How To Price Your Illustration Work - Masterclass

1. Welcome to the course: Hello, and welcome to this Illustration pricing course. If you don't know me, I'm James Illustration agent. I've worked on and priced up an enormous range of projects from small Indie magazines, a few hundred pounds each to enormous campaigns from multiple territories in the mid six figures. I tried to count up how many projects I've had a hand in pricing up, and I don't know the exact figure, but it is thousands of projects. Not all of those prices have been accepted, and not all the projects were won. I've definitely made a lot of mistakes with pricing as I've learned how to estimate what different kinds of clients want to spend on different kinds of projects, but I've had a lot of practice at this. Put this pricing course together because I know how hard it can be to feel confident in pricing work. My years of experience have led me to get a good sense of the market, and I have a feel for what things are worth, but it is or has largely been a sense and feeling a lot of the time. So I've done my best to dissect and unearth what's behind that pricing vibe in order to be able to communicate it clearly to you here and turn that experience into something practical so you can get confident with pricing quicker. I've also done a lot of reading and research on more general pricing theory and strategy to see what we can learn from other creative professions and apply them to illustration. Course represents the best of my knowledge of pricing right now, but I plan to update it as I learn more and as the industry changes. I welcome feedback good and constructive. You'll find links to a feedback questionnaire around the course. If you find something that was really useful, of course, I want to hear about that. And if you'd like me to expand on any parts, I can do that. If you find something you disagree with, I want to hear about that, too. And if you update the way I think about pricing, I'll update the course. Can't wait to hear what you think. 2. The problem with pricing: Here's the problem with pricing illustration. You've got your production fee, which is a combination of your business expenses, rent, materials, equipment, utilities, et cetera, and what your time is worth. Your expenses are going to go up over time, and what your time is worth will also change. If you're new to the industry, it'll start out fairly low. But as time goes on and you get busier and more skilled, an hour of your time will be worth more. This part is unique to you. What works for one illustrator won't be right for someone else. Then we get into licensing, which can be a real headache because there are so many variables. Usage, that's what the illustration will be used for, and often there's a combination of different uses. Territory, that's where it's going to be used. Again, often, it'll be used in different places at the same time. Duration, how long the illustration is going to be used is somewhat more straightforward, but sometimes clients want to extend the duration or re license the work. Some clients want to buy the rights to your work, and you have to consider exclusivity, too. Then you've got to think about the client. Where they are or where their customers are, the size and the reach of the company, and what industry they're in. An independent craft beer brewery in the UK that doesn't trade internationally is going to have a radically different budget for creative work than a Silicon Valley tech company that has hundreds of thousands of customers all around the world. We should also be considering value. On the one hand, we're trying to figure out how valuable the project is to the client. If it's low value, they won't want to spend much money on it. But if it's going to win them lots of new customers or sales, then it's a high value project, and they're hopefully going to want to invest more in developing. The other hand, you've got to consider what your value as an illustrator is. That's the strength of your portfolio, your experience, and your client list, and your skill level or any specialist skills that you might have. Again, these are all unique to each artist, and they will change over time. This is really complicated, and this illustration pricing course is going to break down all of this and more so you can get confident with pricing quicker. Learning to price your work is a journey, and you don't have to get everything perfect right away, but there's a massive advantage to actively get into grips with this stuff early. 3. What to expect from the course: We've already established that pricing work can be very complicated, particularly as you get into bigger projects. In the process of planning this course, I gathered feedback from illustrators through questionnaires, and the word confidence came up again and again. I asked, what would be a good goal or outcome for a course on pricing? Feeling more confident in how I calculate a good price that is worth my time and is also valuable to my client. To gain confidence in quoting fees to clients. Feeling confident sending quotes. To be more confident in setting up and also discussing pricing with the client. And I asked, What do you find challenging about pricing your work? Confidence exclamation mark. How to confidently come up with a price and not second guess yourself? Probably impossible. Crying, laughing, Mogi. This didn't surprise me at all. I've been given prices to collapse for quite a while now, and I'm still not entirely confident when I'm quoting a large complicated project. The more straightforward ones get much easier once you've got a bit of experience. But with complex projects and big clients, you simply don't know what they want to spend and what other illustrators are quoting for the project. So there will always be some second guessing and insecurity around the things you don't know about the project. But this course will teach you how to reduce those unknowns as much as possible, and it will also build up your confidence in the things you do know and can control. So when you give a price to the client, you'll know it's the right price and a fair price for you. You can give that price confidently to a client knowing you've done your research and that it's a competitive but profitable quote. We're going to take the guesswork out of it as much as we can. Then if the client does pick you, you'll know you've priced fairly and you won't regret undercharging. And if the client can't afford you, you can be satisfied that you didn't overcharge. There's just a mismatch between what you need to make and what they want to spend. So we're going to build up that confidence in pricing as much as possible. We're also going to explore ways you can increase your prices over time. Ideally, you'll be making a lot more money in five years than you are now. We've got a whole bunch of tools, tips and techniques you can use when you're calculating your prices and presenting them to clients. Ultimately, I'd like you to build your own personal pricing guide filled with data that you can use to inform your prices in the future, and we'll get into that a little bit later on. I won't be giving any exact prices for different kinds of projects because for one thing, every client is different and has different budgets. Even if on the face of it, they look the same, sell to the same customers, and operate in the same parts of the world, they can want to spend radically different amounts of money on creative projects. We'll explore ways we can try to find out how much a client wants to spend later on. And also, every artist is different with different expenses, cost of living and other financial circumstances, skill and experience levels, and some styles take much longer than others, too. If I say 100 pounds is the right price for a particular kind of project, chances are that would be bang on for some people. Others would be very pleased with that amount, but for another artist, it might not even cover their costs. For a lot of projects, there are accepted market rates, book covers, for example, but there are still ranges within those rates, and I'm assuming you'd rather be nearer the top end than the low end. There are also illustrators out there who can command much higher fees than the usual market rates because of the way they've positioned themselves. We'll break that down later, too. 4. Ways to price your work: It's. In this chapter, we're going to get into some of the pricing methodologies you could use as a freelance illustrator. Some are preferable to others and some are appropriate at different times. So I'll do a basic overview and then consider when it's appropriate to use them. Selling time for money. First, let's look at selling time for money. Usually, that's either an hourly rate or a day rate. This is where a lot of freelancers start because it's easy to work out. Add up your monthly expenses, divide them by how many working days or hours there are in a month, and you get a rough idea of what you need to survive. Then you add a bit on top, so you're not simply surviving. I've got a list of pros and cons here for each, which are largely the same. Pros, it's easy to work out for beginners. It's also straightforward for clients. With day rates, often you'll be asked to work in a batch of days, five days, ten days, et cetera. Some of you may have priced your work hourly or by the day in the past, and you might be doing that now. And it's a great way to get your freelance business up and running quickly. Some creative freelancers work through marketplace websites like Upwork or FIR, which is a great way for people in lower cost of living areas of the world to be able to work with international clients. But selling your time for money is not a great long term strategy for your career because it ultimately puts a cap on how much you can earn, and you're not being paid for your creative skills. You're simply exchanging a unit of time for an amount of money. Your time is so valuable, and I'm not talking about your work time. I'm talking about your time for living and your time for family and recreation and sleep. If you charge by the hour, sure, you can work more hours if you want to make more money, but that time has to come from somewhere else, and there are only so many hours in a day. You can make the argument that you can increase your hourly or day rate to make more money. And while that's true, there is an upper limit on that for most clients. You probably couldn't charge a client 1,500 pound day rate. They'd think you were crazy. But by using a fixed rate, you probably could charge 7.5 thousand pounds for a project that takes you five days to complete. My mind, the cons far outweigh the pros here. For one thing, the better you get at your job, the quicker and more efficient you get, the less you'll earn. And you're in danger of not pushing yourself to improve because of this. You'd be less inclined to use time saving tools and software, for example, and you could potentially stagnate and have very little reason to get better at your job. There's also a point of view that this kind of hourly work is less valuable or less professional. There can be a bit of a lack of trust when you're selling your time. The client might be inclined to micromanage to make sure you don't go over your hours, and they'll want to know what you did in each of the hours you bill for, and you probably won't be able to bill for the time you spend filling in that time sheet. If you're a busy freelancer, you might be juggling several clients at once, and you'll switch between them as needed. But with a day rate, the client wants you to put in a full shift, which makes it hard to work on multiple projects at once. I'm sure most of you have come to recognize the limitations of selling time for money on your own. But if you're just starting out, and this is an easy way for you to make some money and build up your portfolio, it can be useful. But try to make it a short term stepping stone. Do it until you can afford not to do it. When to use it. Although it's not optimal, there are times when it either makes logical sense or you might just have to get on board with what the client demands. Let's say you've been working on a big project and it all wraps up nicely. Then a few weeks later, the client comes back with some changes. It's just technical work to move things around and change colors, et cetera. It'll take you a couple of days to do it. So by all means, give the client a day rate. All the licensing and creative ideation has been accounted for in the main part of the project. At this stage, the client does simply need a little bit more time from you, so it makes sense. Day rates are common in certain areas of the industry, for example, storyboarding or animation projects, you can definitely try to make a case for giving them a fixed price. But practically speaking, if an animation studio is used to working in a certain way, and they have plenty of other options for illustrators who could work on this project, you don't want to make things more complicated for them because if you do, you risk losing the project. It would be great if we all got together and decided to say no to day rates, full stop, but it's not going to happen anytime soon. So if you want to do the job and the client requires you to price the work in a certain way, sometimes you've just got to go with it. If a client doesn't have a defined scope for the project and all the details of the deliverables are undecided, you simply can't commit to a fixed rate because the project might expand. Rather than giving a day rate, in this case, I'd recommend breaking a quote up into smaller chunks. If the client says we need 25 to 45 illustrations, that's a big range. So you could break it up into batches of five or ten deliverables and give a fixed price for each chunk of the project, then you're covered, and the client can determine the final number of deliverables at their own pace. Asking what the client's budget is, not sure this is a pricing methodology necessarily, but it is the easiest way to gather information quickly to determine whether a project is right for you, particularly with the projects you're likely to encounter early in your career where clients have a fairly fixed budget range, and they do a lot of similar projects like book covers, magazine jobs, online articles, et