Pricing for Creatives: Talking real numbers for Illustrators & Surface Pattern Designers | Kristina Hultkrantz | Skillshare

Pricing for Creatives: Talking real numbers for Illustrators & Surface Pattern Designers

Kristina Hultkrantz, Illustrator & Surface Pattern Designer

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13 Lessons (1h 8m)
    • 1. Welcome to Pricing for Creatives

      2:50
    • 2. A set price list?

      4:46
    • 3. A Word on Price Dumping

      3:48
    • 4. Section 1: Freelancing Projects

      4:35
    • 5. Your Big Picture Finances

      11:08
    • 6. Industry Standard Hourly & Project Based Rates

      7:27
    • 7. Pricing Recap

      4:35
    • 8. How to Write a Quote

      7:48
    • 9. How to Write an invoice

      4:53
    • 10. Section 2: Commissioned Projects for Private Persons

      1:51
    • 11. Section 3: Art Licensing & Total Buyouts

      7:38
    • 12. Keep Track of Your Finances

      3:09
    • 13. Other Resources for Pricing

      3:36
27 students are watching this class

About This Class

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WHO IS THIS COURSE FOR?:

If you are just starting out as an illustrator or surface pattern designer you might feel completely overwhelmed about pricing your work. How do you know what the right price is? Am I pricing to high or too low? What are other people charging? How do I give value to my work? These might be a few of your questions. In this course I go into depth (with real numbers) about pricing situations and how to think about your own personal view of money to make pricing quotes that suit you and your business. I really do hope this class will give you the confidence to create professional quotes for all sorts of projects and help your business to be more successful.

In this class I will be focusing on the illustration and surface pattern design industry but this information can of course be adapted to many other creative careers such as graphic design, fine art or hand lettering etc. Just do your own research into industry standard pricing and go from there.

WHAT YOU’LL NEED:

Supplies you will need to take this class:

  • Essentially you will need a business that is up and running. You have opened a Sole Proprietorship etc and have started booking clients or are ready to do so.
  • Some sort of word processing program to create quotes and invoices. For example Microsoft Word.

WHAT YOU’LL LEARN:

In this class I will be going through the different ways that I consider pricing in my freelance business. I will be covering in depth (with real numbers) what I personally think about when pricing for freelance jobs for large and small companies, as well as for custom projects for private persons as well as art licensing and outright sale of artworks. I will teach you how to write a proper pdf quote document to send to potential clients as well as how to write an invoice. We will not only talk about industry standard pricing but also look at the bigger picture around your own personal goal income.

We will cover the following:

  • A quick overview of the different instances I have to think about pricing in my creative business.
  • A set price list?
  • Price Dumping and why this is a problem.
  • Pricing for freelance jobs, & commissioned jobs for private persons.
  • Your own personal minimum and goal income.
  • Art licensing and total outright sale of artwork.
  • How to write a quote.
  • How to write an invoice.
  • How to keep track of your finances so you can then analyse them.

I am so excited to share my tips with you!

