How 20 designers charge their clients - part 1
I asked some of my graphic design contacts three questions about their financial practices: How do you charge clients? How do you accept payment? Why do you recommend working this way?
Here follows the first of a short series, offering an excellent insight into how graphic designers manage their finances.
Jeff Fisher, of LogoMotives
How do you normally charge clients?
With smaller identity clients I usually estimate projects at a flat fee rate. With large corporate clients my fees are most often based on an hourly rate – simply because the corporate approval process usually is much more time-consuming, involves many usually unnecessary meetings, and requires so many levels of approval. Basically, design-by-committee = higher project cost. Time is a limited and valuable commodity for me, and I want to make sure I am compensated for all expended on any job.
For years my project agreement has required a 35% project estimate deposit in advance prior to beginning work on a project. At the first of the year I will be raising that advance to 50%, simply due to clients seemingly getting slower and slower to pay project balances in these economic tough times.
Years ago I offered a 5% discount to clients for paying upon delivery of the completed project. I thought it would encourage smaller businesses to pay more quickly. Instead, the larger corporations – with much larger project invoices – would jump at the opportunity to save the money. I ceased the practice about ten years ago – it was costing me too much possible profit.
In the past I have had retainer agreements with long-term clients requiring a great deal of work on a regular basis. I now have only one client for which I execute design work on a monthly basis – and I just provide them an invoice every 45-60 days, depending on the amount of work done.
What methods of payment do you accept?
I’ve never accepted credit cards or PayPal, as I might get one or two requests a year. Most of my clients pay by bank cheque. With international clients, I have used bank wire transfers and international money orders.
Why would you recommend working this way?
My methods have worked for me and my clientele for 30 years now. If a number of future clients requested other options they might be considered. I would recommend that others make use of the methods most effective in resulting in efficient and timely payments to their own business.
Visit Jeff’s website here: LogoMotives.
Steven Snell, of Vandelay Design
How do you normally charge clients?
I usually charge a flat rate based on the project, although I do have a few ongoing clients that usually get billed by the hour. Issues like charging in advance vary somewhat. If I’m working with an ongoing client then I just charge after the work is done, but with a new client I’ll typically charge part up front, but the percentage isn’t always consistent. This is something I should probably do a little better is to develop more consistency.
What methods of payment do you accept?
I either get paid by PayPal or by cheque. Clients who are friends, family or referrals usually prefer to pay by cheque, but people that find me online and live in various parts of the US or the world typically pay with PayPal. I prefer PayPal.
Why would you recommend working this way?
I recommend having some flexibility with accepting payment because clients have different preferences. I also recommend charging upfront, although as I mentioned I need more consistency in the percentage. When I first started freelancing I got into some difficult situations that could have been avoiding by charging up front. I had one situation where I didn’t get paid for several hours of work and a few other situations where it would have been helpful to get more up front to get more commitment and urgency from clients.
Visit Steven’s website here: Vandelay Design.
Alex Peterson, of Pixel Air
How do you normally charge clients?
For large web design projects I quote a total amount based on an estimate of days required to carry out the work, which is presented to the client in a full proposal. The more a project costs the more detail I usually have to provide about what all their money is paying for. I’ll then ask for a 50% deposit or £1000 if the project is high value. If it’s quite a lengthy project I’ll even ask for monthly installments to tie me over as we all know cash-flow is very important in the freelance game.
For clients that have existing websites and require maintenance work in the form of minor updates, new features and ironing out bugs I charge £40 per hour and round down to the nearest 15 minutes which suits a lot of clients rather than rounding up to the nearest hour.
I also try an offer packages like SEO, where I’ll offer a full site review and written report explaining what areas of their site the client could improve on with regards to search engine page ranking. I usually charge per hours for this – the SEO report outlines the areas of work recommended in hours.
What methods of payment do you accept?
My favoured method is BACS, but more often than not I receive cheques. I do offer paypal for convenience but this is one of the slowest methods as I then have to then transfer the money from my paypal account into my business account which takes 3 days. (Not to mention the 2% paypal commission I get charged.) I find myself chasing late payments more and more so only yesterday was have a conversation with a colleague about offering a discount for early payment or payment by BACS.
Why would you recommend working this way?
I think it’s always good to give clients as many options when it comes to charging for projects. And most importantly you have to be as clear as possible to let then know exactly what they’re paying for and in as much detail as possible so there are no nasty surprises or disagreements later. Payment options are more for my own convenience really but no harm in making your preference known to the client.
