Pricing Problem

[dispatch]

B.W. from TX, USA, using Adobe Production Studio Prem. with Windows XP pro, writes in with:

I am having trouble with the program freezing when doing basic commands. Such as draging an image to a second screen, layers,even clicking on a image will hang up. I had same problem before upgrade and service pack 2 fixed problem but not this time around. Other programs in this bundle seem to work fine. Any suggestions. I have also tried a patch. Billy

If you can help, click "Post Reply" below! Thank you!

[posted by PS 911 dispatch on behalf of DTG reader]

[Nicked]

I am doing freelance for a designer who has her on business - I'm helping her out. She/We got an opportunity to design a newspaper and magazine for a non-profit organization. The Pastor for this organization takes in homeless and/or people with drug & alcohol problems and gets them back on their feet through rehab.

We have a 2 week deadline to have the newspaper ready, its only about 4-8 page newspaper (for now). The woman I work with & for, underprices a lot! She has good experience and explained to me that she has a p[roblem taking $$. She wanted to just up the print 10-15% and make commission off of the ads sold! I said thats very inconsistent pay for something that we will be maintaining.

Basically, how do I price for this newspaper?
Black & white.... what else??

How do I price for this mag??
full color, about 50 pages;

How much should I charge??

[fred]

This is a tough question... it's always a tough question, and I really cannot provide the "canned" answer -- mainly because it relies on a lot of conditions.

Having said that, I'll share just a few bullet points that I've learned in my 35+ years of experience in the field...

What does it cost?

Many people price from the "hip" and really haven't gotten a handle of what it's actually costing them.

Read my lips:
You will never know how much to charge for your work,
until you know how much it costs you to do the work!

Freelancing, like any other business, should have standard accounting practices applied. This helps you establish how much it costs you -- leading to how much you should charge. It's simple math.

Overhead costs:
Add together: a) your 'fixed' overhead -- a portion of rent, heat, electricity, internet connection, and phone, etc. b) materials used / consumed; c) an adjusted amount of "depreciation" on your equipment, vehicle, travel, maintenance, etc.

Time:
Now, decide how much your time is worth -- or more simply put, how much you would like to make. Take an hourly amount, then multiply that times the number of hours you plan to work.

Now, divide your "overhead" by the number of hours, then add the 'hourly' wage and there's the amount you charge per hour.

What's your GPM?

How much do you want to make? Your hourly charges above cover 'real' costs. You need to mark that number up in order to make a 'profit' ... this is called your gross-profit-margin, or GPM. This is the extra you squirrel away into your business to grow, expand, and take lavish island vacations.

The GPM is also where you can "play" with the quotes you give.

For instance, some bigger jobs can cut back on the GPM. Small, one-shot jobs for deep-pocket clients, you can ratchet up that GPM.

(I started as a freelancer, and worked up to nine employees billing between a quarter and a half-million a year -- in 1980s money. I started with a hard and fast rule to mark everything up 30% in the "fixed overhead" and "consumables" categories. I calculated estimates on time and costs. The biggest profit center was brokering the printing, signs and advertising. I billed 2.9% times the wage I paid my employees to cover their overhead. We made money. Lots of money. And everyone got two paid vacation weeks, a week paid sick leave, and paid "birthday off" ... we were happy!)

The forumula:
how much it costs: (say) $12 per hour
take-home for you (say) $30 per hour
how much the biz needs to profit: (say) 30%
EQUALS: how much to charge. = $54 per hour

The NEXT bullet point would be:

What's the Market?

Research other designers, freelancers and agencies including printers in the area and find out how much they charge. That's a good yardstick.

Then you have to factor in whether or not you want to do this nonprofit a favor -- how much exposure you'll get from the publications to bring in new clients.

Your partner's idea to work for ad revenue is a sound business model -- HOWEVER NOT FOR A NEW PUBLICATION -- if they have already established an ad base, with ongoing ad revenue, then working for ads will make a lot of money. But NOT at 15%. You need to get more like 30% to 50% of the ad revenue, depending on their ad rates -- and who sells the ads. They used to say it costs YOU $125 per sales call to actually make the sales call. That was 15 years ago.

In my opinion, you need to know a LOT more.

You can also strike a 'happy' agreement to work with the client if there is some give and take. He has to understand you have to make a living.

How much for a page?

There's also the "per page" rate that seems to make clients happy because they can see a tangible cost for product.

Provide a flat rate for the "first" trial of the publication -- say $500. (off the top of my head) That's ten-bucks per page -- providing THEY set up ALL the content, photos and edit/proofing. You can probably do five pages an hour = $50 bucks an hour for you.

However, have the understanding that the flat rate is for the "TRIAL" and you will reevaluate the costing after the first issue goes to press.