xoxo Kristina

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Transcripts

1. Welcome to Pricing for Creatives: Hello everyone. Welcome to another Skillshare course from me Kristina Hultkrantz. I'm a full time Illustrator and Surface Pattern Designer from Mariefred, Sweden. I've been working with illustration for the most part, and a lot surface pattern design since 2010, full time. During those, all these past years, I've had hundreds of projects that I've worked on. I've worked with huge companies, and I've worked with small businesses. I work with bloggers, and I work with just regular, unique people for a commission custom projects. In my creative business, I have four instances that I have to think about pricing, that is, four, freelance work for big and small businesses. It is commissioned work for private persons like a custom pet portraits, something like that. The third is pricing for licensing agreements for illustrations and a pattern designs, as well as total bios and all of that thing, as well as pricing for products. I will be going over pricing for the first three section, but I will not be going over the fourth section about pricing for your products, setting for a lot of great videos about that. All ready. In this course, I will be sharing my tips and tricks for thinking about pricing and creating a proper quote, for projects in commissioned projects and licensing agreements that might come your way, with actual numbers too because I don't want to just give you lots of ideas. I want to talk to you about numbers, even though it's really scary to talk about numbers, and money is very individual so just stick that into mind when watching this course. This course is open for all levels of students, but I think it causes most influential for beginner students who are just starting out in an illustration or surface pattern design or other creative career, and you just have no idea where to start off with money or what to charge or how everything goes down. I'm going to equip you with the analogy about creating, pressing and prices for your business that will suit you and what you do and you will feel confident about sending emails back to people with your professional quotes, you're very professional. 2. A set price list?: It'd be really cool if the entire creative industry just had a set price list and everybody stuck to it, and then we didn't have to think about what to quote because we knew exactly what to do. But that's not reality. Everybody's creative business is different, we are at all different starting points, we all have different skill levels, we all have different techniques that take different amounts of time. Some will people draw or paint these most incredible illustrations that must take weeks to create, and other people create simple sketches of little icon things and maybe take half an hour. The value maybe doesn't always have to be such a huge difference. Just because you create something simple, doesn't mean that you shouldn't be paid as much or it's not worth as much, but there's something to start off with. Unfortunately, we can't have a set price-list for everyone. I think I've said this in every single course that I've ever done. When you're a beginner, you think that there's a specific way how everything works in a creative business or in a regular business in anything, but that's not how the reality is, the reality is that every business is different, so you're not going to mess up if you quote in a certain way or if you send an email in a certain way. Different companies work in different ways, so it's going to be different for every person that you approach and have no interaction with. You don't have to stress about that at least. What's also nice, is that even if you quoted one price to one company, the next time, you can quote another price to another company. It's not like they're going to be talking to each other. But you can't constantly have a fluctuation because if a company recommends you to another company maybe, or a friend, and they say, "Oh, she took $300 for this," and then you quote ''$600, there could be a little bit of conflict." Just things to think about. Even now that I've been working with illustration for about 10 years almost, it's still nerve-wracking to me because I don't really know what the company, what do they have for budget. If I send them our prices, they're going to be way lower and I could have made much more if I had quoted higher. I think the most part, I think I quote too much for what a company is willing to pay and I have to undercut what I really want to get. Is that really a good thing too? Pricing is hard, but we do have some guidelines that are standardized. That is the Artist's Guild handbook. Wherever in the States and in Sweden we have some skill take notice. They come out with prices lists, but they're usually very large ranges of prices, but then it's also something that you can start off with to just get an idea. Later in the course a little bit how I think about where to put yourself in a range, etc. Should you be on the low end, mid, or at the top? I think this self explanatory also depending on where you are in your career. Also another thing is money is so individual. What you think is cheap, somebody might think is expensive, and the other way around. Since we are working with the help of the Internet, you have the possibility of working with anybody from anywhere in the world. Different parts of the world, have different views on money or different inflation, different costs of living like in Sweden where I live, it's quite expensive, and we might have a higher standard of prices or something like that that I have to stick to, to be able to pay my bills and my taxes for the most part. Something to think about also, when I quote prices to the US in dollars, it might be a little bit lower than I would quote someone who is here in Sweden or in Europe. It's not always the case in the States, I've also been paid more for certain projects with certain companies than I have with any other. As you can tell from me what I'm saying, so there's always exceptions to all roles and in pricing there are no roles pretty much. 3. A Word on Price Dumping: I wanted to also say a quick worry about price dumping, and I feel like that's something that we're going through in this creative business right now. There's a lot of talk about price dumping. I would like to put a stop to it, of course, because I think that art and design is something worth a lot. It's the reason why people buy that pencil case or that shirts because of the print on it so I don't really understand why the artist isn't being compensated as much as they would be or they should be. There's also so many sites now because there's digital downloads. People can go to a stock site and buy a pattern for around $2, $5 and of course, when they go and quote a pattern from an artist like me and I say $1,000, they're going to be shocked of course, but I hope that more businesses will realize the difference between a stock site pattern that was maybe made on a template very simply, some people have that computer programs where they are just throwing icons and then it's finished in a matter of minutes, while a custom pattern that I could create for the company, we would really sit down and we talk about all the different qualities that you want it in, the color palette, different items that would take time to [inaudible] out everything and create this custom pattern for them. I think if we all stick together and we can make sure that we don't undercut ourselves all the time, we're helping each other out in the entire industry. If there's always certain people who are willing to take next to nothing for their work, they're