A brief discussion of your value
I recently spoke to a young designer in Brasil. She has an advanced degree in Architecture and offers 3D Architectural Rendering services to her clients, most of them in the U.S. After some back and forth discussion of services and methods I finally asked her to slow down and give me an example of a job that she is working on and what she is charging for it. She sent some photos of a project in the U.S. from a contractor requesting a 3D rendering and possibly a plan layout generated in AutoCad.
Now for me, this is not nearly enough information to accomplish the work the contractor desired. I mean there are no measurements or elevations, no program of elements, no client desires, no contractor capabilities, no schedule of materials available or desired, not to mention environmental conditions....just a couple of pictures.
When I asked, she told me that the job would take her about 24-30 hours to accomplish a 3D rendering and an AutoCad construction layout.
She quoted a price of $400 to the contractor...for the whole job! That works out to about $16/hr. I pointed out that unskilled hamburger flippers make that kind of money or more. I think she was a bit shocked and embarrassed! For a woman with a masters degree in Architecture I would think that she is selling herself short.
I asked her to step back and stop pricing her education, talent and skills based upon what she might THINK it is worth and do an assessment of what she needed to survive.
This is something everyone should do!
I asked if this was her only source of income, she said yes, and further explained that she is a single mother with one child and that takes up a good portion of her day. She indicated that she would like to work 8 hours a day but often can not do so. I explained that there is a difference between work hours and billable hours. We always work more hours than we can bill for....ask any doctor or lawyer! She still didn't quite get it.
So I asked what she needed to make in income per year to make ends meet. She indicated that she'd have to make $50-$72k (USD) per year to have a comfortable life. So I said, let's do the math...
$72,000 / 50 weeks (this allows for vacations and holidays) = $1,440/week
Allowing for unbillable hours, child care, personal time, etc she might get 4 hours billable per day or 20 hours per week.
$1,440 / 20 = $72/hour. So that is what she should be billing her time at! And she was at $16/ hour or worse!
$16/ hour is great for those who hire her but it is unsustainable for her and undercuts those of us located in the U.S who who are licensed, insured and experienced. She is none of those. But she has every right in a free market economy to offer her very high quality services to those who are willing to pay for her skill, whether it is $16/hr or $72/hr.
$16/hour for an unlicensed, uninsured, foreign contractor is absurd and practically slave wages! But $72/hour is more than reasonable for them and for the client who hires them. Especially considering that to hire a licensed, insured and experienced American designer would be more than twice that figure.
I am using this as an example for contractors and designers to help them to set a solid, realistic pricing schedule.
If you are a contractor you should first know that your pay does not, AND SHOULD NOT, come from profit. If you are working in your business then your pay should be considered as a part of either direct or indirect costs of doing business, your pay should be included in the direct or indirect labor costs and estimated accordingly. Your time is billable. This is a huge topic that would require a much greater explanation.
If you are a designer or consultant and your work is the only source of your income, you should know how much you need to make in take home pay to survive per year. Add to that your expenses (like taxes, office supplies, licensing, insurance, continuing education, etc.) and you will arrive at your minimum. Divide that by your billable hours and you will get your hourly rate. Adjust that rate based upon going rates, your skill, experience, etc. Keep in mind that your billable hourly rate will have to be reasonable compared to average rates (Highly under priced foreign design work will kill you!). Your skill, efficiency and quality of work will allow you to adjust this upward. A good contractor will be happy to pay for prompt, efficient, and practical designs that help them to achieve a more successful and profitable project. A smart contractor will add your fees to their overhead costs plus a loss factor to recover them on every project ensuring a solid bottom line. There are very few contractors out there who want to spend an entire day in the office and in the field to come home and spend hours away from their family learning new software and designing something that they could have a trusted design partner do for them. Time is money and family time is premium! And design is just another cost of business.
This is just a quick overview of how to price your work, so take it as that. But I hope that it will make you think about how valuable and marketable your skills are. Whether you are a contractor, consultant or a designer, you must know your value your time and effort and price that effort accordingly. If you don't, you will end up being taken advantage of until you perish.
~ Eric
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