and family out, just be fully aware of what you are getting into. At PaperBoat if a project comes in with a close relationships, we have we actually ask the other leadership to move forward with it. Irrespective of price, free or paid, keep a buffer between your personal and professional life and let someone else manage it. You will be happier that you did.