essentially bringing the entire industry down and that's something that we have to realize. That's also something to think about when you are pricing,that they might feel like your prices are too high, but you have to think about all of us other people and that's something that you could say when companies aren't willing to pay your prices. You can just say it's an industry standard and its unfortunate that you don't find value in artist's work. Maybe that sounds a little bit too harsh, but you could write it a little bit nicer over there. Please don't undercut yourself too much. Don't work for free as much as you can unless you're really starting out and maybe it's like a friend's business or something like that. But for the most part, try to be paid decently. I know it can be hard to say no to a project when you really need the money or something, that I've done it many, many times, but in the long run it hurts you. You can always try to negotiate less work for less money. If they're asking for something huge, you can try to say, I can do it for this money, I can make this kind of illustration. That's a little bit simpler, etc. Then working for exposure, that seems to be a new thing that lots of companies think that they're so important or something. I mean, you might be able to get a few extra Instagram followers but in the long-run, exposure doesn't do so very much. Unless they're doing a huge feature about you and really talking about you, otherwise, I feel like try to get paid, it's much better. 4. Section 1: Freelancing Projects: In this first section, I'm going to be talking about the first way or the first situation where I have to think about money in my career to business, and that is when I am approached by companies to do freelance work for them. This is what I've worked with most throughout the years. Examples of freelance work can include, but not limited to of course, illustrations for prints such as magazines or books. Digital artwork for blogs, websites or social media. Logos or custom branding. Or custom patterns for fashion or home decor brands, stuff like that. Anything that a small business or large business contacts you and with their own specification that they would like something drawn in your style. This is freelance work. This is how it goes down, usually is a company. They will find me somehow either by recommendation, or found me on Instagram or the Google, who knows. They write me an email and they say that they loved my work and that they love to work with me on this project, so and so. For this video, maybe we'll say it's a women's fashion magazine and they wanted to commission a illustration for some spread in their magazine. They just say that they outlined the project-based simply that they would like an illustration for this spring issue, whatever, something like that, and they asked for my price list. Then I promptly answer and say, of course, thank you that you like my work. I'd love to work with you, sounds excellent, but I would need a little bit more information about the project to create a proper quote. To create a proper quote, I would need information like what size of the illustration is it going to be, is it just going to be printed in that issue of the magazine? What format is it going to be? Is it going to be a pixel based illustration or vector? What do they like? Yes, you'd like to know more about the format. Is it black and white, foal colors, stuff like that. How detailed it? Is use can be like a pair of shoes or is it going to be 50 different items? That's you need to know how big, then the usage, is only going to be printed ones or are they also going to use it for promotion, etc. That's usually what I ask for, and then I say that I will get back to them with a proper quote once I have that information. I can also choose to then ask them what their budget is, because sometimes I like doing that because sometimes companies budgets are much higher than I were to quoted myself, and sometimes it isn't. That's a game you have to play, you have to like feel out the company. Do you think that they're going to be generous or not? Because if you also quote a price that's way too high and their budgets half of it, and you say yes, and you went down 50% on your price, it's not really saying much about your value for your work. But anyways, then they come back with, either they come back with their budget and you think that's excellent. Or you come back with your quote instead and you just go for it and you figure out your pricing. Of course, in a couple of sections, I'll be going over how I calculate prices and thing money and stuff like that and what to quote, and how to actually write a nice a piece of paper quote that they can, a PDF, you can say, yeah, and then they come back to you again. This is the fourth email and they'll say either like yes, of course, that sounds perfect. Let's get started. Or they'll be like, it's a little bit higher than our budget, and then you'll start haggling a little bit, hopefully just a little bit. Or they'll just say no, it's not in our budget right now or we decided to go in a different path. That's usually how it goes down, and only the worst thing that can happen is that they say, no. That's not in our budget right now, but of course they could be in their budget in a couple of months. I don't think you have to be sad about that. It's sad not to get a project. But what can you do? 5. Your Big Picture Finances: Where do you even start? Because I've been working for so many years for this, I can go through my archives and projects and think about prices that I have received from different companies and the different ranges that I have gone through, the process. But if you are a beginner where do you even come up with anything? I thought to start off with, we can talk about hourly rate. An hourly rate I think is just something that you should have for yourself and you shouldn't share that with companies. I think hourly rates scare companies off because they're thinking, they're going to work slower, etc. I think it's better to work on a project base. You just have one set price for the entire project and that's it. The hourly rate is just a good tool for you yourself to figure out if it's a good price to create a price that it will work for you and project. Let's look at the big picture first. We have to figure out what is our minimum incomes that we need to survive with this new career as an illustrator or surface pattern design or some other creative person. We have to figure out our expenses, figure what we need to make so we can calculate a bare minimum wage for ourselves, so this is going to be a personal thing. I have loosely made a little calculation here with some numbers from my life, but converted to $, so it's not completely perfect. But this is the bare minimum I need to survive. This is without fun, without vacation, without going out to restaurants and all that stuff. This is seriously like food, shelter and a little bit of business expenses to keep my business running. For my personal expenses, my rent is $550, my share for rent, and for food, I spent about $300, my share, talking about a share, It's 50-50 with my boyfriend and I anyways. Then savings, I think it's always good to have savings so that you can continue if there is a month that isn't going very well, etc, or to invest in your features. Since I'm old now, I've started investing, which is excellent, you should do that too. That's a total of $950 approximately that I personally need each month. Then business expenses, I have taxes that I have to pay every month around a $160. Services and supplies, this is like my mobile phone, postage, things like that. Website upkeep, Etsy fees, things like that, so that's a 140. I've taken these numbers that are approximate from what I had about last year, so that's a total of $300. My total monthly expenses is $1,250 approximately, and times that by 12, that is $15,000 a year. Just to scrape by and survive, I would need to make $15,000. But this is of course without being able to have any fun or buy any new shoes or go on vacation. I'm going to now calculate a minimum wage for myself that I need to definitely have in order to survive the year. My weekly work hours are about 30 hours. At the moment I have two small children and I am taking care of them at the same time. At the most, maybe I have 30 hours a week to work. I would say it's more realistically around 25. But anyways. Now, working weeks per year, 48 [inaudible] because you have to account for maybe one week of being sick, and I would like to have around three weeks of vacation per year. In Sweden, most people have about five weeks of vacation, but since I'm a small business owner, maybe I don't get that luxury, but it would be nice to at least calculate that in and have that as a hope and dream. 