How To Bid Out A Project (Part 1)

Recently I was approached by a potential client to illustrate a coloring book. The artist she had originally chosen had backed out, so the deadline was now very tight. Since I was already committed to several projects I wasn’t available to help, but I gave her the name of a talented, up-and-coming illustrator whom I happened to know was in-between jobs.

A few days later, I received an email from the illustrator asking for advice. He had started writing up ideas for each page of the coloring book, and even did a few thumbnail sketches. The client liked his work and decided to hire him, but said she could only pay $10 per page! (A laughable sum, considering it would take the artist several hours to illustrate each page. She was essentially asking a skilled professional to work on a rush job for a fraction of minimum wage.) The artist was understandably upset and asked me what he should do.

I felt awful for having handed him a lemon, but decided the whole experience would make a nice springboard for a blog post. It’s an extreme example, but it illustrates the difficulty many artists have (especially those just starting out) when negotiating a freelance project.

Unfortunately situations like this are not uncommon. Generally speaking, artists are not known for their business skills. Putting a price on your personal abilities is an awkward and intimidating process that many creative types would rather avoid. To make things worse, there is a perception among the general public that art is somehow effortless, or has little value (artists are supposed to be starving, right?). An experienced freelancer can usually weed out clients with such attitudes pretty quickly and, as a result, avoid getting trapped in a dead-end project. But when you are just starting out you can’t always afford to be choosy about your clients, making it difficult to turn down any work–even the lemons.

In my early days as a freelancer, I dreaded talking to clients about money. Putting a price on my artwork seemed highly subjective–how much was this illustration really worth, anyway? Would I price too low, and wind up resenting myself later? What if I priced too high and lost the project? What if my artwork would fail to meet the client’s expectations? To make things worse, there was no one I could turn to for advice on the matter. So I groped along for a coupe of years, doing the best I could and making more than a few mistakes.

I’ve been freelancing for over ten years, and I’m now much more comfortable with the process of bidding out a project. Here’s a few helpful principles I’ve learned along the way:

1. Understand that you are running a business. You may not be shipping widgets from a factory, but you are selling something of value. Like it or not, that makes you a business person. You don’t have to start wearing a tie and carrying a briefcase, but you do have to start thinking like a business owner. Start educating yourself about contracts, budgeting, networking, negotiation, and copyright issues.

Rather than making you less of an artist, understanding business fundamentals will help you to work smarter and actually free you up to be an even better artist. It will also help you present yourself in a professional manner and therefore gain more respect from potential clients. For some excellent books to help you get started, visit the Buiness/Freelancing section of my Recommended Resources list on Amazon.com.

2. Figure out your minimum hourly rate. This might require doing some painful math, but the process will help take the emotion, anxiety, and guesswork out of your pricing.

First, figure out how much you need to make each year in order to live comfortably, pay all your bills, pay your taxes, and do some self-promotion. This means (cue Psycho soundtrack)…..doing a budget!

I know, I know….snooze city. But this is a necessary step on the road to artistic independence. You don’t have to figure everything down to the penny—you will probably have to do some estimating and guesswork—but the more precise you can be the better. Besides adding up your monthly bills, add in expenses like software, equipment, art supplies, etc. Don’t forget, if you don’t have a day job with benefits you’ll have to pay for your own benefits (health insurance, retirement, vacation days, etc.) Figure about 10% of your budget should be spent on self-promotion. And keep in mind that any income you make as a freelancer will be taxed by the government as Self-Employment income, which means whatever Uncle Sam used to take out of your paycheck, he’ll now get about one-and-a-half times as much. Ouch.

After a little counting on your fingers and a few broken pencils, you should have a rough idea of what you need to make in a year just to get by. Now, divide that number by 2000 (the average number of hours a person works in a year). This will give you your minimum hourly rate. But we’re not done yet. The reality is, not every hour you spend working is billable. You can’t charge a client for the time you spend doing self-promotion, updating your website, running errands, making phone calls, balancing your checkbook, reading my blog, etc. So, add 50% (or multiply the number by 1.5) to cover all those non-billable hours. Use this final number as a benchmark for your minimum hourly rate. You should be charging at least this much per hour on every project.

Your hourly rate may be much higher than you expected. “Can I really charge that much?”, you might be thinking. If you’ve done your math right, and you aren’t trying to live in the lap of luxury, and you do quality work, and you act like a true professional (especially with the deadlines), the answer is “Yes!” You are not an hourly employee cranking out widgets on an assembly line. You run a business, remember? And businesses have expenses. You are also a skilled professional creating a unique product that is custom-made for each individual client, and that has value.

[EDIT: Incidentally, you should never reveal your minimum hourly rate to your clients. Your hourly rate is designed only to help you figure out the bare minimum of what you need to make. The real value of your artwork isn’t determined by how long it took you to make it. As you gain experience you’ll start doing much better artwork in a shorter amount of time. If you charge strictly by the hour you’ll actually make less money the better and faster you get. That doesn’t make sense, does it?]

Your minimum hourly rate is really just a starting point. The real value of your artwork is determined by how much it is worth to the client. The artwork you produce will have more or less value depending on how it will be used. If it seems the client has potential to make a lot of money off of your artwork, you can raise your price accordingly (or negotiate a fair percentage of the royalties for use of the artwork). If a client wants a rush job, or wants to buy all the rights to your artwork, these are also legitimate reasons for charging more than your base rate.

