Topic

Messages

Production and Design Time

We are a graphic design agency, doing creative concept work and print production for a variety of clients. We typically charge $100- $150 per hour for graphic design work. That is a blended rate across all workers here - from Art Director to the Print Production person.

We have one client who is arguing that we should differentiate between Production and Design time - that the amount of time we spend on DESIGN should be lower cost than the time we spend on PRODUCTION - collecting images etc etc. Do you agree? Do any of you do this?

Second question - do you quote projects based on a flat fee ($750 for an invitation) or on a time basis (That will be $150 an hour and it should take about 5 hours to complete)?

Thanks all,

Natalie Gerngross

Tell the client that design will be $250 and Production will be $100...if the client doesn't like your pricing model they can go elsewhere...

Sorry - I hate it when clients think they know better than you when it comes to how to price work. Which is why we never tell them how long its going to take or who gets priced at what. We do our internal budgeting using blended rates. Then we look at the overall job and value and we might increase the pricing. It depends on the job. The client sees a flat rate on the proposal.

Roxanne Cowan

We charge $150 p/h for both production and design. We have another rate of $175 p/h for concept development. These days the lines are blurred between a production artist and a designer, most firms hire a designer that is capable of both. We struggled with the same debate and landed on one rate for design and production. It is considered all to be graphic design to us. We do separate a task of final file prep, collecting and disk burning to a task we call "Final Art Production". It is usually is a lower amount but catches the labor involved in that "last step". We bill it at the same rate as design because it has a market value and does require a trained professional. We have had no difficulties with clients understanding this.

Sonny Goodall Lighthouse Marketing, Inc.

We charge staff rates, in the range that you quote. However, design is a higher rate than production -- requires more "artistic" personnel, who are paid more.

But consider this from a larger standpoint -- do you really want a client who's arguing about rates BEFORE you've even put out a bill? I'd drop them immediately. In fact, send them to your worst enemy and let them be bankrupted by these folks. :-)

Internally we produce estimates based on hours x rate, but we just give our clients the result, broken out by design categories, production categories, etc. Typically 5-10 categories on an estimate.

Brent A. Byrd Chief Financial Officer Point Zero, Inc.

> We are a graphic design agency, doing creative concept work and print > production for a variety of clients. We typically charge $100- $150 per > hour for graphic design work. That is a blended rate across all workers > here - from Art Director to the Print Production person.

We have a variety of fees for tasks. We have a rate for design/layout and a rate for design production. It doesn't matter who does the work. We bill by task, not staff.

> We have one client who is arguing that we should differentiate between > Production and Design time - that the amount of time we spend on DESIGN > should be lower cost than the time we spend on PRODUCTION - collecting > images etc etc. Do you agree? Do any of you do this?

Your client doesn't grasp the notion that the true VALUE of the work is in the IDEA and its EXECUTION. The design holds more intangible value, and the production holds more tangible value. Obviously if the production is done poorly, resulting in a poor end product, this lowers its value. If it is done correctly, and the client is happy, he is judged on the tangible product in hand... Sounds like a learning curve issue. We charge more for design and less for production.

> Second question - do you quote projects based on a flat fee ($750 for an > invitation) or on a time basis (That will be $150 an hour and it should take > about 5 hours to complete)?

We quote based on actual hours it will require to do the work, then manipulate the proposal total, based on market value to the client.

Shelley Holloway

If you're going to break it down, I think it should be exactly the opposite. We have just recently gone to a flat rate for each person for whatever task they happen to be doing. But we are still under contract with a couple of our clients at our previous rates.

For instance, our art director's flat rate is $105/hour. For certain clients, however, his rate is $115/hour for creative and $85 for anything not considered creative.

The only tasks we charge at the higher rate are CONC (creative conceptualization) DESN (layout/design, including client and/or in-house changes) PROD (prepress) PROG (ASP, CGI, database creation, etc.) WEB (Web site maintenance)

All other tasks including research, client meetings, art supervision, printing, etc. are billed at the lower rate.

The philosophy is that whatever goes into the actual creation of a product, whether it be a web site or a press conference, is worth more.

As for quoting, we base estimates on our hourly rates AND the number of hours it will take to get the project done.