30 hours per week times 40 hours is 1,440 hours per year that I can bill. This is a realistic amount of hours that I can get work done. Of course, there are times where I can work over time or work weekends and stuff like that, which I will of course be doing since I'm a small business owner. But this is just to have in mind and this is what you'd like to strive for at the minimum. Nobody wants to work 80 hour weeks really. My yearly expenses, which are $15,000 divided by the hours 1,440, is $10 per hour. I have to make at least $10 per hour to make $15,000 per year so I can survive. Now this is the bare minimum. Let's talk about moving into our more of a realistic dream situation. I think a realistic goal income would be $40,000 to strive for. It's a good price in my head. That's something that I would be very happy with having. I'm going to continue to have my 30 hours per week. We're going to think backwards now. How much do we really want and how can we achieve that and we break it down. If we have our still 30 hours per week and we are still going to keep our 48 weeks per year that we're working, that's still the 1,440 billable hours per year. Now, I'm going to divide my wage by the hour, so $40,000 divided by 1,440 is $28. Now I'm going to think like that's my top is $20 and my rock bottom when at minimum wage is $10. Now in my mind, I still think $20 is too low because of the nature of our work, but this is just a good number to have in mind, to think if you seriously work all 1,440 hours. You book jobs for that time and you get $28, you're going to make $40,000. This is good, just to have in mind. I'm going to think about more stuff to break down this price so I can get it into chunks that it can make sense to me so I know how much I should be striving to make every month. $40,000 divided by 12 months is around $3,333, so I wrote 3,300 just to have a nice pretty price. Last year, this is my breakdown. I calculated the percentage of all of the income streams that I have and freelance work and selling, patterns, illustrations, and stuff like that. It was 52 percent of my income. Teaching is 36 percent, and then Etsy and other print on-demand sites was 12 percent. Then I'm taking 52 percent of 3,300 is 1,716, 36 percent of $3,300 is 1,188, and 12 percent is $396. Every month I can see that I would like to strive to make around $1,700 with my freelance business. Then when I start calculating the different projects that I'm making and stuff like that, what is my average price that I take for this illustration or this pattern if I sell off the pattern or how many jobs do I have to take per month to make this? Because like I said, the nature of our work isn't really a 9-5 job where you get $20 per hour for doing your work, it's more project-based. Maybe you'll only have to do two projects per month to make $1,700. Again, think maybe if I average do illustration work for magazines or books or websites and they average around $500, I would only have to do 3.5 projects per month to make $1,700. Of course, this fluctuates because maybe one month you'll have one project, and one month you'll have five projects. But if it averages out to be these numbers, you have a good idea of where your business is going. I'm going to also think about my total monthly expenses from my previous slide, and that was $1,250. If I made $40,000 and my expenses are only $15,000, those were my bare minimum to survive expenses. My total surplus income now would be $25,000 and that would be excellent to be able to save for the future, to go on vacation, to buy yourself a pair of shoes on occasion, all that stuff that makes life worth living. I think it's important to look at the big picture and not just at the numbers project to project or get focused on a minimum wage. This is just to have in your head and you can make lots of calculations like this on your own. Make sure to account for budgeting in fun stuff too, if you want to do that. Then you can really like what is your personal minimum wage that you need to survive, what is your dream incomes that you'd like to strive after? Then try to find some happy medium in-between in there so that you can be successful. 6. Industry Standard Hourly & Project Based Rates: I have gathered some information, did some research in what's an industry standard for prices in dollars I'll be doing. If you're a beginner designer, maybe $35 to $50 as an hourly rate, and then if you're seasoned designer, if you've been working for quite a few years, maybe your range is 50-80 or 50-100. It can go up quite high if you have been working and you're well know, obviously. You can use this hourly rate to help you calculate a price. You can also use the hourly rate to calculate if a project is worth it. If a company sends you their budget and says that this is for $350, they're willing to pay you. Then you can divide 350 by your hourly rate, say $50. Then you can say, that will take me these many amount of hours and is that worth it to me? Is that going to work for me? You can think, this project's going to take me only two hours. I think, that essentially, I would only need $100 if my hourly rate was 50 but then I received 350. That seems good to me. Also for the hourly, the extra money is where you think about the usage of the project. Also, that there's also the time in-between drawing and creating the artwork, there is the emailing back and forth. There's the collection of inspiration, stuff like that but mainly you have to keep in mind the usage. That's good. You need to have, not just your hourly rate. I'd say that's like a pretty, pretty, pretty minimum that you should almost never even take. Even if the illustration took me two hours to complete, I wouldn't sell it for a $100. That's too cheap for me. That's why I think on a project basis. This is starting not to make sense already and I'm confusing you, aren't I? But there's more than just the hours that it takes to create work to make a piece have value and stuff like that. That's what I'm trying to say. This is where the whole money is individual, time is individual, everybody's works in different ways. That's where this comes in. That's why we can't have those set prices like I'm saying. I personally, when I'm thinking about my hourly rate, I usually put 752 in there, which is I guess we can say $75. I have been working for almost 10 years with this. Then of course, I guess that I never quote prices like an hourly rate. I never tell the company that that's what my hourly rate is really. As an example, let's think I take $75 per hour and in this situation we're talking about that women's fashion magazines, simple