cetera. They know what they have to spend, and they'll probably tell you if you ask. This takes a lot of the headache of pricing out of your hands. If they tell you, you simply have to decide whether that project is going to be profitable for you based on how much work you'll have to put in. If it's not, you can try and negotiate on the price or on the deliverables, or you can say no. Not every client is going to tell you, and not every client knows what their budget is. With advertising, often there isn't a defined budget, and they need a quote from you that they can add to the quotes of all the other suppliers for the project, then they'll pitch it to the end client and the end client will decide if they want to go for it. When to use it. Asking what the client's budget is should always be something you consider at the beginning of a project, no matter who the client is. But I want to make you aware of a possible problem with this in a later chapter called anchoring. While a client may tell you what their budget is, there's usually an acceptable range, what they want to pay ideally and what they are willing to pay under the right circumstances. They probably won't tell you what the most they're willing to pay is, so their initial low ball number may influence how you quote for a project. So before you ask, do a quick calculation of what you would quote for the project. So you've got that in your mind before you hear or read the number they're thinking of. Plus, it's good practice to price a project up and see if what you come up with is close to what the client wants to pay. Fixed rate or project rate. Giving a client a fixed rate for a job is common, and it's fair for both sides. And in fact, it works both ways. If you ask a client what their budget is, they'll give you a number, which is not fixed necessarily because you can negotiate it, but it's one price for the whole project. Both sides know what they're getting. Sometimes an illustrator will work out this fixed rate by going back to their hourly or day rate and estimating how much time it will take to do the job, then adding it up and giving that price. If you do that, you just end up selling your time again. So we really should be thinking about it in these terms. Production fee or creation fee plus a usage fee, which is the license. We're going to get into working out your production fee in the next chapter, and we're going to go deep into licensing and usage a little bit later on when to use it. Fixed prices will be what you're aiming for most of the time. This does factor in the cost of your time spent on the project, but it is also variable depending on the license the client needs. We'll break this all down in detail in the next few chapters. Royalties. Another very common model is receiving royalties on your work. You illustrate a product for a client and they share some of the profit with you. The more they sell, the more you make. It's common in products like books and stationery and toys and games. In practice, it means you accept a reduced production fee in the hope that it will lead to a higher return overall when the sales start rolling in. It's good for the client because they don't have to pay as much upfront, and it means you can both share in the success of the product you helped out with. That's assuming it does lead to lots of sales, and sometimes it doesn't the risk you take. So you have to judge each project to see how likely you think it's going to be to be successful. Sometimes it's hard to know. But if the client has a track record of making great products that sell well, then it's probably a worthwhile risk. If it's an independent person with no track record of selling products, it's a bit more of a gamble. I've seen it work very, very well, and I've seen it fizzle out into nothing, and the illustrator feels disappointed. You should always receive something upfront to mitigate your risk. If you're asked to take on 100% royalty deal, you are taking all the risk. If the product doesn't sell or the client disappears, you get nothing. So always make sure you get a fee for the work you do, even if it's a reduced fee from what you'd usually charge. Then you share the risks with the client and you share the rewards. Royalties are obviously a big part of book publishing. Some publishers pay a flat fee for a book, but others give you an advance against future royalties. They'll have an estimate of how many books they think will sell and they'll give you some money upfront as you work on the book. And if the sales ever go over that advance threshold, you'll begin to receive royalty payments. Be aware, though, that most illustrated books never cross that threshold and start paying out royalties. I've seen stats for fiction and non fiction that say only around 20% to 25% of books ever earn out the advance and start paying royalties, and that talies with my personal observations, too. The publishers have a lot of data to put those advanced calculations together, so they have a good idea of how many books we'll sell before they even make it. The royalty system is there for the odd case where something unexpectedly blows up and gets super popular. Then the publisher and the author and the illustrator can all benefit from it. I hope something like that happens for you with a book, but it doesn't happen often, so you have to make sure the advance is healthy enough to support you without relying on also receiving royalties. When to use it. Royalties will likely be a part of some of the projects you work on over your career. As I mentioned, not many books get to the point where they're paying royalties, so it serves you well to negotiate the advance up as much as it'll go. But the Association of Illustrators recommends a 5% royalty rate on Illustrated books. If you're the illustrator, if you're also the author, you can double it. If it's lower than that, try to negotiate it up to 5%. I've rarely seen books above that, maybe the odd 6% or a little bit higher for super famous illustrators with a good track record of selling books. For products like stationary, board games or phone cases or socks or any kind of social media startup product that might ask you to design something for them, the royalty rates can vary massively from 5% to 25%, which kind of depends on how integral the illustration is to the appeal of the product. If it's an illustrated jigsaw, then the illustration is what's going to sell that jigsaw. So you should be aiming high. If it's decoration on a really innovative invention, then you might be looking at the lower end because the invention itself is the important part. Product royalties can be great if there's a potential upside for you and the client, but there's also a risk. If it doesn't sell, there's no royalties. So as I've already said, get something upfront for your work, and then you share the risk and the potential rewards. For something like art prints or T shirt designs, a royalty deal makes sense if they'll continue to print and sell them on demand indefinitely. If they don't want to or don't have the infrastructure to do a royalty deal, you could suggest a fixed price for a limited print run. It's X price for 250 prints. If they print 250 more, they have to pay you again. And that could work out at roughly the same amount for whether they sell 250 with a royalty deal or with a limited print run. For example, the royalty deal could be 250 pounds production fee with a 10% royalty for each print selling at 50 pounds. That's five pounds times 250, equals 1500 pounds. Or you could offer a fixed fee of 1,500 pounds for a limited print run of 250 prints. Then if they print another 250, you deduct the production cost and charge 1,250. Either way, with the royalty deal or the fixed print run price, you're making 1,500 pounds for every 250 prints they make. Retainers. Occasionally, you might find yourself in the fortunate position where a client approaches you and they need a lot of illustration regularly. But the actual quantities may vary. One month they may need three, the next they need five, et cetera. In that situation, you might consider offering a retainer, where you suggest to the client that they pay you a fixed rate each month and you'll be on hand to help out with whatever projects they need. And since it's longer term regular work, that's great for you. So you'd probably offer them a reduced rate in exchange for that security of having regular work for a few months, which is a rare treat in the illustration game. Are pros and cons to this, of course, and the pro is regular work. But if it's not planned out well, you could find yourself in a position where a client asks you to work on 12 illustrations in a month, which is way more than you bargained for, and the fee you get for that month no longer seems appropriate. So you'd probably set the boundaries early on and agree a price based on there being, let's say, four to six illustrations per month. Maybe one month it's only two, but the next it's eight. If you set the rules at the start and you make sure to keep time available for this client, then it should balance out. You'll also need to consider some guidelines for your availability in advance so you can plan your other work around. The client comes to you in this retainer period and keeps asking you to turn things around as quick as possible, it's going to be impossible for you to plan your schedule. So you'd need to make sure that they give you enough notice. When to use it, you could consider a retainer if a client wants regular ongoing work, multiple illustrations per month for longer than two or three months. Relicensing, you'll hopefully have the opportunity to re license your existing work to new clients over the years. And the more work you make, the more likely it is to happen. When you calculate your prices using a fixed fee method, production cost plus usage, you can easily work out what to charge for a re license. You deduct the production cost and calculate a fee depending on what the client is going to use it for. We'll be covering that in more detail in the licensing chapter. When to use it. Hopefully, it'll happen often. This is why it's so important to keep hold of the rights to your work, because you can, in theory, re license your work over and over. And I don't want to throw around the term free money, but when it happens, it's basically like getting free money without doing any additional work. Value based pricing you may have come across the term value based pricing before. This is where you charge a different rate to every client based on how valuable the project is to them. In theory, this is great, and it can work very well for some kinds of freelancers and consultants. If your work will make that company a lot of sales or get more leads or downloads or whatever is valuable to that client, then your fee can be proportional to that value. If your work makes the company an extra 500,000 pounds a year and your fee is 50,000 pounds, that should make financial sense to your client. It's a great return on investment for them and a great fee for you. Everybody wins. Practice, though, this is very difficult and unusual for illustration, partly because the effect of illustration on a brand or product is quite difficult to measure. You could imagine value based pricing working very well for someone working in marketing or web design, where the effects of their work are easy to measure. If they can get a baseline measurement of how many sales the client is making or how many leads are looking at their products, and then that freelancer can increase those numbers and prove to the client how much extra money they've made them, it's easier to have that value conversation. Not so easy for illustration. In my time as an agent, I've only seen a handful of opportunities to have that kind of arrangement. So I'm not going to spend any more time on value based pricing, but if you do find yourself with that kind of opportunity, it can be very lucrative. 5. Market rates: When you're thinking about giving a fixed rate to a client, you need to have a sense of what the going market rates are for different kinds of projects. This comes naturally with experience, but up until then, I want to share a few resources where you can gather data about pricing that you shouldn't necessarily copy exactly, but they can inform your pricing and help you to know what acceptable ranges are for different kinds of projects. Asking other illustrators is a great first step. If you know someone who's been around a few more years than you, they'll be able to give you a rough idea of what a fair price might be. If you were to ask an illustrator who's been in the industry for a significant amount of time longer than you have, then the prices they give now are likely to be quite a lot higher than you might be able to ask for if you're new to the industry because they're more experienced and they are more established and they have a better reputation, et cetera. So keep that in mind, but it's still useful data. I want to encourage you to share your pricing data with others, too. If you want people to help you out, you should help other people. If you work in a studio with a group of other illustrators, you can pool your pricing data together, and you'll all benefit from it and learn much quicker. In that spirit, I'd like to point you towards a website called lightbox dot info. This is a website where illustrators share the prices they've got from various clients anonymously, for the benefit of others. That's definitely worth checking out. Are a couple of pricing calculators online, most notably the Association of Illustrators has one for their members. That's a really great resource, and it's really good with straightforward projects. But with any kind of calculator like that, when you get into the really complicated projects, there are so many variables that the results you get can occasionally be unrealistic. It's just a tool. It's a good one, but a calculator can't factor in all the nuances of each individual client and their varying budget. Graphic Artist's Guild handbook is another great way to get data points. It lists different industries and projects in the US and gives guide prices, but it should only be used to give you a rough idea of where the goalposts are. You'll need to do a bit of your own maths to make sure what it's telling you is appropriate for your circumstances. Jessica Hh has a great pricing course on her website along with some PDF downloads, too. And, of course, asking the client what the budget is gives you data, even if you don't win the job. For all these resources, keep track of the data you gather. Don't let it disappear in your email inbox. Stick it in a spreadsheet with some details about the project. Then after a couple of years, you'll have your own pricing guide that you can refer to when a similar project comes along. Ultimately, any specific prices that you come across online or in a book should only be used as data to help you with your pricing, not to copy. If a guide tells you 800 to $1,200 for a monthly magazine cover, that doesn't factor in the subject matter of that magazine. Some magazines are better funded than others. They have more advertisers, or they're aimed at audiences with different buying habits. A tech magazine will be full of ads for high ticket items. They might pay 1,200 for a cover or maybe more, but a magazine about skateboarding might have a much lower budget. Also, some of the magazines that use the most illustration have lower budgets because they need to spread their budget around the pages more. A magazine like Wired, for example, probably has a relatively good budget overall, but because they hire lots of interesting writers and illustrators, that budget is spread quite thin. Clients in different countries have different budgets, too. We'll get into that in more detail later on, but a client producing products in Dutch or Italian languages, for example, has a much smaller potential customer base than one that's in English, so their budgets will likely be lower. You also need to have a good sense of what prices are appropriate for your costs and circumstances, which a book or an online guide simply can't know. They can only ever be a general guide. 