A few weeks ago I read "10 Mistakes Designers Make with Clients" by Preston Lee. Preston was extremely insightful and covered several areas. One of which hit me for 6 - Offering Discounts. He says "Discounts are for grocery stores with rotting produce... Your design isn’t old. It isn’t rotting. It isn’t yesterday’s hot item...It tells your customers that you are not in high demand and you are desperate for some business."
I mused on this for a few days. I even discussed it with my Accountant / Financial Advisor and friend and he agreed. Preston Lee was right, when supermarkets sell products at a discounted rate they still make a profit. When I give a discount as a designer I make a loss.
Very often I'd give my customers discounts but couldn't understand why they kept asking for more, even when my rates were below my competitors. I was sending the wrong message.
Finding the BalanceAfter reading the Preston Lee's book I was tempted to now charge exorbitant fees. However, shortly after I read Hosea 12 where the prophet delivered a message. Hosea called the children of God Canaanites - who were dishonest merchants and were very proud of it. He used the term 'dishonest scale', which in the context of that passage, meant they were extorting customers.
However, in my case the term 'dishonest scale' had a double meaning. For me it also meant that the use of this 'scale' was short changing my business and devaluing my work.
Agencies factor in their overheads in the cost of their services, which is something I didn't do - especially because I work from home. Like agencies I should take my oversheads into consideration, however small they may be. It's a principle worth practicing, especially since I intend to grow my business and sub-contract from to time.
With this in mind I now have to revisit how I bill clients. If I do offer a discount I should still be able to make a profit even if it's marginal.
Can I Undo What I've Done?Unfortunately, life doesn't come with a reset button so the only thing left to do is pause, re-calibrate and continue.
Here are a few practical steps to help you recalibrate:
- Review your rates, comparing them to going rate in the industry, factoring in skill level.
Get yourself a copy of Rockable Press' Freelance Statistics or join a group like Jamaica Design Association, where you can discuss rates and other variables that may be affecting the design industry.
- Consider what you would have to pay someone to do the job and mark it up, anywhere between 10% - 40%.
By doing this you will know how much you stand to lose if you decide to give a discount. You can also use 10% of what you earn to put in a pool that covers your expenses - like paying youself or an even toward buying new equipment. If you decide to give a discount be sure that the full price of your services are reflected on your invoice.
- Develop packages
Use packages to up-sell other services you may offer. Often times packages allow clients to get things done that they didn't think they could afford. And if all the work to be done is under one campaign it means that all you will be doing is recycling elements from the original design. Call it 'shuffling' if you may.
- Charge returning customers a different rate than new clients
Peter Hurley, in The Art Behind the Headshot Free Tutorial says he gives returning clients a different rate than new customers. Doing this initiates a relationship with your client that may prove to be beneficial to your business in the future.
- Update your clients about your new rates
Take the time to let your clients know that you value them and don't supprise them with your new rates. Send an e-mail with a personal touch to all you clients notifying them of the when your new rates come into effect. They will appreciate it.