illustration, maybe for one whole page. The $75 per hour, I'm thinking I calculate that that illustration will take me two hours, so that is $150. Then I say, I want to account for the inspiration, all the e-mailing back and forth. We'll add on an hour. That's only three hours of work, I calculate that project will take. That is $225. But I feel like that is a little bit too low for me to charge because I'm thinking this is a whole page layout in a magazine. The magazine maybe has quite a nice budget. You have to think about stuff like this, it just makes no sense. If I'm quoting a project for Chanel, a huge fashion brand, I would think in prices that are way higher than my local nail salon or something if they were looking for something like that. Because the exposure that your illustration or the value that your illustration has for this company is way, way bigger. I'm thinking it was 225. I feel comfortable with just for usage and stuff maybe bumping it up by doubling it. Then it will be $550. I think that's a nice number in my brain. That feels good. Between 550 is my wishful thinking price, and I'm hoping that is good, and then $225 is my rock bottom price that I'm willing to go down. Then I would write up my quote and I would send off $550 and maybe the company would say either yes, and it could be scary because maybe they think that's super cheap. No idea. They might say , "No, can you do it for $450?" You either think, yes, or I think I would say yes. It's hard to say. But if they say, "That is not in our budget, can you do it for $250?" That's like so close to your rock bottom price. I don't know, I think that's the hardest to say no to because you could do it. It depends. I think maybe you should then negotiate to make the projects slightly smaller in that instance so that you're not negotiating on your price by half and you're willing to do the same work. The company will realize that they can use you in that way to say that Christina isn't willing to go down way in her price, and she'll still create the same amount of work. I think if the company wants to negotiate down the price majorly, then you should majorly negotiate the project as well. If it is a really, really large company, I would suggest maybe just asking them for their budget for the project, so that you can go from their prices. I think that might be a little bit easier, but from the most part, working with smaller companies are like middle-ground companies, I think quoting prices yourself should work out fine. I will say it's impossible to negotiate your price up once you set something, but maybe a company is willing to go up a little bit, and if they quote that they have $200 for a project maybe you can ask if you really willing to. I can do it for 300 or 250 at least". They try to bump it up a little bit, if you think is on the low side. Depends on the situation, so hard for me to give advice. But that's at least you know what your minimum is. I think that is sometimes hard for people to know. There is no maximum, which is cool. If a company is willing to pay you $3,000 for something that you would be willing to kind of to take 500. That's just good on you. 7. Pricing Recap: Because there was a lot to take in and possibly slightly confusing, I would like to do a quick recap about all my thoughts around pricing. These are things to think about when pricing. First off, you have to take into account your own personal minimum and goal wages that you need to make and would like to make. You have to think about the big picture of all the money, the income that you need to bring in every month, every year in order to keep going with your business and pay your bills, as well as have fun and live life. You have to have the big picture and this is also a great way and exercise to think of the amount of money you need every month in and plan out how much money for each section of your business you would like to shoot for. That's one section they need to think about. You also need to think about your time and your value. Now, this is personal to you. Some people for the same project would take two hours and another person who would take 20 hours. But you have to think also a little bit. Now that you're a business person, you have to streamline your workflow so that you work efficiently and effectively in as little time as possible, but with also giving quality work. If you are a person who takes 20 hours on average on a project, maybe you need to work on bringing those hours down so that your minimum wage or your maximum wage, it fits the project because even if you think that you're worth $75 per hour and your project takes, you think, 20 hours to complete. It's a simple illustration for just a magazine or say, the most companies are not going to have a $1500 budget for a simple illustration. You have to take into account your time and your value would also be realistic. When in my third section, you have to think about industry standards at the same time. Do your research about your specific industry and what you're seeing other people charge, what sorts of ranges there are. Then try to find your personal part or your personal position in these ranges. Are you a beginner? Maybe you're at the end, at the bottom part of a range. Are you an expert in your field, then you should be at the top of the range. Another thing that you have to consider is usage and size of the company. If you're working with a smaller company, their budget obviously going to be much smaller usually. If you are working with a larger company, their budget is potentially much larger. The value that your illustration will have much more because it's going to be shown more. You might have to be working on the project a little bit more with a lot more detail, a lot more focus than a illustration for your corner bookshop or something like that. Not that is less important but you just have to take into account that this project has a larger value and should be worth more money. Another thing that you can also think about are time restraints and discounts for multiple orders. If a company would like you to complete this in just two days or over the weekend or so that causes you to work overtime. You should definitely charge more for that project. Maybe tack on 15 percent to 25 percent of the total value of the project that you have quoted. Also, if a company is asking for many different illustrations in the same style, you can consider giving a slight discount. For the same reason, possibly one illustration would have taken you one hour. But by that time when you start working on multiples, maybe if you're on your tenth, then all those start taking half an hour for you because you'll get into the swing of things so it's okay for you to give a discount or is it you see that it's going to be such a chunk of money that you're okay with giving a slight discount, maybe 10 percent, 15 percent to the client so that you really get the client's attention and they might want to work with you again. Hopefully, all these things make sense and you can make great pricing decisions that are personal to you and your business. 