Pricing. People always hate talking about money, right? It’s funny because it’s the core of any business. As some might not recognise, Independent designers and studios also need to have a pricing strategy. Each to their own in this case, but the goal is to always offer a service for a “fair” price.
What IS a fair price? A fair price is certainly not done by counting work hours, unless you aren’t sure how long it will take you to complete an specific task. An amazing strategy for beginners at any area to gauge their experience and skills, but occasionally terrible for clients, who mind end up with a bill bigger than they can afford.
A flat fee might be great for independent designers or freelancers, who are used to performing the same kind of tasks for the same kind of businesses. Not that much room for creativity tho. When you are a contractor, aka a freelancer, as in, being hired by an agency to provide with design solutions on a project basis, this is the way to go. If you don’t have direct contact with the client you can’t really do Value Based Pricing anyway.
Value Based Pricing works great for independent designers, agencies, studios and clients alike. Got the catch? Value Based Pricing is better for both sides. Let’s see why.
Value based pricing, what is it?
We already deduced that it is a form of pricing, but how come based on value? Value in this case is not a specific number in it’s essence. It’s rather a solution that has a figure to it and immense return to the business (where the value comes from). Because designers do that: solve problems. The catch is, design has so many facets and requirements to be applied successfully, that The idea of VBP is to first assess all the requirements and pains of a business instead of using a cookie-cut pricing package.
How is it better for businesses?
You might have 5k of budget to make a website and a logo. You approach a designer. They say they can make it for 6k, you negotiate. You meet in the middle with features and deliverables or you just go find a new designer or studio that can do the job you want for the budget you have. Great? Maybe, because you met in the middle or got what you want from somewhere else.
But let’s say you approach a studio that does VBP. You present them with your budget, they sit down with you and start asking questions, trying to uncover all the pains and challenges you are facing. You feel like they are Sherlock Holmes, somehow they know the root of the problems and a better solution than that what you thought first. Maybe what you need is a system in your website that will automate a certain function in your business. Or that your target audience is actually more picky than you initially thought or are totally different people. That’s what you are hiring them for: creative solutions. Where is that need coming from? Are there more practical solutions, and what’s more relevant to what you want to achieve? Businesses can take advantage of VBP by getting their problems solved and not just aided, the process behind this pricing structure will assure that.
Designers that have been using VBP have realised that Design is more than the fancy logo or brand trend. It’s providing clients with real solutions for their problems and meeting their client’s clients needs, creating an environment (or the foundation) for that business to grow and thrive.
For designers, VBP means more meaningful work and happier customers. Because creative work is not about how many revisions you have to offer, is not needing revisions at all. It means more clarity with your projects and getting paid the right amount to solve a measured problem with clarity. Certain designers will not feel confident with that approach, since it requires a lot more preparation and some extra strategy knowledge, and that’s ok. The reality is, not everybody needs to a like a process for it to be successful for other people.
Ps: Our friends from The Futur have a great series on Pricing.