Once you've done it, you'll get a much better idea of how much it costs, and what the client pitfalls are. I've seen many $50-buck jobs turn in to $300-buck jobs because of the famous "PIA" factor. (That's when the client gives you a pain in the ____!)

Good luck, my friend.

I hope others chime in to this discussion.

Fred
:)

[Retrograffica]

Great response Fred, thanks. Although I'm in the UK, I'm sure the theory is still the same. The main problem we have is making the client understand the value of our work, we have struggled through our first year because have had to underquote to be competitive with printers who basically give the design away for free so they get the print work. The difference is that it isn't actually a designer working there, it's a typesetter and as such the quality is far below what we can produce but the clients don't seem to see it.

I would like to know how we can break into a bigger market. Individually, my business partner and I have worked for many years and for multinational companies but now as a relatively new business we have a limited portfolio, especially as these low level clients want to dictate not only the price, but also the thinking behind our work.

Please Help! We are being driven to distraction!

[fred]

If I had the answer to this question, I'd be a very rich man indeed.

I'd be on my yacht in the Mediterranean, off the coast of France, surrounded by beautiful people, and world-class chefs, sipping Tuscan Pino Noir.

Hmmmmm. Too bad I don't have that answer.

But consider this:

You cannot "convince" someone of your worth in any ways other than:

a) through performance, or
b) through a 3rd party endorsement.

In other words -- as ALL creative people face in the beginning -- you must produce spectacular work -- and have it seen by prospective clients, and/or you have to have successful works for clients to tell other people how great you are.

Therein lies the famous catch-22:

How can I do spectacular work, if no one hires me who have projects that will result in spectacular work.

If I don't have a job (in other words) I can't get a job.

The cure is time.

Each 'little' job that comes along -- do a spectacular job.
Even is the pay isn't quite up to spectacular efforts.
Get the word out... get endorsements from previous clients.

It takes time -- but eventually you begin to 'catch on' and the
juicier clients take notice.

There are no crystal balls, silver bullets or angels.

There's only work.
From the very bottom, to the very top, it's only work.

Make it the BEST it can be...

and they'll come.

:cool:

[fred]

Oh... I forgot to mention...

If you want to do a spectacular piece, and no clients come along -- then you'll just have to invent one.

Seek out a highly visible CHARITY and volunteer (give) them a spectacular piece.

It's one way of getting your talent seen by many.

[Jarvis]

Check out this Adobe TechNote link:
http://www.adobe.com/cfusion/knowled....cfm?id=326146

[skirklan]

Many small non-profit publications are created by designers who work for ad sales and printing commissions alone. This alters their usual agreement with the charity by allowing the designers to excel without client interference, as long as editorial is completely controlled by the charity. Initial structuring is key. Sell only display ads to businesses; no business card sizes, just quarter pages.

Use these benefits to sell ads:

1. Your competition is advertising with us.
2. The paper is distributed everywhere for free.
3. The article content has value (create small blocks of fun content).
4. The paper will be in doctor's, dentists, veterinarian's and car repair shops--anywhere the general public waits.
5. It's for a good cause.

How many ads can you sell for 8 pages? If a small ad costs $250 US, then selling 20 ads will net you $5000 plus 15% of the printing. Sounds like good money to me. ;)

Good luck,
SDK

[admin]

Susan, you're right. My design firm did many such clients in "the day" and one huge regional client who put out a syndicated tabloid "shopper" ... made tons of bucks.

However, please exercise a bit of caution when considering embarking on such a venture...

1) The publication needs to have a 'guaranteed' readership and circulation.

2) The ad sales person has to know what they're doing and know how to SELL.

In my years I've also seen dozens of such projects go down the tubes because they failed in the above two points. If you can't sell the ads... you're in trouble. If distribution falls down... you're in trouble. If the ads you do manage to sell don't show some kind of return... you're in trouble.

As I said before -- and in other posts -- make any "contract" with prospective "add selling project" clients have a "discovery" period before committing yourself to continue on an ongoing basis.

If it won't fly, you certainly don't want to launch into the SECOND go-round.

:)

[MotownBaby]

I have a similar question to Nicked. My business partner and I have designed what will be a precurser to a magazine being launched in Feb. 08. What we designed will be distributed at a tradeshow-- it is 12 pgs-- What would you charge for that?

What you have offered as a response to Nicked, however detailed, is still a bit vague. How do you price for a magazine? Do you charge monthly or yearly for the design of the magazine? Or would you put the company on, say, a 5-year contract to cover your charges per year for your design services for the magazine?

The rate that you pulled off of the top of your head for a trial magazine:
what constitutes a "trial magazine"? How many pages is this?

This is an interesting topic-- I await your reply