8. How to Write a Quote: Now we're in the computer. I'm using Word to create this quote. But you can use any other word processor program that you like to use, or you can create in Photoshop, Illustrator, whatever. Let's zoom in a little bit so we can see what's going on here, but you can see that it's in, I use A4 paper, because I'm in Europe. You can use of course, letter size, here we go. The top I have my logo, because I want to seem professional, and have my branding everywhere, so they know that they're dealing with someone who knows what they're doing. Also, just to clarify, this is a quote. It has no legal obligation whatsoever. This isn't a contract, but it does outline all of your terms and conditions, and the price that you have agreed upon. It's binding in that way, it's like a verbal agreement, we can say. These are all things that you need to have included in your quote. You need to have the date, that you are writing the quote. You should have information about the client, and who they are, you should outline the project, and you're using all the information that you got from them, from your e-mailing, because you had asked for more information so that you should have that. You should talk about the delivery, maybe there's a due date, and we'll just make something up. We'll say it takes some months, we'll say by the February 11th instead, as a high-res PDF print ready file, or the JPEG or is it vector file, depending on what the company wants. The price, and this is the price that we calculated when we thought, oh, it's going to take me approximately three hours to complete. That was $75 times three, so that was $225. Then just to bump it up and make it seem a little bit more valuable, and to count for the usage that is going to be printed in a well-known fashion magazine. We say, I'm going to quote $550 and that's a price that I feel comfortable with. Maybe it even makes me feel a little bit nervous descending. I think it's a little bit maybe too much than what they might be willing to pay, but hard to know. I think it's always nice to quote slightly, over what you're super comfortable with. Additional work. Here's where I write my hourly rate if I want to. I think this is a great way of scaring a company into working well with you. Saying that, oh, if they request work over the project that we have quoted, then I will be charging you $75 per hour. I think this makes people definitely want to stick to what you've outlined in the project. Then the usage, you have to outline exactly what the illustration would be used for. Again, this isn't a contract, but this is just a way for you to both come up with what you're going to agree upon, and then when you create a real contract, you can use these parameters, and stuff, and then you can add more information, so there's more details to that payment terms. You can say a 100% payment voice by approval of this quote. You can also of course do 50-50. That's very recommended if you're starting to work on a project with a company you've never worked on before. Also, the 50% upfront can be a deposit, or they want to cancel a project that you'll be paid 50, it's non-refundable. You can have that as a stipulation in your quote, as well as in your contract leader, that is good way to protect yourself. Goods validity. This means that what I wrote one week from data above, this means that the company can't come back to you in five years and say, here's a quote that I received from you, that you would only charge 250 for this project. But if you've been working for five years, you're not going to be charging the same prices that you used to. This just protects yourself again. That the company can't come back and be, but you quoted me this, but yeah, that was then, this is now. Now I have way more experience, I know what I am doing even more. Then you can justify that. Corrections. I think that's a great way to protect yourself and your work as well under time. Kind is loud. Three correction opportunities before delivery of finalized material per illustration. This means that they can't constantly come back nitpick your illustration that they have three times that they can do that, and after that, you're going to be charging them $75 per hour. You need to help them along the way as well to make sure you say this is the sketch. After this is much more difficult to make changes once I make the final artwork, so can you please give me changes now while I'm still working on the sketches, etcetera, that's a great way of making sure that they know that what you're drawing now is going to be the final later. Then other, I'd like to have a little bit of information about what they're going to be reading in my contract later, so that they know what it's like to work with me and the kind of terms that I like. I always want to make sure that, upon use of produced material, illustrators shall be given credit. I want to be credited. That images may not be changed in any way without the illustrators approval. Rates are not transferable, these support to another party. That means that they can't sell this illustration to another company to make money off of it, and that the illustrator is allowed to use material for personal marketing and usage in portfolio. It's important that you're allowed to show the work that you created. Upon cancellation of project, the illustrator is entitled payment for hours put in. No rights are transferred to the client. This is another way that you can protect yourself. I think in the contract you should specify the amount that gets 50%, or if they've paid a 50% deposit, that is non-refundable, but that's something that you would include in your contract later and make sure that it's been signed. Then I register it sincerely, my name Kristina Hultkrantz. I make sure that my company name is here, and then maybe even my tax information so they know that I'm a legit company and person that they can trust that they're giving money to, and they will be receiving a product. That's simply a quote. When you outline it in this way, you giving confidence to the company that you're hoping to work for, that you are professional and all that jazz, so that they are going to be more willing to pay you a lot of money and work with you again, and hopefully everything was going to be seamless and all that stuff. Save this as a PDF, attach it to your e-mail when you send e-mail reply. Easy as that. Then they'll either say yes or no, and you can just negotiate within the e-mail itself. I don't think you have to write another quote. You can just come with the contract later and that will have the final pricing information in the contract. 9. How to Write an invoice: Now that we're talking about pricing and stuff like that, that would be helpful to also talk about invoices and this is the paper that you're going to send as a bill to the company. For that, there's also some information that you need to include for it to be valid. Let's zoom in a little bit again so you can see, whoops. That's too much, here we go. Again, we have my logo at the top so that it is consistent and the branding looks professional. You should have the address of the company. I think it's helpful to have your little reference information about names and stuff cause sometimes for certain companies, they will send the invoice or bill to their financial department that handles that and they might have questions so that you can reference somebody who works at the company, the person that you've been in contact with. I just wrote Jane Smith as an example and then of course me, my name is Kristina Hulkrantz so they can have some information about that. You should have the date in which the invoices created, let's update that now that I have updated the video wherever, so it's valid when you are reading it. The invoice number is something that you should have as well. Here I wrote total five, you don't have to start at one. For whatever you can pick a number and then start off from there. You can have a longer number, shorter number, it doesn't really matter, it' up to you. Then you describe what the project was, a title, something that they can remember, and the price, tax if it's applicable. In Sweden, we have 25% tax on all services and products and stuff like that but in my situation here I'm working with American companies who I wouldn't charge any tax. Shipping