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Compensation: Graphic Designers

Planet Money asked people how they are compensated, and I added my two cents today, regarding graphic designers. I've posted about this before, but it's a nice (relatively brief) summary:

Compensation for graphic designers is all over the map, depending on how long you've been in the industry, how your shop is set up, and what you have been trained (by either clients or your boss) to expect.

Most designers who work for someone else--in a studio or in an in-house design department--make a salary, like many white-collar workers. Benefits, etc. all depend on the size, wealth, and philosophy of the employing firm. So that's fairly "normal".

Where it gets interesting is when you're working for yourself, or looking at how the client/studio relationship works in regards to compensation.

Crowdsourcing, and Logo "Competitions"
Of late there has been a lot of "crowdsourcing" of logos: logo "competitions", where freelancers submit a design (based on very little info about the "client" company), in hopes of being the "winner" and having their design chosen. The payout for this is usually very small--a few hundred dollars for something that (when a firm does a lot of research, takes time to get to know the client's organization, and so on) potentially is worth several thousand dollars, at minimum. A lot of designers, design advocacy organizations, and professional groups have come out against this model, saying it's bad for both the designer (not getting paid fairly) and for the client (not getting a logo or brand identity that's really all that effective).

Value-based Fees
Typically, a graphic designer will charge a fee based on the value their finished product has for their client. The logo for a small local business with a lower annual revenue has less value assigned to it than a brand identity for a national, multi-million dollar corporation. A lot of time is spent by designers and firm owners figuring out what these values are, and how the value _they_ assign to them fits into the competitive marketplace. A firm may charge more for a given product for a given client than another firm, but perhaps they offer value-added services (additional consultation, an approach that fits the personality of the client better, and so on).

These fees take into account not only the value that the client places on the product, but (internally) takes into account the actual amount of research, concept, design, production, and implementation time for the designer. They know that they can't make less than $X per hour if they want to pay rent on their studio, cover health insurance, buy design software upgrades, and so on. And since on average a designer only does about an hour of design work for every two or three hours spent looking for work (or planning projects, or doing their accounting) the actual hourly rate is lower than the figured rate.

The client usually doesn't see any of this. It's part of the larger calculation that figures in the value of the piece to the client, as well as hard costs of production.

Hourly Rates
Other designers will charge their clients an hourly rate, but in my experience this hurts the client, the designer, and --ultimately-- the project. If you're paid hourly, what's the incentive to work efficiently? If the client runs out of money, does the project stop where it is, or proceed with the designer getting paid less, effectively, per hour? Or does the client cough up more dough?

Setting Expectations
Whether a designer is charging based on value or based on time, a set fee for a project with a defined scope of work is better for everyone, setting boundaries and expectations on all sides, and resulting in happier designers and clients in the end. The AIGA has excellent resources for designers (both those just starting out and those of us who have been at it for a while) regarding contracts, fees, and terms of use; as well as resources for people who need to hire a designer.

Labels: advice, b2b, graphic design, logo

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