6. Costs: This chapter is all about your costs, and we're going to start with a few definitions, so we're on the same page. Costs. This is a combination of all your expenses, rent, studio, materials, utilities, equipment, transport, marketing, et cetera. It also includes your time, which I've found that some people don't factor into their costs. Your time has a value that you determine. As a new or junior illustrator, the cost of your time might be fairly low. But as your skills develop and your life expands, and the more experience you get, your time becomes more valuable. While illustrators don't work by selling their time, ideally, the value of a unit of their time needs to be decided and reviewed regularly so it can be factored into their costs. When you're planning out a project that is going to take you ten days, for example, you work out what your expenses are going to be, which we'll dive into in a few minutes. But let's say that's 50 pounds per day. Then you add on the cost of your time for ten days. Let's say that's 250 pounds per day. The total you get is 3,000 pounds. This is what you need to make to break even on that job. Here's an example of how these expenses could look. So the illustrator here has added in their monthly expenses. Their rent is 400, travel, 200, loan, or, you know, this could be anything really that is an expense, and it's all going to be personal to you. Mateials is 100 each month. The total of their expenses is 1,000 pounds per month, and then they divide that to get their daily and hourly. And the illustrator has also decided that the cost of an hour of their time is 50 pounds based on their experience or how complex their style is. One important note here is that not every hour of your workday is billable, so you probably wouldn't calculate your hourly rate based on a full eight hour day. You still want to reserve some time to work on non billable but important business activities like your social media marketing. Maybe you're learning some new skills or you'll need to do some contracts or invoicing or maybe even run some errands and go pick up some materials. Much as any client might want you to work a full 8 hours, it doesn't work like that, and you calculate your rate based on billable hours. You've got 50 pounds per day expenses. That's what you're paying out each hour plus 50 pounds per hour or 250 pounds per day as the cost of your time. This equals 300 pounds per day, your total cost. There's no profit here. If you charge this, you only break even. Usage, this is what the client pays you to be able to use your work. They pay you to make it and they pay you to use it, which is pretty good, right? The price or the fee is the amount of money that changes hands between the client and the illustrator. A lot of illustrators calculate their prices like this. Costs plus usage equals the price they give to the client, and they consider the money they make on the usage to be their profit. There's a part of this equation that's missing, a very important part. Let's say, for example, a client agrees to your price based on this equation, but then pulls the plug on the project and decides not to use the work. So they only want to pay you for the production. Then you're left in a position where you've worked on a project and you've not made a profit. You've just broken even. You might as well not have done the job at all. 7. Profit: Being paid for your costs and your time is an absolute minimum. If you go below that, you are losing money. If you're not also making a profit, your business will never grow. A very basic level, any regular business buys an item or a service at one price, then sells it at a higher price. That's how they make money. A shop buys from a wholesaler at a low price, then sells it on their shelves or website for a higher price. When you're creating the item or service from scratch, you might not think about it in these terms. But if you want to grow as a business and be profitable, we need to consider adding a markup to our costs. Markup is the percentage we add onto our costs to make a profit. Costs plus markup as a percentage, equals production cost. Needs to be a percentage rather than a fixed amount, so it grows relative to the size of the project. Here's an example using the ten day project we discussed in the last chapter. The costs here, expenses plus time are 3,000 pounds. The markup is 25%. So the production cost is 3,750, and your profit is 750 pounds. This is before we even get into calculating the usage fee. So if the client decides not to use your work and only pays you for the production or creation of the illustrations, you're still making a profit. 8. The Planning Fallacy: Before we move on to the next chapter on usage and licensing to complete our pricing equation, I want to go over what's called the planning fallacy. This is a well documented cognitive bias where humans tend to be overly optimistic in planning things, and we underestimate how long things will take, how much they will cost, and how much risk is involved. We base our plans on the best case scenarios as if everything would go smoothly. Now, I love the positive attitude here, but it can get us into trouble if there's a lot of feedback or we get sick or our computer breaks down. This is especially true if we're in a good mood or excited about a project. If a big time client is considering hiring you, understandably, you'll want to impress them and show them that you're quick and efficient. What's not going to impress them, though, is if you say the project is going to take ten days, but it ends up taking 15. And if you've ever been in a situation where you're on the eighth round of feedback from the client, you'll know how that feels. So I wanted to add this in here because simply being aware of it can help us be a bit more accurate in our estimates and plans. Ask yourself some grounding questions if you feel like you might be falling into this trap. Have I caused myself unnecessary stress in the past by not allowing myself enough time for projects? Am I being overly optimistic in the planning because I really want to impress this client? Can I break the project down into smaller chunks to plan separately? It's a lot easier to plan a small part of the project than the whole thing all at once. Is there anything that could delay the project that I've experienced before? If so, how likely is it? Some setbacks are less likely than others. Extra rounds of feedback from the client is very common. So planning for that possibility is wise. You don't necessarily need to factor in your computer breaking down for every project, but if you've owned your MacBook for seven years and it's noisy and it overheats, you might want to consider that more seriously in your plan. In general, I would say, give yourself a bit of a buffer when you present your schedule to the client. If you think it'll take ten days, tell the client 12, just to be safe. Then if everything does go smoothly and you can do it in ten, they'll be pleasantly surprised. This isn't about gouging the client for extra money. It's just sensible planning. It's usually not too bad with small projects, but when you get into bigger and longer projects, you can see how things could spiral out of control, and you might find yourself in the unfortunate position where the longer a project goes on unexpectedly, you start eating into your profit and maybe into your costs. 9. Usage fees and licensing: Hopefully, everything up to this point has made sense. It's all logical and based on simple maths. Well, here's where it gets complicated. Let's complete our pricing equation here first. Costs plus markup as a percentage, plus usage fee equals the price you give to the client. The costs and the markup together, you can call your production fee or creation fee, and then you add on the usage fee to get your price. The price is the number you send to the client. Occasionally, a client might ask you to break down the price or itemize it. When you do that, you send them the production fee or creation fee and the usage fee separately. You keep the markup to yourself. When you buy an item from a shop, if they also listed the price they bought it for and how much they'd increase the price, you might think twice about buying the item. So the costs are fixed, and the usage will vary pretty massively depending on how the client wants to use the work. A general rule of thumb is that the more people that are going to see the work, the higher the price should be, but it's not straightforward to work out. Some illustrators decide on a fixed licensing fee depending on the kind of license the client wants. So it might be a fixed fee of 150 pounds on top of their production cost to use the illustration for a monthly magazine cover. With time costs and expenses and a markup, the project comes to 600 pounds. Then a fixed fee of 150 pounds for this kind of usage and this kind of client equals 750 pounds total. Other people might use a multiplier on the production cost. So they've got their production cost at 600 pounds, then they'll multiply it by 1.25. This also equals 750. I prefer to use a multiplier because it's scales. Here's an example. Artist A has a production cost of 600 pounds plus their fixed usage fee of 150 pounds. That equals 750 pounds. Artist B has the same production cost of 600 pounds, but they use a multiplier of 0.25 to get the usage fee. Also 150 pounds, in this case, they add the production fee to the usage fee to get the price of 750 pounds. In the second example, let's say it's a longer project and it's going to require more time from the illustrator, both artists land on 1,200 pounds production cost. Artist A adds their fixed usage fee of 150 pounds and lands on 1,350. Artist B uses the multiplier of 0.25 to get the usage fee, which is 300 pounds. They add them together, and it comes to 1,500 pounds. So they're making 150 pounds extra in this example. For a more extreme example, if production costs were even higher at 2,500 pounds, Artist A still uses the fixed fee and lands on 2,650 pounds. And Artist B, using the 0.25 multiplier, gets a usage fee of 625 pounds, giving them a total of 3,125 pounds. You can see you get a better deal by using a multiplier rather than keeping it as a fixed fee of 150 pounds. So let's move on to the different parts of what will make up your licensing fee. The three main parts are usage, territory, and duration. Usage. The usage here is what the work is going to be used for. I've made a list here of all the different uses I've seen for illustration projects in the last year or so, and this isn't a complete list. There are always unusual cases that you have to wrap your head around. There's a lot here, and I've really gone around in circles trying to think about how to teach this in a useful way because there are so many variables and possible uses that you might come across in your day to day illustration work. And while some are obviously going to be more expensive than others, a website spot illustration versus an outdoor advert, for example, others aren't so clear. What's worth more between some printed point of sale items or a mural. It's not really that obvious. This is why a lot of pricing calculators can be a bit unreliable with complex projects because there are so many variables to calculate. It's almost an impossible task. I really want to break this down for you in a way that's going to simplify this for you. And in the course of doing that, I spoke to a photographer friend, a very experienced photographer to ask how she priced up her licenses. And I was surprised to discover that she only has one option. The client buys what she calls a commercial license. None of the specifics of what the work is going to be used for is factored in. It's simply fixed percentage of the work she does. If the production cost, the hot and the editing, et cetera, come to 4,000 pounds, the commercial license might be 10% of that. I don't know the exact calculation, but she keeps it super simple. And that has worked for her for a long time. I've since tried to persuade her that this is maybe too simple, and she might be losing out. If it's the same rate for a corporate magazine as it is for an ad campaign, she's almost definitely left money on the table with some clients. What I'm trying to get at here is you are allowed to choose how complicated you make this for yourself. Yes, there are industry guidelines, and working out how much to charge for all of these possible use cases should be