a few months ago, smashing magazine posted an article called Quality-Price-Ratio in Web Design (Pricing Design Work).  i’m not going to recap the article, you can go over there and read it yourself if you’re interested — it’s a good read both, i think, for designers as well as people trying to shop for good designers.  there were two main points of the article: 1) price and quality do not necessarily go hand-in-hand, and 2) generally speaking, you get what you pay for.

the article posed a solution for designers for pricing their work, a formula.  yes, there are lots of pricing  your work formulas out there, but this one has a lot of room for variation depending on how much you value  your own work.  the formula goes like this:

price = creativity coefficient x cost of doing business

cost of doing business is obvious — it’s what most of these calculators are for.  but what, you ask, is the creativity coefficient?  it’s the amount by which you determine the value of your services.  anyone can come up with an estimate based roughly on the cost of doing business — the variation comes when you’re trying to figure out how much to add to that so that you can actually make money doing design.  if you’re just making ends meet to pay the bills, you’re probably in the wrong industry.  the so-called creativity coefficient includes difficulty of the project, your company’s brand strength, and your style or individuality.  there is no 1-10 scale, it’s all left open-ended and depending on  how you value your own services, a project could be valued at $100 or $10,000, it all depends on the numbers you plug in.

so i made a spreadsheet with formulas to come up with a couple different quotes based on different sets of variables as a way to get an idea how to price each project.  the reason i like a range is because another factor is the audience — who you’re proposing this quote for and what they’re expectations are.  certainly you could give them a high bid and if they walk away, well, that’s their loss, but we don’t typically work that way.  and anyway, we’re just getting started and don’t have heavy brand strength or traffic yet.

because i’ve used this a few times, i thought it would be useful for other designers, or for people shopping for design to get an idea of how our pricing systems may work.  so i’m offering up my version of the designer’s cost calculator.

how it works

the first thing you do is plug in your expenses.  for designers this is your cost of doing business, and if you work from home, you can include things like a percentage of your mortgage or rent for the space you use as your office, internet service, software and hardware upgrades, etc.  basically, all that stuff that you should be itemizing on your taxes that help you run your business.  that creates your operating cost.  i then break down the operating cost to cost-per-day, which divides your monthly expenses by 25 (for 25 business days in a month).  then my formula branches out — i have a set of numbers based on 8-hour days, and a set of numbers that divides your daily operating cost by 24 (for instance, if you’re including things like electricity bills or other expenses that are an always-on sort of thing).  i also have a place to enter your hourly rate for comparison.

that’s all the setup.  so you have a project, what do you do?  first, figure out approximately how long it will take.  i break this down in days and hours.  then you plug in the difficulty, brand strength, and individuality variables of the creativity coefficient. and that’s it.  now you have a range of quotes based on different variables.  i have a quote based solely on number of hours x hourly rate (and does not take into account the creativity coefficient), one that is based on the 8 hour operating cost, one that is based on the 24 hour operating cost, and one that is based on the daily operating cost.  then i take a median of all four and offer that up as well.

it’s a bit of overkill, but it can be tweaked and customized, and i like having options.  and that’s why i’m offering it up.  you can take it and do whatever you want with it, change the formula, hard code your creativity coefficient, whatever.  it’s yours.

the zip file contains 3 versions for different formats; xlsx for office 2007, xls for all other versions of office, and ods for OpenOffice.org and other open office projects.

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