also isn't something that's relevant for this project so that's zero and you have the total which is 550 and then you write a proper due date, 30 days is pretty normal. I usually do 20 days, depends. You can either write the due date where you can say due within 20 days, due within ten days. It's up to you and what you want your payment terms to be and then you have to have information about where to send payment. In Sweden, we have a different system with a very short bank account name that I use or you can also, if it's international, I put in my international bank information, everything from the address to my bank, my Ibon and big number. You could also have PayPal information if that's a way that you want to be paid. You have all the different ways that you accept payment here. I also have my invoice, I have [FOREIGN] which just means that I pay my taxes in Sweden and I have a specific paperwork for that and that's important in Sweden. I'm not sure what in your country is needed legally to be on your invoice, but maybe some tax information, especially your tax or organization number should be required to have on your invoice and that kind of information, I have it in the footer, I have my business name, I have the address I just wrote, a made-up address obviously, and a made-up phone number and as well as the VAT number, tax ID number, or organization number, it should be similar. Those are all the things that you need to have in your invoice so that you and the company that you're working with can easily have this for the records for when you do your end of the year taxes. In the project section of this course, I have uploaded these sample invoice and the quote as well, as well as the outline of the whole course. If you would like more information or to read or look at this in more detail, then that is available for you to download and take a look at. The class outline might be helpful to you as well because they're definitely written more concisely all my ideas about pricing with examples and stuff like that. That might be helpful to you so check that out if that is something that you'd be interested in looking at. 10. Section 2: Commissioned Projects for Private Persons: Another instance that I have to think about pricing in my creative business is for projects that are quoted or that are for private persons and in that case, I use the same calculation with my hourly rates of how much I think that the project, how long will it take. But then I don't really double it or bump up the price so much because it is per person, the value for them is that they're just going to have it on their wall in just one piece. It's not going to be used to print on thousands of items for a company, et cetera. So If we take the instance of my hourly rate, I think it's going to take three hours approximately. So it's $225. That's my rock bottom price, and I might bump it up to maybe 300 to start off with and maybe the client will barter down to 250 or something like that. It depends on what the project is, obviously what they have per budget. You have to be a little bit looser with your prices for working with private persons, for the most part, some people have huge budgets too. But in my experience, I've had to take lower prices when I'm working with private persons. Even if you are working with just a regular person, I think you should still create a proper quote and create a proper invoice so that you're a professional business person and you come off as being professional so that they feel more confident in spending money on the work that they are commissioning with you. So they might even recommend you to friends and family, colleagues and I like that and that's exactly what we want. 11. Section 3: Art Licensing & Total Buyouts: In the third and final section that I want to talk about in this video about the ways in which I think about money is for licensing agreements. With licensing, you're essentially renting your artwork for a company to use. You have created artworks in your portfolio that you show and the company becomes interested in it. They would like to license it, meaning they would like to rent it for a specific amount of time. Then gave the thing that happens is that they will give you a percentage or royalty based on the wholesale price of the item is sold at, or could be the retail price. But usually is the wholesale price. If we say, example, that you sell a print that's going to be on betting, and the company would like to license it for maybe two or three years, and that you're going to receive six percent of the wholesale price. Six percent seems pretty little, but if it's a huge company, that six percent could potentially make you a lot of money. It's a gamble with licensing. You never know if it's going to be successful or not. That's the only thing that can happen with licensing. The percentage is usually low, between two percent and maybe 12 percent tops that the artist receives, which is pretty sad. That's the industry's standard unfortunately, maybe we can work together to pump it up a little bit. Over time, it can make you a lot of money and people have good luck with licensing deals. Another thing that's great about licensing deals, especially if you write in your contract that it's only for a specific item, you can license the same artwork to a different category of products. Your pattern is locked on betting maybe, then you can sell it to a stationery company to put on notebooks or something like that, et cetera. Then after three years the vending company would be unlocked again and you could rent it to, another vending company or another company, et cetera. There's also the possibility that the item that you have licensed your pattern to, doesn't sell anything at all. Then you could make zero, but you, haven't sold, the rights to the pattern, so you might not be able to sell it or license it to another company for three years, but you're still at least you haven't lost many. You could also completely sell all the rights to an illustration that you have in your portfolio. It's usually called total buyout. Then you should make sure that the price feels good to you. You're not going to be able to use this illustration ever again. You're also not going to be able to create an artwork, that is similar again, because now the company owns the rights to it, even though you drew it. They have the right to use it on all projects, that they want to. Then that would make sure that a pattern, that you're selling total buyout would be at least maybe $500 trading, maybe have it more around the $1,000 or 1,000 plus. Because you're selling it forever and ever. I might be willing to completely sell a very simple floral or like almost like a pocket out or a geometric, maybe $250. I'm very open to, stuff like that. I'm not as precious with my art wok and stuff like that. If it's something that I've had my portfolio for a long time, I would be definitely willing to sell off some things. But again, try not to undercut yourself. I think $250, it's pretty good for a pocket art. That maybe only take you 20 minutes, something like that. But if there is anything that's like seriously in your signature style, you should definitely never sell the rights to that because then you can't mimic your style again without legal complications which is quite silly, but it's important to know. In my experience with licensing agreements, and the pricing in that situation, the company always comes with pricing to you and the percentage of the licensing amount like six percent, seven percent, three percent, two percent. You have to look at and see if this can be worth working for you for that specific artwork. This also, deals in which you can receive an advance before