the long term goal, but you can't do that all at once. And trying to learn it all early in your career can leave a lot of people feeling quite lost. I remember trying to get my head around it in the early days, and no matter how much I read about it, it was mind boggling. I have a feel for it now after nine years pricing up projects, but it's been very much vibe based, and I refer back to old projects sometimes to give me a steer on what's been done before. It's very difficult to explain and very difficult to learn when you've got limited experience. So I'm not recommending you use one license fee percentage for any job you work on, but I think we can simplify a hell of a lot by grouping some of these things together. And you can simplify it as much as you want until you get more comfortable with it and more experienced. It's your career, they your projects you decide and work towards a greater understanding as you go along. You don't have to do everything perfectly from day one. Territory. This is where the work is going to be used. So that could mean one location for one shop, or it could mean an entire country or multiple countries and everything in between. I've seen projects that are for London only. I've seen projects that are for the south of England. It could also be related to where your client has physical locations. If they've got six stores around the country in different cities, so it's sort of nationwide, but not really. It's just six locations. It could also relate to territories that have a shared language. Spanish language territories covers Spain in Europe, and also most of South America. Similarly with German speaking countries, Germany, Austria, and Switzerland, but not the whole of Switzerland. We also have to consider that countries vary massively in how their economy is doing and also how much value they place on creative work. That's high in the US, but maybe not so much in India, for example. If you get bogged down in these details, it's going to become so complicated. The size of the country is a factor, but in my experience, the population of the country is more important. Economic stability is a factor. Economic development is a factor. The important factor when thinking about territory is common sense. The countries that you think would probably have the highest budgets probably do have the highest budgets, and the countries you think pay the least probably do pay the least. But as always, there are a few exceptions to that. Here are a few examples. The US is big with a relatively high population, and it has a stable, thriving economically, generally speaking, the UK is small but stable. Canada is big with a stable economy, but their population is low. Australia is very similar. Brazil is big with a high population, but it's quite unstable. Switzerland's economy is great, maybe the best in the world, but it's a very small country. Similarly, the Scandinavian countries are very economically developed, but with very small populations. India has a hell of a lot of people, but their economy isn't as developed as the US or UK, for example, and probably their value of creative work isn't as high due to traditional cultural and religious factors. If you consider three factors, the population, economic development, and stability, you can usually estimate what their relative budgets might be. And here's a chart based on my experience of budgets from different countries. The USA and the UK are generally the higher paying countries, Germany, France, South Korea and Japan, sort of a little bit lower there. Canada and Australia are lower than you might imagine, but I think that's largely due to the population. Spain, the Netherlands, Italy, Scandinavia. These are all small countries, relatively speaking, so they have lower budgets. And then we get into South America, Central America, and Eastern Europe. These are big areas with lots of people, but they're quite economically unstable. And then at the lowest paying end of the spectrum, we've got places like India, Southeast Asia, and most of Africa. So if you live in a city in the US where it's a high cost of living and you're asked to work for a client in Eastern Europe, for example, it may simply be impossible. They might not be able to afford what you need to pay your rent in San Francisco. If you live in a lower cost of living area of the world and you work with clients in the US or UK, that could work really well for you. You can earn more money than you could locally, and that's what companies like Upwork and FIVA have built their businesses around. Now people from Indonesia, Pakistan, and the Philippines have the opportunity to work with clients from around the world. They get paid pretty well relative to their country, and clients from the US can pay much less than they would by hiring an American. It's easy to see the downsides of those kinds of marketplace companies if you're in the UK like me or in the US, but they present a real opportunity for people in other parts of the world. Duration, this is how long the work is going to be used for, and it's more straightforward to work out than the other two factors. Basically, the longer it's used, the higher the price should be. Some clients want the rights to your work in perpetuity or forever, basically. They're unlikely to actually use your work forever, though. It's more often a case that they just don't know how long they'll use it for. There aren't many cases where your work will be used for more than five or six years maybe because trends change and companies like to rebrand. So when you're asked to give a price for a perpetual forever license, although you should really consider that it could be used forever, thinking about it as more like ten years is probably closer to the truth. 10. Other licensing factors: Exclusivity. This is usually tied to the duration of the license, but sometimes not. A company may want to use your work for a couple of years, but they don't want you to ever re license it, so they want it to be exclusive to them. This cuts off your potential future earnings from that illustration. They don't have the right to use it after that two year term, but neither do you. So you should be charging more based on what you think the potential future earnings of that image could be. Can you show the work once it's released? Usually, yes, once the client releases it to the public, you can share the work in your portfolio or on social media, but there are some very prominent clients who simply don't allow illustrators to share that work ever or even say that they've worked with that client. In that case, you're losing out on any future promotional opportunities that the project could have gained for you, so they should pay you more for that request. I don't know why they do it. It doesn't make any sense to me. But if they pay well enough, you might want to consider it. I've known illustrators turn down exceptionally well paid projects based on this rule because they want to have the right to share their own work. It's really up to you where you land on that. Buyouts or assignment of rights. This is where you sell your rights to the work. The client then owns it and can do whatever they want with it. You no longer have any say in how it's used. You decide how much that's worth to you, but you should consider the potential future utility of an illustration you make. If you make an illustration of some unusual medical device or something like that, the chances you'd be able to relicense it in the future are pretty low because it's so specific. So if the client wants to pay you more for the rights to that very specific image, you could think, Yeah, I might as well, because there's very little chance of me ever making any more money from that illustration in the future. All the illustrations about COVID are good examples of that. Fingers crossed. All those illustrations of the COVID virus that many illustrators were asked to work on in 2020 aren't going to be of any use to other clients in the future. But if it's a general Christmas illustration, for example, you might have the opportunity to relicense that image year after year to different clients. So you don't want to cut off those potential future earnings. A buyout price for something like that should be high, and you may actually prefer to keep hold of the rights to that work. There are no guarantees that any of your work will be relicensed in the future, but based on an illustration's potential future utility, you can make the decision based on probability. Extending a license after it's been agreed. If a client licenses a piece of work from you for one year and then returns to you when it's due to expire to relicense it for another year, if you calculated your usage fee separately from your production cost, then you know what the usage for one year is, and you can simply charge them that usage amount. Were to come back to you and say, we want to re license it for an additional four or five years, well, that's great for you because you don't have to do any additional work, so you might want to consider reducing the rate for longer terms of time on a sliding scale like this. So if the original license was one year for easy math, let's imagine the usage fee was 25% of the total fee. For one additional year, you can charge 25% of the original fee. But if they want three additional years, maybe you knock that percentage point down to 20% for each year. Or if it's five additional years, you can knock it down to 15%. So here's an example. If the original job was 4,000 pounds total, that would look like this. Plus one year equals 100 pounds, which is 25% of the total fee. Plus three years, that'll be 2,400 at 20%. So it'll be 800 times three for each year they want it. And if it was five years at 15%, that's 3,000 total, 600 times five. Reducing a license after it's agreed, occasionally, a client might ask you to quote for a one year license. You give them a quote of 4,000, with 25% of that being the usage fee. They say, That's too expensive. What does it cost for six months? If you've made sure that the project is profitable at the earlier stages, your costs plus your markup, your production fee, then this isn't a problem for you. You could tell them it's 15% for six months, bringing the total to about 3,530. Even if they decide not to use it at all and pay you no usage fee, the project is still profitable for you. You skip that markup stage and the client starts to reduce the license, it's going to start eating into your profitability. 11. Value: The value is the largest amount of money a client will pay you for your work. It's what they think it's going to be worth to them. Here are a few examples of services clients might value. A marketing consultant solves the problem of getting more leads, more eyes on the client's website or product, it's measurable and it's valuable. A web developer solves the problem of converting those leads into customers by improving their sales funnel and making it easier and more appealing for people to buy whatever the client is selling. It's also measurable and valuable. Wedding photographer provides happy memories, an enjoyable experience, and peace of mind. They are trusted to do a great job on a special day. This isn't measurable, but it is very valuable to someone who's getting married. Is illustration valuable? It's very hard to measure the impact of illustration, but getting more leads, making more sales, and being trusted to do a great job are all things that clients value. And these are all things that illustrators can provide. But some clients will value illustration more than others. For some, they really appreciate the creativity and really feel the joy of illustration. For others, they simply know that having illustrations on their website or product can help them make more sales. They don't really care about illustration. They just know it will benefit them and they want it done cheaply. But illustration is often the last part of the puzzle with a big creative project, and sometimes it can feel like we have to slot in after the web designer, the UX designer, the copywriter, the graphic designer, and the photographer have done their parts. It's often the last part to be considered and the first thing to get cut if the budget gets cut. I've certainly felt that illustration is valued less than some of these other creative professions. Having said that, if it is the last thing to be considered from the client's point of view, it's often the first thing that their potential customers will notice and be drawn to UX design and graphic design and copywriting aren't things your average customer notices all that much. When they go to that website or pick up that product, the illustration is what they see and connect with. Perhaps it's our job as creative professionals to try and communicate that to our clients and to help them understand the value in the work we provide. If there's no return on their investment, they won't want to spend money on something like illustration. They won't value it. So we have to be able to tell them how our work is going to solve their problem and help them achieve whatever their goal is. Often, that goal can be traced back to making more money, more sales or new customers. Sometimes it's more informational or decorative. But that in itself helps your client's customers figure out how to solve their problem, in turn, building up trust with the client. Or if it's decorative, it helps to form a bond between the client and their customers. So although it's hard to measure, we should think about what our illustration will do for the client's brand or products. Even in a magazine, if they use a lot of illustration, it becomes a nicer looking magazine. It feels more premium. Then it makes more sales and connects with a particular kind of reader. A wedding photographer isn't making the happy couple any money, but when the couple are deciding which photographer they want to hire, the photographer's job is to impress them with their portfolio of work, of course, but also to communicate why they are the best person for the job. They make them feel comfortable and build up a relationship and some trust. They communicate to that couple that if they hire this photographer, everything will be taken care of and they won't have to worry about anything on the day, and they'll be happy with the results. They have a whole sales process, and wedding photographers charge a lot of money. I don't know many illustrators who go to these lengths, but the ones that do have real fans who can pay well for their work. It's hard to do through a few email exchanges, but if you can get on a call with a potential client and get into this kind of conversation where you can build that trust and put a face to the name and really connect with someone, you will begin to be more valuable to clients. So this brings up a couple of questions which we're going to look at next. How valuable is the project to the client and how valuable are you to the client? 