You Can't Rationalize Value - RD128

You can't grow your design business if you rationalize the value of what you do.

Most designers don't get paid what they're worth. The reason they don't is that they rationalize the value of the service they provide. What I mean by this is they try to justify why they are charging the price they do for their designs by itemizing what's involved in their creation process.

A logo will cost this amount of dollars because it will take me X hours of research, and another Y hours of development and finalization. Since my hourly rate is Z, the cost of the logo is (X+Y) x Z

Cost of design = hours invested X hourly rate.

This formula works for many designers and they're happy with running their business this way. But the problem with this scenario is you're trading time for money. Yes, it's a tried and true method used across many industries. But it shouldn't be used for design. Or at least it shouldn't be the sole method of calculating what you charge your clients.

How much you earn running your graphic design business should not be related to how many hours you put in. It should be connected to the value you provide.

Face it; we live in a world where we assign a dollar amount to most services. A haircut costs this much. A cab ride downtown costs this much. Having your car serviced costs this much. But even simple things such as these have variations based on value.

My daughter changed her hair colour recently. It's not the first time she's changed the colour, but this time she decided to go to a different salon. One that charges almost double what her usual salon does. Why? Because the man running the new salon has a reputation for excellence and the perceived value of the service he provides is worth that much more to those who go there.

In the end, my daughter paid a much higher price for her new hair colour than she used to. She loves her new look and is getting compliments left and right so in her mind it was well worth it. It's a perceived value.

The same scenario applies to cars. When you have a problem with your vehicle you can take it to a privately owned garage, maybe a national chain such as a Walmart garage or you can have it serviced at the dealership.

From my experience, the dealership is always more expensive. But think of it from a value perspective. If you drive a Honda, who is more equipped and more knowledgeable about your car than the Honda dealership? That perceived value is why some people are willing to pay more to have their car serviced by the dealer.

What does this have to do with your design business?

The services you provide as a web designer or graphic designer are not commodities like haircuts or oil changes. There is no one price fits all. Or at least there shouldn't be.

A logo for a local bricklayer should not cost the same as one for a regional airline because they bring different values to each client. The representation the logo brings to each client affects them each differently.

You may design a great logo for the bricklayer but what's he going to do with it? Stick it on the side of his truck and his business cards. That may be it. Most of his work will come via word of mouth referrals and through contractors. What his logo looks like may not have that much impact on his business.

The airline, on the other hand, is going to showcase their logo on everything to bring awareness to their business. It will be on their planes, their building, their uniforms, their tickets, even on the cups and napkins they serve on their planes. And that's not counting the vast marketing campaign they will use it on. Their logo will be displayed everywhere, and over time the logo you designed will come to represent an excellent, reliable airline, that offers quality flights with courteous, friendly staff. For that reason alone the airline's logo should cost way more than the bricklayer's logo.

It doesn't matter that both logos took you the same amount of time to design. Their value is different. And yet many designers would still charge for both logos solely on the time they spent designing them.

When you start trying to rationalize what it is you do by focusing on things like time and effort, you lower the value of the service you provide. This rationalization devalues what design is all about.

Designing is all about vision. It's about emotional impact. Giving a visual voice to what the design represents. It's about problem-solving.

Both the bricklayer and airline needed a logo, but the problem that logo is solving for each company is vastly different.

Instead of rationalizing your pricing to your clients by explaining every little thing you are charging for, or how much time a project will take, you need to explain to your clients how they will benefit from your designs. How design is an investment and not just an expense. When done right and with proper focus, a well-implemented design can skyrocket a company's growth. When explained this way, a client will begin to see the value you bring.

Will there be a backlash if you do this? Of course, there will be.

Some clients will counter with "You're crazy. I could have someone on Fiverr design my logo for a fraction of your price."

Yes, they absolutely could. And what would they get back in return? Maybe a hastily-designed image. Something that uses stock imagery and may or may not be similar to many other logos out there. There is one thing to be sure; it will fulfil their rationalized expectations of getting a logo for as cheap as possible.

What they won't get from places like Fiverr is the conviction a well thought out design generates. A design that represents their company's voice, the tone they want to present to the world. Something that will truly represent them and everything their company does. they will be missing that value.

Don't rationalize the value of your designs.

As a professional designer, and that's what you are, it's your job to explain to your clients how that extra value goes beyond how much time it takes to design something. It's that overall value that you should be charging to your clients. The logo itself is only part of the overall picture it represents.

Show your clients the value you provide them. Show them how you are focusing on the desired outcome they want to achieve with the design and not just on the design itself. When you can successfully convey that message to your clients, they will stop questioning your prices. They'll know that whatever they pay you is an investment they are making in their business and not simply a purchase.

If you want to grow your design business, you need to stop exchanging your time for money. Stop rationalizing value.

Do you agree or disagree?

Let me know by leaving a comment for this episode.

Questions of the Week

Submit your question to be featured in a future episode of the podcast by visiting the feedback page.

This week's question comes from Adam

I've recently quoted for a Web Design & Development job. After the project is finished, I've quoted a monthly fee that covers ongoing content updates and design consultation, plus domain, web hosting, and 7 custom email addresses.

The client is stating my price is a bit too high and is wondering how I "calculated" my price. I don't necessarily "calculate" my price numerically, but rather set it based on value to the client and what I believe my services are worth.

The client's mentioned that July-Dec is typically quite slow for content updates, and so, would like to see a reduced price for the 2nd half of the year.

What do you think? Any suggestions are appreciated.

To find out what I told Adam you'll have to listen to the podcast.

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Running a graphic design or web design business all by yourself isn't easy. If there are any struggles you face running your design business, please reach out to me. I'll do my best to help you by addressing your issues in a future blog post or podcast episode here at Resourceful Designer. You can reach me at feedback@resourcefuldesigner.com