Payment Alternatives

Different ways design services can be priced and paid for.

March 2, 2020

In my last article, I touched on the fact that I don't bill by the hour. In summary, hourly billing is a loose-cannon way of determining the value services bring to the table and one that favors things taking longer rather than being done efficiently and strategically.

It begs the question though, how do you structure payment for such services? The way I see it, there are three options:

Pay for design services up front
This is the most common method of paying for design services. It's pretty straightforward, client and designer decide on a price based on the value created through the services, client pays for the work, and the designer does the work. Usually the payment is made upfront or on a specific cadence like 50% to start and 50% after 30 days or before deliverables are transferred.

Lease the design work
It's no secret that good designers charge a pretty penny for their work. At least, they will charge a pretty penny to part ways with ownership of it. This is where leasing becomes a viable option to get quality work, but without the initial upfront cost of buying the rights to the work out-right. For example, let's say an identity package of a new logo and style guide will cost $6,725. Rather than paying for the entire thing upfront, the client could pay 8% of the total cost per month to get up and running. If the client decides they want full ownership of the work, there is a clause within the contract stating how much the buy-out fee will be in addition to the lease payment.

Profit sharing
If the client is willing to share profits based on the impact the design work has had on the business, then a third option becomes available. Similar to trading equity, profit sharing or performance-based compensation puts everyone's time and resources on the line. The designer and client establish the key metrics they are looking to improve and then share profits based on the value generated from the change.

When it comes to pricing design services, the key is to be as creative and nimble with pricing as would be expected in the actual work. The next time you speak with a designer and you want to work with them, but can't afford to pay their fees, see if they are open to these alternative pricing structures.

More you say?

Obi-Wan

Because your company is not the hero.

3.10.2020

Luke Skywalker is the greatest example of the "hero" archetype. He has humble beginnings and does not understand his full potential. At least, not until he is called to adventure after the murder of his Aunt, Uncle, and the desperate call of Princess Leia. Facing down this behemoth of a journey, you gotta wonder what was going on in his head at the time.

"I have no skills beyond moisture farming and I'm a decent pilot, but taking on the Empire? I need help."

That's where Obi-Wan Kenobi comes into play. The old wizard who sees the greatness within Luke and helps him to overcome his own, self-imposed limits. Despite the fact that Luke is lost without him, Obi-Wan never lets it be known. He's not focused on his own success, he's focused on the success of Luke. If Luke succeeds, that is his victory. Granted, he does all he can offering mentorship (guidance and knowledge of the Force), tools (lightsaber), instruction and feedback, and, most importantly, honest encouragement.

Here's the thing:

Most companies see themselves as Luke.They think they are the hero, that saving the world depends on them. They are wrong and their self-interest will not inspire others to be better. To quote Marty Neumeier "the best brand builders see greatness in their customers, and figure out ways to enable it."

Unleash your inner Obi-Wan, you rebel.

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Fast and Good

You cannot wait for lightning to strike.

5.14.2020

Design seems to have a drawn out and lengthy process. I don't know about you, but I really don't like it. Especially if you're working with startups that need to move fast. How do you fix it? You work together, show the ugly, and focus on getting a bunch of guesswork eliminated.

If you can move fast, you're good at what you do, and you can coach people through the process, this shouldn't be an issue.

This applies to everything. Logos, websites, apps, collateral. Hammer out as much of the details in low-fidelity form as possible.

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