royalties, when you license an artwork, and you maybe have the contract says that you will be receiving an advanced of maybe $250, we'll say. Then over that price you then you will receive six percent, of the wholesale price. What's great about that is that you don't have to wait, until the product starts being sold to get some money. You get some money in your pocket, $250. Then once the product is sold and sometimes with licensing deals, it can take over a year or a year and a half or two years before the product even start paying, come into manufacturing into stores. It's good to have a little something in your pocket to begin. Then that $250 you'll start receiving royalties once the six percent that you're making on all the things exceeds $250. We've discussed regular licensing deal where you receive royalties like six percent. Then we've talked about, advanced plus royalties where you receive an advance of a little bit of money and then you receive royalties after that. Then I've also discussed total buyout and that's when you're just seriously, sell ready work it's not yours anymore. Your can also do a flat fee license where someone will lay a set price, but say $1,000 to use this certain artwork for like two years. Then you get the rights back to it after the two years are up. That's another way that you can think about that. I had done a little research into pricing for flat fees. I have noticed that greeting cards maybe sit around the 350-550 range for illustrations, for cards and stuff like that. I've noticed that in the apparel industry maybe there also on a lower end. Like 350-750 for different prints for professional and clothing and textiles and stuff like that. For quoting, also I've seen the ranges around $350-$750 for different fabrics maybe the the main prints will be up on the 750 range and then the secondary or blender prints for quilting would be more than the 350 range. Then for home decor seems to have the biggest budget for home textiles and duvet covers and bedding and all that stuff, is more on the 552,000 mark for flat rates. Please feel free to contact me if any of this information is confusing to you or if you'd like more information, it's so hard to make this huge topic, compact so that it's easy to watch because it's not like 20 hours long. 12. Keep Track of Your Finances: Now that you have done tons of calculations about your future goal income and you've calculated your rock bottom minimum wage and you have taking into account all different factors that I've talked to you about, usage and industry standards for pricing and your own workflow. What works for you with pricing in hours and how long it takes for you to create projects. You've created pricing and you've gotten jobs and you booked tons and tons of clients and stuff and you bring in money. It's time to save all that information so you can have at your fingertips to analyze throughout the year. I do this in Excel and I have this spreadsheet. It's unfortunately in Swedish, but I think you can get the gist of what I'm going for. I have a category or a column for every month of the year and then I have my income stream so is Skillshare, Etsy, Spoonflower etc, freelance. Freelance it too much. I think this is the area that I would like to add more categories is here so that I know what is commissioned jobs, freelance jobs for companies, and what obviously surface pattern design clients, etc. But for the most part this works just fine. Then also here my expenses like my postage and Etsy and services, and supplies and other things. Then you just add in the numbers and Excel does all the work for me to calculate what my running totals are for the month and to get my net costs and all that stuff. I am no expert as you can hear about Excel or my finances, but this is a good start and something you think about. I would suggest doing your own research on how to create a good Excel file or a spreadsheet for yourself to save all of your finances. You can also use some tax program. I don't have anything to recommend, but something that will help you with doing your taxes because you're business person now. I do both. I have this file where I can just save different informations for stickler like a rough idea of what my expenses and what my income looks like per month, so that it can see all. If I need to work a little bit harder and promoting and trying to get jobs for the next month if it didn't go very well on the previous month and so on and so on. You can get a lot of information about your business. If you keep doing this year by year, then you'll be able to see that, oh, during the summertime it's usually a low in business and/or in the spring time it is, and then in the fall it picks up. You can try to use that information to your advantage. 13. Other Resources for Pricing: Well done. Thank you so much for watching my course, and I hope that the information that I have shared with you will help you in your business, and that you'll be more confident now about writing prices, and coming up with prices, and thinking about money and all that stuff. I know that it's still nerve-wracking to send a quote to a company, or someone you hope to be working with because you think, "Is it going to be too much?", or "Are they not going to accept it?" But if you feel just a pinch more confident, that would make me so happy. Anyways. For the class project, because this isn't really a tactile course there's nothing to draw or anything like that, and money is so individual and I'm sure that you don't want to be showing the prices that you come up with, I think it would just be nice if, in the project section, that you just write a little blog post about your experience with money, and clients and all that stuff, and what's helped you along the way when you're thinking about pricing and stuff like that, or what you thought about after watching this course, how you're going to be approaching that thing. If you're still feeling a little bit confused about pricing or not confident, I think another resource that is great to use is Facebook, and there's plenty of groups on Facebook that you can ask questions about pricing like Surface Pattern Design Community, the Art of Licensing. Advice for Artists is a really great group that is run by Jennifer Nelson Artists, which is a agency so she comes with lots of amazing information about pricing, and she even has templates for artists to use about negotiating with companies if they're not willing to pay what you deserve, so that you can find in that group, Advice for Artists, and also if you get a budget for a project, you can go into the group and say that this company has given me this much, is that enough, was that good enough? You can go from there, you can also get advice from tons of different artists and get a feel for pricing and stuff like that. You can also go through these groups and look for pricing information and for different projects, if you don't want to ask about something, you can just gain knowledge that way. I've done that many times, you go through and see if anybody's done anything similar, see what ranges people are talking about, so you just get a feel for the industry and we all work together. Thanks so much for watching. I hope that you enjoyed the course, like I said, and if you like to stay in touch with me, the easiest way is on Instagram @emmakisstina. I have more free video content on my YouTube channel, which is also under the name EmmaKisstina. Please make sure to follow me on here on Skill Share so that you can stay up to date when I release new courses. I hope to release more courses on the business side of illustration in creative business, but also more drawing videos and stuff like that, because that's really fun. Bye.