Visit Alex’s website here: Pixel Air.
Yael Miller, of The Dieline
How do you normally charge clients?
On smaller-mid sized projects I require a 50% deposit and the balance prior to release of production-ready files. On larger (longer-term) projects with several stages of deliverables, I require the same 50% deposit prior to starting any work, but break up the fee schedule based on deliverables. A retainer is usually applied to the end of the project, too.
What methods of payment do you accept?
I accept wire (bank) transfer for overseas clients, paypal when a client prefers this or is in a rush, and most often for US based clients - a cheque by mail. I usually charge a small fee to cover the wire transfer and paypal payment methods.
Why would you recommend working this way?
This works for me. It spreads the risk yet gives the client (who may be a first time client in many cases) the option of not paying everything at once to an unknown designer / studio. It’s a pretty fair process. The only added advice is that even if a client has ‘proven’ themselves to be trustworthy by having paid your deposit and even subsequent payments, you must not continue to provide work into future phases of a project before getting payments as per the signed agreement / fee schedule. I have learned this the hard way. Trust me - it’s worth swallowing your pride and overcoming any fear of confrontation and not moving forward on a project until you get payment as per your mutual agreed-upon contract. Many unexpected things can come up - even personal emergencies or as we now know - catastrophic economic upheavals - that can upend even a trustworthy and fair client’s willingness or ability to pay you.
Visit Yael’s website here: The Dieline.
Aaron Russell, of aaronrussell.co.uk
How do you normally charge clients?
I have different relationships with different clients. I have a handful of clients who I work for on an ongoing basis and for whom I charge an hourly rate. As I have a long term level of trust with these clients I just bill them at the end of every month for the hours completed.
I also do lots of project work where I provide a quote in advance of the project. Early in my freelance life I learnt the hard way about doing work without any up front payment. Having been stung once, all new clients now must pay a 50% deposit up front. As my relationship with clients develops I am a lot more flexible about this, but certainly with new clients there is a huge risk involved - even more so when you are dealing with overseas clients and you don’t understand how the legal system can protect you.
What methods of payment do you accept?
The majority of my clients are UK based, so the best way for me to accept payment is through electronic bank transfer as it’s free. However for my overseas clients I generally accept payments through PayPal and I will pay any fees associated with that. One overseas client of mine is uncomfortable using PayPal so they insist on paying via international bank transfer.
At the end of the day, I don’t really mind how the money gets to me - as long as it works for my client and gets to me in good time.
Why would you recommend working this way?
Clients come in all different shapes and sizes and there won’t be any one-size-fits-all approach. It’s part of my ethos with how I deal with clients to be as flexible and accommodating as I possibly can be, and that includes how I take payment. It’s essential to protect yourself when dealing with new clients - and I learnt that the hard way. But all my long term clients are fantastic and always pay on time without issue, and I think that can party be put down to dealing with them with flexibility and understanding.
Visit Aaron’s website here: Aaron Russell.
Jacob Cass, of Just Creative Design
How do you normally charge clients?
I always charge clients with a 50% deposit however from there it is different from each project… For a web design job I take another 25% before coding and then get the final 25% before delivery of files. For logo designs I charge 50% upfront then 50% before delivery of files.
What methods of payment do you accept?
PayPal only and the client pays for the fees - I include a 3.5% processing fee on all quotes & payments. For Australian payments I allow bank deposits.
Why would you recommend working this way?
I would recommend working this way as there is less risk for you and the client and I would recommend getting your clients to pay the PayPal fees as it sure does add up in the long run.
Visit Jacob’s website here: Just Creative Design.
Michael Martin, of Pro Blog Design
How do you normally charge clients?
I charge a flat rate, but make it clear that if the client requests more advanced features or extra revisions during the project, then there will be extra charges (So that they know the original flat rate isn’t always the end cost). I then ask for a third of that payment upfront, a third at a milestone about half way though, and the final third at the end.
What methods of payment do you accept?
I use PayPal for everything. I’ve tried working with cheques, and not only were the charges ridiculous, but the hassle was unbelievable! Seems that a bank can simply not reply to a request for a cheque to be cashed when they’re in another country (Or at the least, delay their reply for a long, long time!), so you can spend months waiting on your money. That may not happen too often, but with PayPal, it never happens. And because I ask for a second payment part of the way through the design, I don’t carry on to the final stage until I have that payment. PayPal is instant, so it means we don’t lose any time waiting around for money to be transferred.
Why would you recommend working this way?