Since each project is unique, it helps to know what other professional artists are charging for similar work. Every few years the Graphic Artist’s Guild surveys professional artists and designers to find out what they are charging for various types of projects. The results are published in a book, The Graphic Artist’s Guild Handbook of Pricing and Ethical Guidelines. The latest edition was just released, and I would highly recommend ordering a copy . It will give you some helpful parameters to keep you from over- or under-charging.

Of course not every potential client will be able to afford you, but that’s ok. A good rule of thumb for pricing is that you should lose approximately one out of every three jobs because you are “too expensive”. If no one ever flinches at your prices, you are probably charging too little.

3. Ask the right questions. Several factors will influence the price of a project, such as the deadline, the rights being purchased, and how the art will be used. When I was in college a professor gave us a “cheat sheet” of questions to ask clients when figuring out a price for a project. I’ve posted a modified version as a PDF which you can download for free here. Use it as a sort of checklist to help you gather the information you need to determine what a project is really worth.

4. NEVER quote a price off the top of your head. You will almost always get it wrong. Instead, once you’ve got all the information you need about the project, politely tell the client you need to run some numbers and then you’ll get right back to them. Once you hang up the phone the pressure to do quick, fumbling math in your head will be gone. Take your time to think through how much effort the project will really take (including revisions), thumb through the Handbook of Pricing and Ethical Guidelines to find out what other artists are charging, and then call the client back with your price. Better yet, type up a formal estimate/contract which includes your price and your terms and e-mail it to the client. (More about contracts tomorrow).

5. Decide whether you will charge per hour or per project. Your hourly rate is a good benchmark, but many clients are not comfortable paying by the hour. They have budgets to stick to and they don’t want to be surprised when the final bill comes. Instead, a client will often require a lump-sum price for the entire project, and you as an artist agree to complete the project for that price no matter how long it takes.

(Within reason, of course. It is fair to put a reasonable limit on the project, i.e. charging extra for endless revisions that go beyond the terms of the original agreement. Just be sure you spell out those limits in your contract, and notify the client immediately if the project is about to exceed them. I’ll talk more about contracts in tomorrow’s post.)

In my experience, it is better to bid per-project when working on small- and medium-sized projects. It keeps the whole process simple, and it takes the pressure off so you don’t have to worry about going over-budget. On the other hand, for really big projects it is generally better to bill per-hour. The larger a project, the more people and departments are generally involved and therefore the more likely it is that there will be endless revisions, delays, and add-on’s. If you don’t charge per hour, you might look back and discover you were doing twice as much work for half the price.

Whether you charge per-hour or per-project, I highly recommend keeping a log of how much time you spend on each and every project. You don’t need fancy software, you can just jot your hours on a piece of paper. When each project is finished, go back and figure out how much you actually made per hour and see how it compares to your hourly rate (many artists find that they are severely under-charging for their work). Over time this practice will help you develop a better instinct for estimating what you should really be charging and how long a project will actually take.

6. Just ask. Sometimes the simplest way to figure out the price of a project is to ask the client what their budget is. As my grandma used to say, “It never hurts to ask”. The client might be uncomfortable tipping their hand, and they may not tell you. But sometimes they will. After you hang up, compare their budget with your calculations and determine if the project will be worth your time and effort for that price.

Tomorrow: Part 2!


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19 thoughts on “How To Bid Out A Project (Part 1)

  1. Brilliant stuff! Thanks a bunch for posting this.

    I’ve been freelancing for about 6 months now, and even after completing a small business course I still find pricing my work difficult. You’ve given me some helpful tips here, especially in regards to hourly rates. Looking forward to the next instalment!

    –Joe.

  2. Excellent, Excellent Advice Cedric! As an Art Director since 1991, I totally agree with your advice. From my perspective, illustrators that have done all these things are the best to work with.

    Why, because they are comfortable with where they are and what they are charging. This makes for a happy illustrator that does not complain during a project and seems more focused on doing the illustration.

    From an Art Director’s point of view, I wish I had the money (budget) to hire who I want all the time. On that issue of what is the Art Director’s budget, I would share it, if I was given one. I’m told by my bosses, get some quotes and then we will go with the lowest one, or I get one or two quotes and they go, “oh, that much.” and either cancel the project, shelf it, or make me do it in a slot of time I have available. I could go on longer about this, but I will cut it short here.

    Thanks Cedric for great guidance. – Kirk

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  4. Hi Cedric,

    It is nice to read this blog, as it gives immense information which is valuable. Hope every freelancer who reads both parts and enjoys his work in a better way.

    Thumb’s up Cedric.

    Jagadish.

  5. I am (virtually) sitting at your feet and hugging your calf’s with tears of joy! Finally, a no-nonsense answer to the artistic question of the ages: “What should I charge and how do I get them to pay me?”
    Cedric…. “Your The Man!”

  6. Pingback: The Con’s Of Freelancing « Cedric’s Blog-O-Rama!

  7. hi,
    this is nitin and I am happy to read your tips , I just started the job of freelance so can you give me some other help , how I bid a seo, web designing project.

    Thanks
    Nitin
    Seoexpert

  8. This post, as well as all your others, are super helpful. I am beginning to go the freelance route with very little independent business experience and this helps tremendously!

  9. Ive got to say this is an awesome jewel of a post, thanks alot pricing has to be one of the most stressful things an artist can face and its so rarely touched upon. Another great tool ive been introduced to is http://freelanceswitch.com/rates/ to help you determine your costs and needed income to survive.

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  11. it is very useful for anybody who is going to start or even for them too who are already star working & running their business.
    thank u so much 🙂

  12. Pingback: How to Create a Service Delivery Process

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