12. How valuable is the project to the client: If the project is high value to the client, they'll likely be willing to invest more in developing it. If it's low value, they probably want to get it done cheap. You'll get sick of me saying this, but there are always exceptions. For example, if you've got an independent author self publishing their book, they're probably going to want to get everything done as cheap as possible. But this is a problem that we can address when we talk to that client. Imagine spending a year or two or more writing the best book you can possibly write and then going out to find the cheapest book cover designer you can. It makes absolutely no sense. The purpose of a book cover is to get people to pick up the book off a shelf or click on the thumbnail image on Amazon. If the book cover doesn't get potential readers to do one of those things, nobody is going to read that book. When you frame it like this, it's very difficult to argue with because it's true. A book cover may be the most important part of a book's marketing. Investing in a good book cover means more people are going to pick it up or click on it. More people are going to buy it, more people are going to read it, and more people are going to recommend it to others if it's good. So if you find yourself in this kind of situation, it could be a book, could be another kind of product, ask the client one question. Is the product good? And what author that spent two years on a book is going to say no to that question. When they say yes, you can tell them that an investment in a cover or branding or design is the first step to getting people to actually try the product. If they get a mediocre and cheap book cover designed, they're doing the product a disservice. But let's concentrate on the majority of commercial clients here where money is a bit less tight. They already know that it's a worthwhile investment, but we've got to try and work out how important the project is and how much they're willing to invest. In our early conversations with the client, we've got to look for signs, ask questions, and try to uncover how important this project is to them. Here are a few things to think about, and some of these overlap, but they come at it from slightly different angles. We're trying to look at the project from the client's point of view here. Who is going to see it and connect with it? Is it going to attract new customers to the product, whatever the client is selling? And are those people going to engage with it? Because if they see it and forget it, it's not valuable. A lot of advertising money is wasted because the ad isn't memorable. But if a potential new customer can relate to it, connect with the message or the style, and therefore come to like this client's brand, that is really valuable. It an internal or external project? If the project is like company information, for example, posters to put around Amazon warehouses, specifically for their employees, there's a lot of people going to see those posters, but the purpose of that project isn't going to get those people to buy more products. More likely it's informational, lift with your knees, that kind of thing. That's pretty low value. But if it's an external project, meaning it's going to be shown to the general public, it has to present a certain vision to the public, and more than likely it's either directly or indirectly related to making that company more money, so it's valuable. Will it help make sales? If you're adding illustrated elements to any kind of product packaging or marketing for that product, it's going to help make more sales, or at least the company is hoping it will make them more sales. If it's a book cover, it's going to help sales. If it's a T shirt design, it's going to help make more sales. It's high value. In which regions is the work going to be seen and used? If I'm a company and I'm making and selling my product in Central America to low cost supermarkets for average customers, there's a lot of people seeing that product, but it's not as valuable as if I was selling high ticket items to expensive department stores in Manhattan or Paris or London, for example. What is the work going to be used for? Is it going to appear on a big multinational marketing campaign specifically designed to drive sales or attract new customers to a product or an event poster for a one day folk music event in Scotland? There's an enormous range there to consider, but you can see the scale of how valuable illustration would be between those two examples. How long will it be used? If it's used for a short time, going by this factor alone, it's lower value than if it were to be used for three or four years. But these three work together, usage, duration, and territory. These are your primary licensing considerations. Is it a portfolio piece or an award winner? Another consideration that isn't thought about that often is if the client, the ad agency or branding agency is going to add this project to their portfolio or maybe even enter it into some awards. If they're really enthusiastic and excited about working on a potentially award winning project, they see value in it beyond whatever payment they'll receive from their client. They're excited to work with their client because it's a big opportunity for them. This is maybe less common, but if it comes up, you can add a point to the valuable column. How widely is it going to be used? This is tied to a previous point, but is the work going to be used for one thing, a digital ad, for example, or is it going to be used on a social media campaign, print ads, outdoor ads, packaging, a website, point of sale printed items? If they're investing in multiple media types, it's a higher value project. The client is, you know, really going for it. So with everything you learn about the project through the brief or a call with the client, these are some of the things you can think about to estimate how valuable the project really is. Is the client going to make money from this project? Usually, yes, but how much are we talking? If your illustrations are going to help make this company an extra 10,000 pounds in the next year, your fee can't really be that high, but if it's going to help make them 500,000 pounds, paying you 25,000 pounds is a pretty good deal for them and for you. It's not easy to discover this kind of thing. And chances are, the person you're in contact with, like an art director, doesn't have this kind of data, so look for the signs and you can adjust your markup and your usage fees accordingly. 13. How valuable are you to the client: The next thing we want to know is if the client wants to work with you specifically or if they're just looking for any decent illustrator. If they want to work with you specifically, your value to them is higher, and in theory, your price can be, too. If you're at the start of your career, you're probably facing a lot more competition, and clients are unlikely to be seeking you out specifically. But once you make a name for yourself and you have a portfolio of awesome work for great clients, people will seek you out. Again, here, we're looking for signals of whether they want you specifically. Probably all seen emails from clients that begin with, Hey, there. Sadly, that's a sign that the email has gone out to 20 or 50 different illustrators. They're not looking to work with you specifically. They're just casting a wide net and seeing who they can catch. In that situation, you're starting from a position of low value to the client. So you may be competing on price, ultimately. If you want the job, you might have to be very competitive with your prices. On the other hand, this is an opportunity for you to demonstrate your value and show the client why you're the best fit for the job. So I recommend getting on a call with them, making your face known, asking some good questions, and beginning to form a bond with the client. It's not ideal because you're starting from a position of weakness. They're looking for any illustrator, but you can still do well if you make a good impression and go the extra mile to show them that you're a better fit than the other people they've email. If, however, they ask for you by name, say positive specific things about your work and maybe reference projects of yours that they like, they're clearly interested in working with you specifically. That doesn't mean you won't have some competition, but it does mean they value you specifically. If they don't say anything about your work, ask. Ask them how they found you. What work they like in your portfolio. If they give you a wishy washy sort of generic answer, maybe they're not so interested in you specifically. But if they tell you they follow you on social media and they tell you they love the project that you made for whatever client or maybe they found an old project on your portfolio that they really would have had to scroll down the page a long way to find, these are great signs. If they tell you you were recommended by someone, immediately, your value goes up. Personal recommendation is powerful. That means you're instantly in a better position to negotiate because you've got some social proof. Do you have a specialist skill that is important for this project? If you have a skill that not many other illustrators have, your value goes up and your price can go up. This could be linked to having a unique style, too. If you have a style that 100 other people can do, it's lower value. But if you're the only one that does your thing, and that thing is what the client wants, you are valuable to them. Do you have a lot of experience with this kind of project or working with this kind of client? If you've done a lot of work with alcohol packaging, for example, and you have a portfolio of evidence to support that, then the client can see that you're a good fit for the project. What can you offer that another illustrator can't is tied to whatever specialist skill or style you might have, but this is what sets you apart from the competition. What else do you do that other illustrators don't after considering these things and speaking with the client, you sense that you specifically are highly valued for this project, you can give a high quote and still win the job. You're not competing on price because you know that you are a great fit for the client. They know that, too, so you've got less competition. If you sense that you're not specifically valued for the project and they're just looking for anybody, then you probably have to be more competitive with your price, and maybe what starts as a 25% markup has to drop down to sort of 18% just so you can stay competitive. 14. How to increase your value: But. There are a couple of ways I'd like you to think about how valuable you are as an illustrator. Your baseline value is your skills, what you can actually do and what you've done, your style, the strength of your portfolio, your experience, and what other clients you've worked for. This is a pretty standard way to measure yourself as a creative. It will move up over time, hopefully. Your differential value is a lot more interesting. This is what makes you different from the competition. Both of these added together equals your perceived value, how valuable the client thinks you are to their project. The higher your perceived value, the larger your fees can be. So some really famous artist that has a load of cool clients and an awesome portfolio of really unique and skilled work in a large social media following has a very high perceived value. A client looks at them and their website and their social media and thinks, Okay, I wonder if we can actually afford this person. They can clearly see that they can't offer low fees to an artist like that. That artist has positioned themselves as someone who is skilled, popular, busy, and expensive because they've got all these value indicators on show that the client can clearly see. Increase your baseline value. Let's look at how you can improve your baseline value. You can improve your skills. This takes practice and time. There's no getting around that. It's a long term process that is hopefully going to continue to compound over the whole cost of your career. If you ever get to the point where you think, I don't need to improve anymore, then that's the beginning of you becoming irrelevant and possibly the beginning of you getting bored with your own work. You can add to your skill set, too, by learning new things, taking some online courses, and investing in your future. Then you've got to show those skills in your portfolio, apply them to something. At the start of your career, you don't have a load of client work coming in, so you can work on self initiated projects. If you want to work on a big technology advertising campaign. The only way you have a shot of getting hired to do something like that is if you show that kind of work in your portfolio. So if no real clients are giving you these projects, you can make them up yourself. Self initiated projects aren't about showing more examples of what you can already do. They're about adding new, useful and interesting things to your portfolio, which, in turn, makes your portfolio more valuable to more kinds of clients. Your portfolio is full of map illustrations, adding another map won't make the portfolio much more valuable. It's just more of the same. Instead, learn something new. Think of a project that could be useful to a client and make some work that shows what you've learned and how you've improved and how you can help them. Finally, you can demonstrate your expertise. Your portfolio does this to an extent, but this is where social media is really use. Rather than simply posting the finished image, which is what