I work mostly with bloggers and small business owners. Larger companies may be used to awkward, tedious billing processes, but I don’t want them and my clients don’t tend to either. A flat rate and payment in thirds makes things very simple, so the client (and myself!) know exactly what to expect and when to expect it. Before we even begin, they can get ready to set aside money for the second payment. I’ve never had any trouble getting paid on time this way (And I don’t go onto the next stage of the project without being paid whatever was owed to this point. Great incentive to pay on time!).
Visit Michael’s website here: Pro Blog Design.
Part two coming very soon
Part two of this series will be published towards the end of the week, and features more other skilful designers, such as Chris Spooner, Gino Orlandi, and more. Grab your free subscription to davidairey.com so you don’t miss it.
Thank you!
Thanks very much to all the designers who answered my questions. I greatly appreciate your time, and hope you enjoyed reading the answers from everyone else.
For those of you curious about the image at the top of the post, it’s a commemorative £5 bank note for the late Northern Irish footballer, George Best. There’s a saying in this country, that Northern Ireland is known for two things; the Titanic, and George Best. One was a disaster. The other one sank.
UPDATE: All parts now published.
How 20 designers charge their clients
- How 20 designers charge their clients — part 1
- How 20 designers charge their clients — part 2
- How 20 designers charge their clients — part 3
Related posts on this site
28 spot-on reader comments to “How 20 designers charge their clients - part 1”
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Simply fill in the form below. All comments are moderated so you may experience a short delay before your comment appears. Comments should be respectful of other voices in the discussion. I reserve the right to edit or delete comments at my discretion.
Thanks for including me in this article, David - it’s great to read everyone else’s practices. 50% seems to be the defacto standard with up front payments, and it’s interesting to see a few people commenting about an increase in late payments.
By the way - great header image!! Although, I’m surprised you of all people to be using an image of a ManYoo legend!
Aaron Russell’s last blog post…Epuron advert: will make you smile
Thanks for including me David. It’s great to see the answers of others, especially since some have much more experience than me (30 years! wow, that’s a long time.).
Steven Snell’s last blog post…50+ Gorgeous Navigation Menus
David - Great post! Thanks so much for asking me to a part of it. Enjoyed reading everyone else’s take on the questions.
Jeff Fisher LogoMotives’s last blog post…Identity Re-Design: Peggy Sundays
Thank you for compiling this list and featuring myself among other great designers. You sure got the post up quick!
Sorry for not including such an elaborated answer like the others, I thought it was going to be a short sharp answer type post but I will know better next time.
It was also interesting to see how Jeff Fisher works with larger corporate clients. I haven’t had the chance to work with any large design-by-committee designs as I mainly work with small businesses however it is a handy piece of information to know.
It was also interesting to note how many people receive cheques. In Australia that is not very common at all… nearly everything is now done online. Also as most of my clients are based overseas the fees involved with international electronic bank transfers makes PayPal the best option (when you charge the client the fees). Also cheques from overseas are a real pain, they take ages in the bank to clear and then even longer for you to receive the funds - let alone having to go to the bank to cash them in.
I am also going to be running an article on my site soon “Do you charge your clients PayPal fees?” - It was also interesting to note the poll results on Twitter: http://answers.polldaddy.com/poll/1096508/
Anyway, look forward to the second article.
Jacob Cass’s last blog post…20 Typefaces To Start A Designer’s Career
David – a great idea, posing these questions. I hope you’ll find new aspects of business practices to look into with a selection of designers.
I’d be interested to hear more about level of detail in proposals. For instance, in the case of logo design, are each of you specific with the number of sketches or design options per phase…or do such details vary wildly among your clients?
Again, thanks to all participants.
I’m amazed how many Designers say they add additional PayPal fees to the bill - Take my advice, includes these into your costs!!!
From someone that outsources a lot of work, I get offended when I see this and think they are taking the mickey mouse.
You don’t separate your electricity bill which is a part of your over head costs, so why separate the processing fees?
Another great article David :)
Chris’s last blog post…A very strict diet
Another great post David. I will look forward for the second post.
Highly appreciated – thanks!
You’re very welcome, and yep, a 50% downpayment seems a common request. As for the George Best inclusion, I guess you chose to overlook my closing sentiments. Hehe.
Steven,
My pleasure. Jeff Fisher has a wealth of experience, so it’s great he chose to join in.
Jeff,
Don’t mention it, and thank you.
Jacob,
No need to apologise at all. Some others have been brief with their answers too, and any insight is of help. There are a couple of interesting comments on that PayPal poll you link to.
