Article on How Much We Should Charge

[jujubee]

Yeah, but I don't want to go around telling everyone his name - just like I don't tell people how much I make. It's private information.

The reason why I didn't mention his name to begin with is because I think it's rude/improper without someone's direct consent/permission.

[flino2004]

[ATTACH=CONFIG]3467[/ATTACH]

This one took me about 3 days and I charged $720.00. When I got the PDF's of the floor plans and elevations I decided it would take me a day to model, 1 day to render, and 1/2 day of post. I was pretty spot on. I guess if I do my own math I undercharged, but they are really good clients.

What would you guys have charged? how long would it have taken you?

If I follow my own formula this is how it should have played out:

3 - 8 hr days = 24hrs
Low complexity so it would fall into the $45.00 per hour

24 x 45 = $1080

It seems very low to me...I usually charge a flat fee x for the first view and 1/3 or 1/2 for extra views of the same scene...I like flat fees because push me to finish my projects earlier, I don't think you have to be punished for working faster.

Fernando

[YoyoBoy]

This conversation has made something very clear to me: I am perhaps the worst businessman who has ever lived. I mean, I knew I was bad but...

[Sawyer]

I like your post but I think its only one way of looking at your finances. What you are not taking into account is "profit". Its pretty cut and dry to show an artist in OK and one in NY competing. You need to know your finances, your monthly liabilities and utilities. What you also need is to know what you are making in profit. Everyone has different monthly fixed liabilities but once you get rid of that you need to know how much you can make after you pay your salary and your fixed monthlies. If you cannot charge enough to actually make money on your business it cannot succeed. Bobby may be able to charge $44 per hour and make 50% profit off that. But I may charge $60 an hour and only make 10% profit. Should Bobby charge more just to "keep up"? No not at all. He is winning. I am loosing in that transaction even though I am charging more. I have to work harder and get more clients to keep up with what Bobby is making. Does it make sense for Bobby to charge more? No it doesnt. He will probably get more clients because he can charge less - he has little incentive to keep up with me because the more he charges the more we (him and I) are competing.

Maybe you think that charging more means you make more money but in a competitive market the best value will be the best competitor. Balancing your spread sheet off mine just so it looks like we have a similar product may seem like a good idea but it really may hurt you. Figure out how much you need and how much profit you are making on top of that. Dont assume though that we have the same monthly expenditure. Taking in hourly rates as the comparison is really deceptive. Figure out your profit margin and stick to that. I would never ask an employer in OK to pay a rate to be competitive with an employer in NY. They would laugh at me.

[glorybound]

You also have to consider your market, I suppose.

When I lived in Chicago there were a dozen architectural firms in our building and a dozen buildings, with a dozen firms in them; all in a city block. The competition was fierce and the overhead was high. You might be able to charge $10,000 for a still, but it was on a 200 million dollar project.

Here in upper Minnesota I am the only guy with in a 250 mile radius, but the projects are between $100,000 - 1,000,000, which do not support large budgets for illustrations.

I used to charge a % of construction cost. The higher the project cost the lower the % and the % changed with the projects complexity.

I guess it just depends!

[Sawyer]

Yes it does depend and much of it depends on you. Very few people dont take losses at all in a year. We all do. Making good choices on where to take those losses - thats good business. Take a loss on doing a job for a client with a great portfolio or upcoming jobs. Dont take a loss for a residential client who wants to see what a metal shed will look like on their lot - they will never come back and you will not be able to learn on the project or use it for promotion.

Another thing I have learned is how incredibly complicated our work is. And it may be too complicated. I can see our education overhead being way too high for a support industry. I think the comparison with a plumber is right on - the problem is I fear that a plumber is much more necessary. I will assume that new software will keep coming out that will make arch viz a more main stream commodity. Hope not though

[jujubee]

I do take into consideration profit - but very briefly. That's not the main focus. The main focus is the bottom line, and anything above that is profit. That's why I mention that you should try to double (even more) what you're charging to make that profit.

The problem is that you get a lot of people new to the field and they are charging too little to support themselves. Most of them will disappear or go and work for an employer. First, they need to make their bottom line which is the focus of the article.

I do bring up geography and cost of living in different parts of the country. True, a person's cost of living might be lower for now. But I think in time, geography will not matter as much - and that was the reason why I brought up the television example - the Internet is the great mediator of pricing.

I'm not foolish enough to say that we all have the same expenses - I know we don't. Some people have more bills and overhead and others have less. I factored into rent - I didn't even factor into mortgages which are generally much higher. Some people are also not stuck at $150/month in credit card payments - I'm certain there are people pushing $500. What I tried to attempt was to point out an average - and how that average needs to be met at a minimum. I think those would be near standard/average numbers across this country. On the other hand, a lot of adults will be dual-income earners.

[Sawyer]

I guess I keep hearing these comments online about making sure we dont undercut each other - like we owe it to each other to keep our rate in a certain range. I think we all need to be aware of our bottom line but I think the term undercutting as its used here is incorrect. Undercutting is typically when you intentionally bill lower than an known price of a competitor to get a job. Not when your rates are lower. Artist A in OK is not undercutting - his overhead is lower and can afford to charge less. Artist B in NY may need to think about moving to compete. Typically companies look for ways to reduce their overhead to increase profit not look to the highest paid competitor out there and try to justify billing at that rate.