you have in your portfolio, you can document your process and share it on social media. You can show behind the scenes, show your thought process and how you work, and you can share your knowledge with others. Don't worry about sharing your secrets. Show people what you do and how you do it, and you'll become a valuable resource for them. They'll love you for it, and your following will grow much faster than if you only show the finished product. Those followers will respect you, appreciate you, admire you, and you'll come to be a leader and an expert and somebody who produces value aside from the illustrations themselves. This can then potentially translate into another income stream, eventually, if enough people want to learn what you do. 15. Differentiate yourself: Differentiate yourself. When it comes to differentiating yourself from the competition, there's a lot to talk about. But basically, this is what will make a client choose you over another illustrator. If there's no obvious difference between you and another artist, the client can simply pick the lowest price. Think about an art director. Part of their job is being able to spot and hire talented, fresh, interesting, and exciting talent, whether it's photographers or illustrators, or whatever else. If they choose uninteresting, common styles and generic creative work, it doesn't make them look very good at their job. They pride themselves on being able to spot something different. And if you want to be chosen from all the other illustrators out there, you've got to stand out. Now, being the lowest priced illustrator is a way to differentiate yourself, I suppose, and it's potentially a selling point for some clients, but that is a very hard position to sustain. There's always someone who can undercut you, and then you're in a race to the bottom. And how will you be perceived if you are the lowest priced option? Well, clients might think you're less experienced. They might think your work will be lower quality. Basically, low price equals low value. As a possibly interesting segue, wine lists are usually in price order from cheapest to most expensive. The most profitable wines in a restaurant are generally the second on the list, because for anyone who doesn't know anything about wine or doesn't really know what they want, they don't pick the cheapest option because they think it will be low quality, so they go for the next one up. As a segue to that segue, wine is generally marked up by 200 to 300% in a restaurant from the price they bought it at. So if you feel guilty about marking your work up by 25%, then that might put things into perspective. You could also differentiate yourself by being the most expensive illustrator. If you've got the skills to back it up and you're willing to lose some clients that can't afford you, you could get into a position where only the big budget clients will hire you. The perception, in this case, could be that you're the best illustrator, the client who is looking at, but you can only really get away with this if your skills are undeniably better than anyone else. Otherwise, you'll be considered overpriced or possibly delusional. To return to the wine list for a moment, you look at the most expensive bottles on the list. Maybe that's the champagne section. You'll probably think, they must be really good wines, but you're not drinking champagne every day. It's maybe just for really special occasions. So I've probably stretched that metaphor as far as it can go. But if you're the lowest priced option, you're unlikely to be chosen, except by the clients who only care about price. And if you're the highest priced option, you're unlikely to get chosen, except on rare occasions when you find a client where money is not really an issue and they want the highest possible quality. But you have to be sure that you're the best person for the job. Aside from price, there are a few other factors that can help differentiate you and help you stand out from the crowd. Professionalism. If you're really professional and efficient and responsive and organized and you showed that, you stand out. A lot of creative types are a bit disorganized and may be slow to reply to emails. And clients accept that to a degree. But if you're really on the ball and you do what you say you're going to do by the deadline you agree, that is a big selling point for a client. They'll remember that and know that it's a positive experience working with you. Social following, having a large social following can also differentiate you from the crowd, though it's not so easy to get there. I wouldn't recommend prioritizing this, but I wanted to add it for the sake of completeness. Impressive client list. This is really useful, but it takes time. If a big tech client is considering working with you and they see you've worked for other big tech companies in the past, they'll think, great, this person gets it and they know what they're doing. Special skills. If you've got a really specialized skill set that no other illustrators have, then you are immediately separated from the Pack. You're the only one who can do what you can do. And if the client wants that, they have to hire you even if the price is high. Specialism in a particular kind of project. If you specialize in working on tech project, then you are potentially more valuable to a new tech client than another illustrator who doesn't specialize and their portfolio is full of all different kinds of projects. A unique style. There are many good reasons to have a unique illustration style, but basically, I'll return to what I said earlier. If there's no obvious difference between hiring you and another illustrator, then the client will decide based on price. And if there's 100 other illustrators who can work in your style, there's no way you can negotiate or charge the highest fees because the client can get that style cheaper elsewhere. Great communication skills. If you ask good questions and you're proactive in solving problems and you send a client regular updates and you're polite and you're fun to work with, these things really stand out to a client. If your specialist skill isn't obvious to a client by just looking at the images, you need to be able to communicate what goes into the work in other ways. You have to be able to explain what you do really well, and then that explanation has to be consistent across your branding, your website, your social media, your emails, and your in person conversations. Communication skills are really valuable in all aspects of your work. Sharing your personality and values. This is maybe the most you can differentiate yourself because you are your own unique person with your own unique thoughts and opinions and values and interests. No other illustrator is the same as you in this respect. And if what you share publicly resonates with a particular client, then they're immediately going to see you as being the best fit for the project, no matter what the price is. The flip side to that is that when you share your views and opinions, you'll probably cut some clients out who don't agree with your points of view. But I don't see that as a downside necessarily. There are plenty of clients out there, and personally, I'd prefer to work with clients who are like me, who like the things I like and see the world in a similar way rather than working with a client who I have no connection with. Testimonials. The last one here is kind of old school, but if a client comes to your website and sees you have some positive comments from other clients saying good things about your work and the process of working with you, that is definitely going to work in your favor. It's more social proof. 16. Price appropriately to your level: I've seen various sources that say you should charge market rates, even as a beginner, because that's what's fair. And if you charge under that, it's unfair. And to a degree that's true. You don't want to be consciously undercutting anybody. But if everybody charged the same rate, that would be great for beginners, but not so great for the people who have been doing the job for ten or 20 years. Those people should be able to charge more for their work because in theory, they are better at their job. That is the way it works in all industries. The better you get at something, the more you can charge. Costs are costs. So your costs are your costs. You can't charge below that, or you're losing money, and those costs will go up over time. Maybe you'll have a family or want to buy a house, not to mention inflation and the price of living going up. So reviewing your costs every six months or so is important. If you're getting into illustration in your 20s, your costs are probably quite low. That gives you a competitive advantage that you are allowed to use. You don't have many competitive advantages when you're starting out. You don't have a big client list or a huge portfolio of work, but you can be cheaper and still be profitable for your circumstances. Someone later on in their career with three kids and a mortgage has to charge more because their life is more expensive. Same for anyone living in lower cost areas of the world. You can charge less than someone living in London or Paris or Berlin, probably, and still make a comfortable living. That is a competitive advantage for you that you can use. However, for the reasons outlined in the previous chapter, you don't want to go too low. You still want to be within reasonable boundaries, so clients don't think of you as a low quality option. Experience alone isn't necessarily enough. Here's another thing to think about. Just because an illustrator has been doing the job for a long time, it doesn't necessarily mean their value has increased. If an illustrator hasn't put the work into increasing their baseline value and differentiating themselves, developing a unique style, and learning new skills and pushing themselves to be better, maybe they can't maybe they shouldn't charge more. If you go to work in an office and do average work for five years and then ask for a pay rise, are you entitled to one? No, you have to earn it by being valuable to the company you work for. Your prices will go up as your value increases. When you work on your skills and differentiate yourself from all the other illustrators out there, you can raise your prices. And when you are genuinely valuable to a client, they will be happy to pay you more. 17. Pricing High vs Pricing Low: We've already discussed the perception of being the lowest priced or the highest priced, but I want to outline a few more pros and cons here of being low priced or high priced. When you price your work at the lower end, there are some advantages. You're more accessible to a range of clients, so you can potentially work on a wider variety of projects. You can also potentially work on a larger volume of projects, which means it's really good for getting experience quickly and building up your portfolio. So when you're just starting out, it's quite a good way to get experience. The chances are you're going to be working on a larger volume of pretty bad projects with low quality clients. So it's important to raise your prices as soon as you can. Once you've got a bit of experience, raise your fees in line with your value. Otherwise, you'll be left in this low priced category, and you might feel quite disappointed with your day to day work and have very low job satisfaction. If you stay there too long, the better quality clients are going to see you as a low value illustrator. When you price high, maybe not the highest, but a premium price, there are some pros. Obviously, the biggest pro is that you've got more money, which translates into more time, because if you only need to work with one or two clients a month to make what you need, you can free up a lot of the time that would be otherwise spent working with five or six lower paying clients. When you're juggling less clients, you can give more of your attention to the clients you do work with. It's good for you, it's good for them. Time is your most valuable resource. So if you can free up some of that to spend with your family or friends or doing things that make you happy, that's great. But also, more money and more time means you can reinvest some of that into your business, learning new things, practicing your skills, upgrading your equipment. When you charge more, you will cut out a lot of the lower paying and potentially lower quality clients. You become more exclusive. And when you are more exclusive, you should be providing a better service, which I think is a pro. It takes a little bit more work, but it means you have to be better at your job, which is something we should all strive for. And you'll also be perceived as higher quality if you've got a higher price, but the work has got to be high quality, too. Cons. You will be too expensive for some clients, but that's not necessarily a con. If you can get better clients, that's good. There's potentially more pressure if you charge more. Your clients will expect more. But as I've said, if you can cut down on the quantity of clients, you can find a balance more easily. 18. Raising your prices: Raising your prices is something you should do regularly through the course of your career. You have to raise your prices as the cost of living goes up and as your costs increase, so you could do it yearly. You can also raise your prices at points where you get really busy. That makes sense because some of the lower paying clients may drop off, but it's okay because you've got plenty more, and you'd likely have to turn work away anyway, so it might as well be the low paying clients. That's how Uber surge pricing works. At peak times, the prices can multiply up to four or five times. They do that because demand is higher, and they understand they will lose some customers in those times. But really we should be thinking about raising our prices when our value increases. It only really makes sense to increase your prices yearly if you're better at your job than you were a year ago. Let's say you learn how to animate your work. You then are potentially more valuable as a freelancer to a client who's looking for that combination of skills. As we've spoken about earlier, if you're doing hourly rates or day rates, there's only so far you can raise your price before it seems unreasonable to a client. 