Bruce,
Where sketching / brainstorming for a project is concerned, I’d never place a restriction on the amount. I would, however, restrict the number of logo options I provide clients. This depends upon client preference and budget. Hope that helps somewhat? Feel free to ask any other questions you might have.
Chris,
Glad you enjoyed the read. Most of my own client payments are accepted via bank transfer (national and international). Ocassionaly a client pays via PayPal, where I pick up the processing fee, so it’s interesting to read your take on the charges. I wonder how many others feel the same.
Ole, Meraj,
I enjoyed piecing this first part together, so I’m glad you found it of interest too.
This is an excellent post. I was quite surprised at first that so many take as much as a 50% deposit but I think now that this is fair and necessary for a designer as they need to protect themselves. I also think that this should not really put too many clients off (that actually intend on paying) as they will have to settle the balance at some point anyway and is probably better to do it half and half. Thank you for the post this has been most informative.
That was very insightful and helpful. I’m just starting out in freelancing and I struggle with this very issue. I think I’ll probably incorporate a number of the ideas and approaches used here.
Thanks!
Don Farland’s last blog post…Office Revolution
It’s very interesting to see how people charge differently for different types and sizes of clients (Jeff Fisher especially). It seems most designers charge between 35% and 50% of the full fee up front which I think is a good idea. Personally, anything below £750 I charge in 2 installments - before design and build and on project completion, but anything higher and for the clients benefit and reassurance the fees can be split over 3 or 4 installments.
The idea of a discount for punctual payment (Jeff Fisher again) is something I’ve never considered before. But to be honest, payment on time should be compulsory (although of course it never is) so no-one should deserve a discount just for paying up on time.
Looking forward to part 2 David!
Nathan Beck’s last blog post…A note on accessibility - body background colours
Very interesting, it’s also timely as I’ve been focusing on more long term projects recently, as opposed to the quick ones (which I always require payment for in advance), and have been trying to figure out the best way to go about charging my clients.
Great collections of replies you’ve put togethere here David. And thanks for including me! :)
After reading them all, I was surprised at how many people use cheques. I suppose if you live in the US and get a lot of clients from the US, then it would make sense (Same with any other country of course). Most of my clients are overseas though, and my bank charges £18 to cash an overseas cheque. If I tried that with the thirds system I use, it would be £54 in processing fees! :(
(And I liked the George Best line! One of my friends has a poster in their house of him saying “People Will Remember Me For My Football.” Guess that’s not the only thing they remembered! :D )
Michael Martin’s last blog post…Design Review: 21 Gun Studios
That’s an interesting post David. Like others have mentioned, I find it strange that many companies use cheques. I know here in the UK, as you will know, cheques areseemingly being fazed-out.
Most of my work comes from a very large retainer client based in England, and they email me Remittance Advances and pay me via BACS 3 days after. This is by far the simplest method I’ve found, with no extra hidden costs to myself.
Hi David
It’s interesting to see that most people are charging 50% up front. I’ve generally been asking for 25% before I get going on any designs. Having said that I’ve usually spent quite a bit of time working out what the client wants. Very helpful article, thanks.
I am a strong advocate of requesting a 50% deposit up front from all new clients. If we have worked together in the past, I may reduce the deposit to 25% based on our history (on time payments, etc.). What I do find interesting is that people are including the PayPal transaction fee into the overall bill, as this is an ongoing argument I am having with my project manager and accountant. I consider this a function of business, no different that if I have a merchant account and would have to pay fees to the individual credit card companies. Some would argue that the fee should be passed along to the customer, but I differ. I don’t believe that a client should be penalized for being able to pay with a credit card by having them pick up the fee for using said card. I actually hate when a retailer does this to me. There is a gas station that is 3 blocks from my house that passes along the credit card fee to the customer. I have decided to purchase my gas from a station that is 10 blocks away because the prices are competitive and they do not pass the fee along. This is how I like to conduct my business.
Just another point of view.
Erik Ford’s last blog post…October 31, 2008: Weekly Round Up
Hi David, thanks for a great article, and thanks also to all the designers who contributed.
For me, one of the biggest challenges to date has been dealing with Government agencies who have their own set of rules and can be inflexible on things like up front payments. At the same time they can be very reliable as clients so it’s a balancing act.
The other big challenge is pricing, which is always tricky. It helps to get the perspective of others on flat rates versus hourly rates, as your contributors have discussed.
Tracey Grady’s last blog post…Fresh ideas for creating seamless websites
Glad you enjoyed the first part. More insightful contributions will be published tomorrow.