Example: Possible estimate for 4-panel brochure

Account management - 2 hours x $70 = $140 Creative/conceptual - 3 hours x $105 = $315 Production management - 1 hour x $65 = $65 Design - 4 hours x $105 = $420 Proofing - 1 hour x $65 = $65 Prepress/production = 2 hours x $105 = $210

Total = $1215.00

Of course, our jobs rarely turn out that straightforward, but you get the idea.

I would be interested in finding out how other agencies do the same things!

Kristi Long Blair Communications

Always on a flat fee. Should you be penalized because you are efficient and clever? A good idea has worth regardless of how long it took. If you charge hourly then perhaps you should charge differently for different tasks. We have a blended hourly rate that covers everyone and overhead, but only use it for aa's, consulting and the like. Hope this helps.

Christopher Staples

I have a further interesting point to add to the mix. The client that prompted this discussion is one that we have had for 5 years, during which time they have expanded globally. We completed a design piece for them last year - their major selling tool - which was priced for its value to the North American market. I then discovered that it had been translated into 14 languages 6 months later and reprinted and distributed globally! What do you think? I am tempted to invoice them for a usage charge for the other countries.

This is going to come up with a new ad campaign we are doing for them, so your thoughts would be helpful.

Best,

Natalie Gerngross

Interesting question. Only your lawyers know for sure ...

I would think that they're on thin ice ethically, but not necessarily legally:

1> What do your standard documents (terms & conditions or other agreements) say?

2> Did the piece contain any stock photography or artwork where the copyright is maintained by others? Reprinting that without appropriate rights is clearly illegal (unless you use Napster, in which case you'll think it's fine).

Brent A. Byrd Chief Financial Officer Point Zero, Inc.

Pesky clients!

You don't say if the client bought the rights to the design. Assuming they didn't, you have the right to charge them for additional usage just like stock photography charges. But without a specifically stated agreement, If you did what you propose, you risk the relationship. Only you know if it's safe to tread those waters.

We have our clients sign a Terms & Conditions Agreement Letter at the beginning of the relationship. Among other things, there is a title clause that states the client has purchased the design rights, but can only reproduce the design for additional printing for the same purpose the proposal stated. See excerpt below.

Because your relationship is 5 years, doesn't mean you can't have them sign something agreeing to terms of business. Good Luck!

"TITLE: In producing the finished product, it is understood that title to all items and materials purchased to complete the project passes to the client at the time of purchase and prior to use by ***AGENCY***. Unless specifically otherwise stated on the face of a proposal, this order includes the right to reproduce stated design, illustration or photography only for the purpose stated on the proposal. ***AGENCY*** bears no responsibility for usage rights fees incurred by client beyond the limits of the purchase as defined in the stock photography license agreement."

Roxanne Cowan

There's a larger question here than one of pricing. This is an important marketing decision, and it's also a client communication issue.

You need to develop a pricing policy and then discuss it with your clients. In other words, if your client isn't expecting "usage charges" it isn't right to bill them.

The first rule of client service is "no surprises," and so you might also wish to grandfather your pricing policy for existing clients if the policy represents a change.

Here we don't believe in "usage charges" or residuals. Our clients own outright any of our work that is paid in full, and that policy has been a significant competitive advantage for us more than once.

Of course, your policy should reflect your philosophy and financial situation rather than ours, but you'd be wise to put yourself in your clients' shoes when deciding because this is a marketing strategy decision with significant long-range implications.

Russ Norwood

Hmm. I have run into similar situations over my career. There is almost no way to handle this cleanly after the fact.

Up front, they should understand what their rights/usage are. I make certain with a working agreement that covers artwork produced for the Client, as well as the photography & any illustration.

Clients need to understand that while the ad/brochure/mailer is theirs (after the cheque has cleared), that other items such as photos & illustrations remain property of the artists who created them UNLESS THEY HAVE SPECIFICALLY SIGNED AWAY THEIR RIGHTS.

If the photographer or illustrator becomes aware their work was used beyond that for which they were contracted, they could sue you and/or the Client for additional payments and damage. This needs to be stressed to the Client prior to the original production of the piece.

Keeping control of this is easy: never give the Client the files. You should hold on to the project through printing, delivering the Client the finished product. If there are changes or new versions, then they come back to you.

I hope you can get this worked out.

Take care,

Phil Watkins creative director Wilson Chapman Advertising

Always state the usage rights on the estimate for the job. This applies to both media and collateral. If you didn't, I'd try to go ahead and bill the additional usage. I'm assuming you used in-house creative talent?

Mary McMurtrey