19. Estimates quotes and proposals: I've put together a collection of handy pricing related tools and tips here that you may find useful. First, a couple of definitions. Estimates. An estimate is just that an estimated price or time period for you to do a job. It's common for a client to email you with vague details and ask for a price. You can only really make your best guess if the details are incomplete, but they will become attached to whatever number you give them. It's not meant to lock you in to whatever number you present to them. So be really clear if you give an estimate to the client that the final price may change depending on what other details follow. Could go up, could also go down. But an estimate is not meant to be binding. I've been caught in this position before where the client has submitted an estimated price and got it approved. Then the project details are revealed and they don't want to move away from the estimated price that I've given them. A quote, on the other hand, is meant to be an official, binding price. This is the final price you give to the client and you're committed to it. You can only really do this once you're satisfied that you've got all the details you need. A proposal is something you may or may not have put together when you're working with clients, but it is something you can do when there's a client you really want to work with. It's not always required. You might want to reserve it for bigger clients or clients that you really want to impress. It's a way to really show that you are the best person for the job. This would come after you've had a conversation with the client and you ask your questions and you think, I really want to win this one. I'll put together a little slide deck. Typically, it will include a summarized overview of the project, the desired outcomes of the project from the client's point of view. This shows that you understand their goals for the project. If you can show that you understand the goals of the project better than the other illustrators that are being considered and you put the effort into a proposal for it, you can win the project even with a higher price. The project scope is what you will do in the project, the deliverables. Proposal is also an opportunity for you to share some initial ideas of how you'd like to approach the project. Maybe that's a written explanation, maybe it's some quick sketches. It's extra work you're doing for free, but depending on how much you want to win the client, it might be worth it. Don't think about it like working for free. Think about it as an investment. You're going the extra mile. Can add a timeline into a proposal. That's when you're going to do certain things, when you'll send the sketches, when you'll send the second round, and when you'll send the final illustrations. It's also an opportunity for you to tell the client what you need from them. If you need feedback on a certain date in order to make a deadline, you can put it here. You can also add a page here that shows your value too. If you've got examples of similar projects you've done in the past, if you've got some testimonials or maybe you want to share your client list or your special skills and why they will be useful for this project, you can add a little bit about you and what you can do. You can also add in your final quote here and include your price options, payment schedule. Maybe there's a deposit, maybe you're offering a discount. We'll get into that a little bit more shortly. You can prepare a proposal template in advance if you think you might need it. Then you can put them together quickly as and when you need them rather than making them from scratch when you do need it. 20. Deposits & staged payments: Deposits. I've often been asked by illustrators when it's appropriate to get some payment upfront. It makes sense to do it with higher paid projects or projects that are going to run for a long time. If it's a short project or if the fee is quite low, it just makes too much admin on the client's side to split up the payment. It's impractical. If a magazine is going to pay you $2,000, for example, that's not really enough to justify a deposit. It will make their job more difficult to try and arrange that. You can decide where the threshold is of where you think it's appropriate to get something upfront, but I probably wouldn't charge a deposit unless it was over 6,000 to 8,000. But deposits are also a really good idea where you think the client might be risky. So if you're working with an independent client that could easily disappear, even if it's a lower paying project, you might want to consider asking for some payment upfront. If they don't want to pay a deposit, that's potentially a red flag, but it could also mean they consider paying you any amount upfront as a risk because you could also disappear. You can explain it in a way that makes it clear that if you get, let's say, 25% 30% deposit upfront, then you are both sharing the risk. Staged payments. These make sense with projects that are going to last multiple months. This is fairly common. Staged payments are often based on project milestones. For example, you might get 25% of the fee when you deliver the sketches and the rest on final delivery. But project milestones can get delayed. So it's probably better for your cash flow to base staged payments on actual dates, for example, the last day of each month. So if the project is going to go on for four months, you split up the total fee into four payments. They might not even be even payments, but you know you're going to get something in your account each month so you can pay your rent and plan your finances. 21. Other additional fees: Other additional fees. If the client wants extra sketches, you could charge more. Two to three sketches for a single illustration is reasonable, but anything more than that should probably be charged for. Though it may depend on how quick a sketch is for you to do. For example, I work with one artist who submits six to eight sketches for pretty much every project because it's quick for him and it's a good way to get his ideas down. It's up to you where you draw the line, no pun intended. A client wants to see alternate versions of the final illustration, maybe they want two different color variations, for example. Again, you can decide what's reasonable for you. If it's as easy as clicking a few buttons, maybe it's not worth charging. But if it's a more involved process, you'll want to charge for your time. This kind of work where it's straightforward technical process work is where it makes sense to charge an hourly rate. Project requires you to do a lot of research, maybe you have to read a lot about the subject of the illustration in order to get the visual details correct, or you need to source your own references. This takes time. You've already decided what your time is worth, and it should be paid for. Rush fees, if a client needs you to work on a project very quickly overnight or over the weekend, for example, you might consider adding a rush fee, which might be an additional percentage on your price. If it needs to be done next day, maybe it's as much as 50% or 100% more. We're not talking about editorial projects here because they are by their nature, very quick. But if an advertising agency gets in touch and they say, We need this in two days, and it's a ton of work, you need to make sure it's worth your while doing those late nights and early mornings. There are other additional fees you might consider, but generally speaking, if it means you have to spend extra time than originally agreed or you have to work on sociable hours to meet a deadline, you might want to consider bumping up the price a little bit. Be reasonable about it. There's always some give and take and urgency from clients, but decide where the line is for you and adjust accordingly if the project goes over that line. Safety money. This is a concept that you definitely shouldn't publicize. Keep it to yourself. But if you know from previous experience that a client is particularly demanding, asking for a lot of feedback or changing the details of a project, et cetera, you can adjust your price to account for that risk. Then you know that even when they are being demanding and a pain to work with, you have charged enough for it not to bother you so much and not to make the project unprofitable when you're on the seventh round of change. Don't always know this upfront, though, and we usually find out that a client is a pain to work with later on in the project. But look out for signs and red flags early on. If you suspect that the client is quite indecisive or a bit of a drama queen, you might want to consider this option. Deposits, staged payments, and safety money are about reducing risk. If there's a risk of a client disappearing without paying you, get some money upfront and limit the risk. If there's a risk of scope creep or endless picky feedback, factor it in, then you can get on with it and not feel too frustrated. 22. Give your client options: When a client asks us for a price for a project, most of the time we'll go away and work it out, then give them a number, hoping it's what the client wants or as close as possible. Sometimes that will lead to a little bit of negotiation, but I'm sure you've also been in a situation where a client tells you it's out of their budget and you don't hear back from them again. Or they simply tell you they've gone a different direction, and you're left wondering whether your price was too high. I've experienced that many times. Well, there is a solution, and that is to offer options. If you only offer one price, you're only offering the client one way to engage with you, and that price is either right or it isn't. If you say the price is 1,000 pounds, that's more or less a take it or leave it offer. If it's fairly close to their budget, they might negotiate, but if it's too far away, in their opinion, they may simply think, Nah, there's no way we can work with this person. But if you offer them multiple price options and multiple packages of what you could do for them, you're giving the client different ways they could work with you at different price points, and you have a better chance of one of those prices being about for what they want to pay. We give a client a price, we can go back and forth, wondering if it was the right price. If they turn us down, we wonder if it was too high, and if they accept it too eagerly, we wonder if it was too low. But to keep things simple, let's say that the right price is the one they accept. If you'd done the earlier work on calculating your costs and adding a profitable markup, then you don't need to worry if your price was too low. You know it's a profitable and fair price for you. The client may well have more money in their budget, but we can't know that, so there's no use in worrying about it too much. You're thinking about offering different price options or different tiered services, you basically want to think of it like good, better, best. The lowest price option has still got to be a good option, and the quality of the work you deliver should absolutely not be a factor that you cut back on. The work you deliver has got to be good. But there are other things you can negotiate on or increase or decrease for the purpose of these different pricing options. Here's an example. Let's imagine you're quoting on a project and you determine that your price would be about 4,000 pounds for two final illustrations with three sketched ideas for each one, three rounds of feedback, you've got three to four weeks to do it, which is not too quick for you. It's manageable. Instead of giving the client that quote, you can think about what a stripped down basic version of it would look like. Maybe it looks something like this. Cut it down to two sketched ideas for each illustration and suggest only two rounds of feedback. If you've got other projects on the go, you could also see if the client can wait a little longer to receive the finals. Let's say five to six weeks. And you figure if it's easier and a bit more relaxed in the schedule, and it's still going to be profitable, keeping in mind your cost and markup, you'd be happy to do it for 1,300 each illustration, which would be 2,600 total. This is your basic option. The work is still going to be good, but it's easier for you and cheaper for your client. You've already got your middle better option of 4,000. So then you can think about what your premium offer is the best option. And that might be some extra sketched ideas. You don't want to go crazy, but maybe it's four sketched ideas for each illustration, which you'll compile into a beautiful presentation deck, and you're going to be less strict about feedback rounds to make sure the client gets exactly what they want, and you'll prioritize this project and deliver it quickly in under three weeks. You have to put a limit on feedback, ultimately, or you won't be able to guarantee that it'll be delivered on time. You could offer a video call halfway through the project where you can present your ideas to the client directly, and then maybe you can say to the client, you'll deliver them some additional final options, a couple of different color ways or offer to give them some different formats so they can use it on social too. Maybe you even throw in some light animation in there if that's in your skill set. This is your best and highest level of service. So we're thinking about what we can do to really blow the client's socks off and go the extra mile. It's a lot more work, and this project becomes your priority. So a fair price might be 3,000 pounds each, 6,000 pounds total. Then you've got your three options. Good is 2,600, better is 4,000 and best is 6,000. Make sure you're going to be happy with whichever option the client chooses. If you offer as much as you can for the best option, the client goes for it, and you've given a price that's still fairly low, if they choose that, make sure you're not going to regret it and make sure that the highest priced tier is good enough to motivate you to do all those extras. So when you present these three options to the client, they'll look through and be able to figure out what's best for them. It may be that the cheap option is simply not suitable for the client. Maybe they feel they need to see three sketches