If the point of this article is that we should charge more to make sure we are all creating a realistic standard of living with a profit margin - then I strongly agree with that. If your point is that the internet created a level playing field and we need to think about a level billing rate - which your comparison of the 2 artists seems to indicate - than I think that's really off base.

If artist A's overhead is half what artist B's is artist A can charge less and make more money.

[glorybound]

you have to factor in experience, too. 10 years ago my job was hard, but now it is easy. I can model and stage a scene in a fraction of the time now; it doesn't make what I do worth more or less.

If it takes artist A 5 days and it takes artist B 2 days that just means artist B gets to start the next job sooner and can do more jobs in month.

Both artist A and B can only get what their product is worth.

[jujubee]

I'm not telling people to fix prices - that's ludicrous. I'm just pointing out to people that you need to factor in how much it costs to LIVE divided by the amount of work you do.

It's a pretty simple concept that a lot of people don't get.

Ultimately, people can do whatever the hell they want. That's up to them. It doesn't mean that I'm not going to stop thinking someone is a douchebag for charging $350 on something that should cost $2,000 in the "real" world all because everything one owns is pirated and outsourced - and that does happen. Whether it's intentional or not, they end up hurting the people around us and the industry (software developers included) as a whole. You've also lost all respect for me as an artist - no longer is it about the skills involved, but it has simply become a numbers/business game instead. It becomes like one of those children's books in which you color between the lines with crayons.

"Undercutting is typically when you intentionally bill lower than an known price of a competitor to get a job."

If you really want to get picky/anal about the wording... I don't think it has to be intentional. People can charge a low rate - and know/realize that it's a relatively low rate without having to shop around. I think that's the same freaking thing/concept.

"Typically companies look for ways to reduce their overhead to increase profit not look to the highest paid competitor out there and try to justify billing at that rate."

I never said that people should look to the highest to justify their own charges. However, I pointed out a few examples so people would realize that there are others out there who charge much higher - and usually they have the skills and artistic style to back themselves up. I also think artistic skills and knowledge should also count for something... If you have better skills, you should be able to charge more.


"If the point of this article is that we should charge more to make sure we are all creating a realistic standard of living with a profit margin - then I strongly agree with that."

Pretty much. That and what to realistically consider when coming up with your figures.

"If your point is that the internet created a level playing field and we need to think about a level billing rate - which your comparison of the 2 artists seems to indicate - than I think that's really off base."

Wow. I never said that. I never said we should all be "level" but that there's some basic standards we should try to meet at the very minimum. Some of us are better than others at various things, and they should be rewarded for that. What I did say is that the Internet is creating (still in the process) a more level playing field. Over time, it will become more even, even on a global basis.

Look - you can charge whatever you want. However, I think if someone is charging too low that's unprofessional and they're screwing their fellow artists. They're also reducing the overall quality by watering down and flooding the market.

[glorybound]

I think we are all in agreement with you.

[Sawyer]

100% agreement. To me it is important to make a distinction between Artist A who charges $45 (or whatever he needs to) and Artist B who charges $95 per hour one the one side and a pirate who charges $100 for an image using pirated software. I dont think anyone owning a business can do business for less than 60k per year - I cant imagine that being realistic.

What I have seen from these online discussions is that people call out others as under cutting them when they are charging less than they do. I dont think as you proposed that the internet is making regional wage differences disappear. That was a point I thought you were making. Now I have seen undercutting happen and its usually a very unprofessional outfit running pirated programs. Its very insulting to see that I cant imagine any of us havent seen it or isnt fed up with it. I guess I think its an important point being clear on what undercutting is.

"Unfor*tu*nately, Artist A can eas*ily under*cut the more expen*sive Artist B. On the other hand, is Artist A really doing him*self any favors by dras*ti*cally under*cut*ting the more expen*sive Artist B?"

If both have done the formula you presented there could be huge differences and that is not undercutting - in my mind.

[jujubee]

As I said, I don't think undercutting has to be completely intentional. If I started charging $400 on a rendering that took a whole week to make, I'd know that very few people here in this country or parts of Europe could afford to keep up with that rate. To me, that's charging too little.

I suppose I could have worded it more carefully to have read "charged a lot less" instead.

As for 60k - you could technically work for less if you were married and had the additional income and/or worked out of your parent's basement. But practically-speaking, that's not realistic for the long term - at least in this country. Even 60k is too little considering the difficulty of what a freelancer has to do.

[tricky]

The thing that bugs the hell out of be is Artist C who charges one fifth of the next lowest bidder, gets the job, does the work, which turns out to be one fifth of the quality of what the next lowest bidder was offering.

Clients only see £ or $. A client who sees quality is rare.

[jujubee]

I have a developer two streets away who is working on some condos - put these huge signs in the front with renderings that look like Second Life. I talked with him and he said, "my renderings are beautiful! They definitely helped sell the project." I didn't have the heart to tell him they looked like crap.

There's simply no accounting for individual taste... How do you argue with that?