Hello gang. Craig here for week three of all that agony uncle-ness, via the lovely lot at Lecture In Progress. So far we’ve talked about rejection and motivation, and we’re going to go a little formal this week – as a lot of people have questions about fees. So let’s have a whip round, eh?

First off, talking about money, in almost any situation, is bloody awful. And just like any form of pain, people find their own ways of dealing with it. So don’t be surprised if what you read here doesn’t align with how expected to be doing money things. Let’s have a look at how the majority of creative practitioners cost their working time...

Approach 1: Calculate a day rate
Lots of freelancers and agencies use a day rate – a charge per day for their work. This is by far the most popular and widely used way to cost for projects. Agency rates will be very high compared to the freelancer, but that’s because there are costs in agencies that freelancers don’t have (such as staff salaries, studio rents, etc.). But the maths in getting to your day rate is all but the same.

You have to take into account all the things you need to live and work, add them all up for the year, with a bit of top for profit. Then you need a rough idea of how many days you will want to work a year (remember holidays, but also account for dead time, as no one – not even agencies – bills for 8 hours every day). Divide your costs by the number of days, and that’s your rate.

As a guide, depending on your experience, freelance designers I’ve known or worked with can charge anything from £100 per day to £400 per day. But it really does all depend on things like experience, workflow, skills, network, demand, and how much you want to do the work you are negotiating for. This last factor is by far the trickiest – even more so than the maths, for me. You could also have a stab at this handy tool.

I’m going to hand you over to James Binning now, from creative collective Assemble (yes, they won the Turner Prize a few years back), who has some interesting things to say on day rates:

“By far and away the most important thing to understand is the value you bring to any piece of work, and be confident about asking for a proportionate fee. This is difficult in practice, but it shouldn’t be. It’s important to establish clear principles when you start working as a freelancer, or in your own practice. This can make it transparent and procedural, rather than emotional – which is where it gets tricky.

“In basic terms, we work out how long we think a project will take, and we charge a ‘day rate’ which covers salary, overheads, rent, etc. A fairly good rule of thumb is that salary is 1/3, overheads are 1/3 and rent or desk space is 1/3, but that can vary dramatically depending on your scale.

“One of the principles is to say how much time we think any piece of work is going to take, put a cost to that based on the day rate, then communicate that to the client. If it feels like a lot, then you might reduce it, but tell them you are reducing it. Something a lot of people starting out are prone to (and we definitely were too) is not communicating when you are doing work at cost, or less, because you want to work with someone, or they aren’t a corporate client. The fees always feel high, and you worry that they’ll think the whole day rate goes to you, when it isn’t.”

Approach 2: Charge a project rate
So hopefully that’s enough to get you raring to go on a day rate, but what a different way of doing things? Mike Reed, of Reed Words, argues in favour of a project rate, instead of a day rate. I remember reading his article about it, and it changing my perceptions, so I wanted to share it. The full piece is here, but here’s a snippet:

“It’s [the day rate] nonsense. Many new projects begin with some version of this conversation:
‘What’s your day rate, and how long do you think this’ll take?’
‘It’s £700 a day, and I reckon it’s ten days’ work, so that’s £7,000.’
‘Oh. I only have £5,000.’

“Instantly, the day rate goes out of the window. Now, it’s about balancing the writer’s needs and the client’s. Is this a nice project for the portfolio? Might it open up other opportunities with this client, or in this sector? Will it be fun, or a drudge? Can he or she afford to let it go – or is this the first proper job to come along in months? All the factors above are important in setting a fee. So why reduce the process to an artificial system of hours and days?”

Now, before I leave you with your calculators and green visors, I’m sure many of you will be curious to know how I approach costing in my own practice – as I seem to be dodging telling you. Well to be honest, I’m shit at maths and costing, so I do a bit of both. I have a day rate, but I also try to work to a client’s budget, if I believe it’s feasible and worthwhile. Then I have certain project fees for certain kinds of projects (like branding). But I really struggle with costing – so don’t worry if you do too.

As I said, money is an awful thing and it gets in the way of what you really want to do. But the trouble is, it makes life a lot easier when you don’t have to worry about it, so do what I do and get it out of the way first. As James says: “make it transparent and procedural rather than emotional”. But as long as you bring in more than you spend, that’s enough right?

For more Craig wisdom, his book ‘Oh Sh*t What Now?’ is available via Laurence King.