Nathan,
The prompt payment discount is an interesting one for me too, and you’ll discover that Jeff isn’t the only one using this method. I do agree, however, that prompt payment should be compulsory, and it’s a good idea to charge interest on late transactions.
Michael,
It’s rare for me to receive cheques too, but I do offer it as an option. As for George Best, sadly he became known for the wrong reasons, even if it didn’t stop an airport being named after him!
Andrew,
Yep, BACS is perhaps the simplest form of payment for national clients. More and more of my international clients are preferring wire transfers, whereby I provide IBAN / Swift numbers.
Jennifer,
You’re very welcome. Might this prompt you to ask for 50% in advance, rather than 25%?
Erik,
Like you, if I’ve been working with a client for some time, I’m more trusting about the downpayment. Similarly, I’d never write it off completely, as it’s a good motivator for both parties.
Tracey,
I’ve also found that the larger the client, the less straightforward it becomes receiving your preferred downpayment. A big name in your portfolio is always worth the extra effort though, and I have one or two I’m happy to be working with at present.
Thanks everyone.
That’s great share. I am not taking clients worldwide yet, but this will help me to decide. And yes, agreed it always depend from client also.
Dainis Graveris’s last blog post…How To Create Your Permalink Structure More User And SEO-friendly
I’ve had great success in creating contracts with clients that include payment and delivery schedules on both small and large projects.
Like most of you, I typically get 25% just to get started. Depending on the complexity and length (time) of the project, I’ll divide things into phases. I’ve yet to have a problem with slow or late payments, even with big corps.
The PayPal fee discussion is interesting. I like PayPal because it usually means someone pays more quickly (it’s just dead simple and fast for individuals and small biz). However, I state that if they pay via PayPal *with a credit card* then I charge a processing fee. If it comes from bank funds, there’s no fee for me and I don’t pass one along to them.
My feeling is that if they’ve got the funds at hand they’re rewarded by zero fees. If they’re borrowing to pay me and there are several payments on a schedule, I lose quite a bit to PayPal.
I feel strongly that this is different from overhead (like electricity). They do have the option of paying me by check which costs them nothing. It’s really their choice.
Great answers from everyone here and I learned a lot about other approaches. Very valuable insight. Thanks!
Great information from great designers. Thank you. Good informative article on pricing.
Chaitanya VRK’s last blog post…10 Must To Follow Blogs For Effective Blogging
Thanks for sharing your own thoughts, and I’m very glad you found these insights of use.
Chaitanya, Dainis,
No worries at all.
David, I just starting reading your blog. I love it. Articles like these really help a guy who’s just getting into design. Very helpful and informative.
David,
A big thank You for the article. I really think every designer can gain a lot from the knowledge.
I’ll just add: including the PayPal costs isn’t really that big of a deal, for instance Bank Transfer for oversea clients is much more expensive. I rarely use PayPal (mostly for abroad clients), mostly Bank Transfers, Cheques or cash (when the client is local, usually the price is more attractive for this type of payment).
Unfortunately, I’ve learned that having a spoken agreement is not the good way out (when you’re at the starting line you try to catch every possibility, but they don’t always mean cash for you), so I always sign a contract, describing what has to be done, specifying the due dates and the way of delivering the end product. I always take a upfront deposit, from 25%-50% depending on how big the project and it’s nature. E.g. web design - 50% upfront, 25% before coding, 25% before uploading and testing the site on my clients server.
After seeing that some of my designs where a bit altered and used by the client without my permission, I’ve decided on taking deposits. Somehow strange but introducing the deposit, made me more credible and brought in a few serious clients. If the company is delaying signing of the contract or the deposit, but is still asking for sketches, ideas and concepts, don’t bother, they’re not worth your time.
Tracey,
Government agencies / companies are indeed a pain, especially when it comes to payments and deposits. They are a good client though, really reliable and trustworthy, oh and they know what they want, rarely changing their mind in the middle, or a the very delivery of the project. Had the chance to work with a couple gov. institutions and it was grand, everything you need is a good conract (which they like to have as well) and patience.
Glad you’ve seen the light and now ask for a deposit. I hope you didn’t get too burned when working on a client’s word alone.
Wow, thank you so much for this great series! As someone fairly new to the freelance graphic design field, deciding how I want to deal with clients and fees has been my biggest struggle. It’s so nice to get some good examples and advice from the pros in the industry. I’m signing up for your rss feed immediately!
I hope you enjoy the future articles here.