or maybe their deadline doesn't allow for any extra time. But the important thing is, you've given them the option. They can say no to that one and then consider one of the other options. Depending on their budget, if the better and best options are out of the range, that's okay, too. You've given them a cost effective solution, and they can choose the cheapest option. Now have three chances of winning the project, all profitable for you. And if the client chooses the cheapest, you spend less time on it, it's fair. In reality, you probably don't need to do this for small projects, but when you get into more competitive projects and better higher paying clients, this is a great way to increase your chances of winning the job. This also applies if the client gives you a budget, by the if they offer you a budget that's higher than what you would have quoted, well, that's great. You can probably just accept it. But if they give you a budget that's a bit low, let's say, 3,000 pounds. Go check your costs and markup so you know how flexible you can be while still being profitable. Then you can offer some options. Option one, your usual rate, which is higher than their offered budget, 4,000 pounds, tell them what they'll get for that. With option two, you can present it to them as a discounted rate to meet their budget at 3,000. But also tell them that to make it work, you'll have to limit sketches and feedback rounds and maybe you'll need an extra week, et cetera, whatever you need to cut down on there. Might accept that discounted rate to fit their budget, or they might be able to find a bit more money to meet your standard rate. 23. Presenting your prices: When it comes to presenting these prices, there are a few things to note. We've chosen three price options here for a very good reason. You could go with a simpler standard and premium model with just two options, which is okay. Maybe you simply don't have time to be able to offer the best option in some cases, so you can only fit the good and the better option in the schedule. That's fine. But the reasons we've gone three options as an ideal way to do it is because the lowest and the highest are always going to serve as a frame of reference for the one in the middle. Remember, the one in the middle, which we're calling the better option, is the one you worked out first. This is what you would usually quote. It's probably the option most clients will choose. So you've got your lowest option here and your highest option here. Assuming these two don't change, the position of where you put the middle option will influence how the client thinks about it. You've got your low option at 2,600 and your high option at 6,000 if the middle option is down here at 3,000, the high option will seem very high in comparison and will make the middle option seem reasonable. They'll look at the low option and think, hmm, we can get more work for very little extra for the middle option. It seems reasonable compared to the highest option. The middle option seems fair, reasonable, and achievable. This is a fairly low risk way for you to get the client to choose the middle option. This is known as Goldilocks pricing. One is too low, one is too high, but the middle one is just right. If you put the middle option nearer the top at 5,000, it's higher risk because you're giving the client two relatively high priced options and only one lower priced option. If they have 5,000 pounds to spend and they see how much more they'll get for just 1,000 pounds more, that could encourage more clients to choose that highest option, if that's what you want, but it is a higher risk. This is known as might as well pricing because the client might only need the middle option, but they might as well pay a little bit more for a lot more value. Apple does a very good job of this on its sales pages. If you're buying a MacBook for $2,000, something like that, and you look through the options for the hard drives and the RAM, and you think, well, I'm already spending $2,000, so I might as well spend a little bit more on getting that terabyte hard drive. So this is getting pretty advanced, and maybe it's something you play around with and maybe not. But the important thing is that we offer options because that will give us more chances of winning the job. There's one more thing to mention in relation to presenting these price options, which we'll look at in the next chapter. 24. Price anchoring: Anchoring is a common practice in pricing all different kinds of products and services. It plays on a psychological tendency we have to getting attached to a statistic or a number that we might read or hear. If I were to tell you this course is usually priced at $500, but I'm offering it at the very special sale price of $100, and I write it like that on the website showing the original $500 price tag with a big red line through it and $100 next to it. That high price acts as an anchor, something you see and become attached to, thereby making whatever price I put after it seem like a bargain. I could put $100 or $150 or $350 or $400 and it would still seem like a better deal simply because there's a high anchor price next to it. Take a look at these examples. Here's my book on Amazon. Notice the price. It shows the recommended retail price. Then it shows what you can get it for. It also shows the percentage discount, bargain, right? Here's a screenshot from B&Q, a DIY store here in the UK. These products seem cheap, but only because you can see what the original price is. Same thing here from John Lewis, a big department store. These companies could simply drop the price and not show the original price, but it wouldn't work. They wouldn't sell any more of these products because the customer doesn't have an anchor price to compare it to. It only seems like a bargain when you can see the higher anchor price. So when you're presenting your price options, it can be useful to present the highest option first, as it makes whatever comes after it seem very reasonable. So using the example from before, we've got our best option at 6,000, better option at 4,000 and good option at 2,600. The job of a high anchor price isn't necessarily to be chosen. It's to frame the middle one. If the middle option is your preferred option, you want to make it seem the most reasonable and fair. Without anything to compare it to, the client can't see that it's the most reasonable. If your client thinks they need a buyout and to own the copyright to your work, this is a good opportunity to offer them a high anchor price. If the project is going to be around 4,000 pounds, and they ask for a buyout price, and you say 10,000 or 12,000. But also offer them some more reasonable licensed options, that's going to get them to consider very carefully whether they really need it. If you only offer them this high anchor price without any alternative options to consider, you'll probably scare a fair few of them away. Anchoring can work against you, too. If a client comes to you with the example project we've been discussing and tells you they want to pay around 1,500 total for those two illustrations, you might see that number, internalize it as an anchor and adjust your whole pricing scale based on that. What was once 2,600, 4,006 thousand pounds for your good, better, and best options might then become 1,000 2003 thousand pounds. That's not necessarily a problem in itself, as long as you've done the calculations to make sure that it's still profitable because every client has different budget expectations, and being flexible is good. But what if the client offers you this low ball budget, knowing that you'll probably price lower than you would have otherwise, and it's just a tactic for them to get a better price. It's not very likely that people are playing mind games with you in all honesty, but consider that it is a possibility and try not to be swayed too much. The other way anchoring can work against us is if we have some clients we've worked with while we're in the early days of our career. The first couple of years into freelancing, we probably accept pretty low paid jobs because we need the money and we want the experience. Some of those clients might come back to you regularly and love working with you. But what happens when you get more experienced and your skills improve and you put your prices those old clients are unlikely to just accept that and appreciate that you've leveled up. Those clients become anchored to the prices you used to have. Anything more than what they're used to will seem expensive by comparison. It's very difficult to raise your prices with existing clients because to them, it will always seem unfair. 25. Negotiating: Et's talk about negotiating for a while. It's a big topic. If the client begins negotiating with you after you've sent them a quote, that is a good thing. It means your quote was almost perfect for them, but just a little bit on the high side. In my opinion, that's the perfect place to be. Pretty much in the ballpark, but at the higher end rather than the lower end. And if they weren't seriously interested in working with you, they wouldn't try to negotiate. So if you get to this stage, you can feel quite confident that with a little bit of adjustment, the client is going to be happy to work with you. You already know from the work we did earlier in the course that you're making a profit on the quote you sent. Maybe that's 25% markup on your costs, maybe it's higher, maybe it's lower, but you know pretty much exactly how flexible you can be in a negotiation to still have a profitable project. So let's say your daily costs come to 275 pounds. You're going to spend 12 days working on the project. So that's 3,300 pounds to pay for your costs and time. You can't go under that. You add a 25% markup. The production fee or creation fee is 4,140. That's your costs plus your markup. So you know that you have 840 pounds profit. The difference between the cost and your price. Let's say for the sake of easy mass that the usage is 2000 pounds for two years usage. So the total price you give to the client is 6,140 pounds. Then the client says they have a maximum budget of 5,500 pounds to spend on the project. You could in theory, reduce your markup to get 5,500 pounds. But then you'd only be at about 6.5% markup, which is raise a thin profit, definitely less than ideal. You have a few options here. You can negotiate their budget and try and find a happy middle ground. You could reduce your costs by spending less time on the project. Maybe instead of 12 days, you spend 11 days on it. If you're spending less time on it, you might have to negotiate on the deliverables. If they want three sketched ideas, you could offer two instead. Or you could try and minimize the licensing fee by negotiating the usage they need. If they say they need it for two years, maybe you could get that down to 18 months. Some combination of these three things will bring you and your client to an acceptable deal. If they put their budget up by 300 pounds and you reduce your price by 300 pounds, you land somewhere in the middle. Everybody's happy and you're still profitable. A lot of negotiation seems pretty vibe based, and you might be rounding numbers up or down to make it easier for both parties, but fundamentally, it has to be based on the calculations you've done. If it's too vibe based and not based enough on the maths, you can very easily get into a situation where you're not making a profit. In this example, the client wanted to pay 640 pounds less than your price, which is not that much. But it took your markup percentage down from 25% to 6.5%, a couple of hundred more, and then you'll be eating into your costs. So negotiating on the price actually means negotiating on the other things, how much time you dedicate to it, how many deliverables there are, how many feedback rounds you include, and also the licensing requirements, too. You absolutely should be flexible and open to negotiating, but know that there's a limit to that flexibility. And there's one more thing I'd like to add about negotiating and being flexible. If you're willing to be flexible on the prices you've given, the client needs to show some flexibility, too. 26. Offering discounts: I have a few thoughts on offering discounts here. You'll probably be more willing to be flexible with some clients and less flexible with others, depending on who the client is and what the project is. So if you're in discussion with a project you really believe in or a charity or something like that, you might want to offer a discount. That's great. But if you do offer a discount, make it clear to the client what your usual rate would be. Then tell them the discounted rate, itemize it in your quote and in your invoice. Spoke about anchor prices earlier, so showing what the price would have been, along with your discounted price shows the client what a good deal they're getting. It also doesn't diminish your value as an illustrator. If you only show them the discounted price, the client will categorize you in their mind as an illustrator whose work is worth X amount, which could bite you in the future if they come back to you with another project and expect to pay the same amount. If you show them what it would cost, they can see that you have a higher value and you are offering a generous discount, which they'll appreciate, hopefully. Volume discounts. If you're working with a client who needs a large quantity of deliverables, it's perfectly reasonable to offer a volume or bulk discount. If your price for one illustration would be 600 pounds, but the client needs 20 of them, that's a good chunk of work for you. So you might want to do a deal to give you a better shot of winning the project. Again, you decide where the threshold is of where you begin to offer a bulk discount, but five images is not a big order. I would only consider offering a discount on anything over ten, and maybe it's a sliding scale as the volume goes up. You'd have to do the math to make sure it was profitable, of course. But, for example, 10-19 illustrations might be a 10% discount, 20-29 illustrations, might be a 20% discount and so on, although not all the way up to 100% discount. 27. Final thoughts: Okay, well done. You made it to the end of this illustration pricing course. We have covered a lot. I have talked a lot. I hope that you found it interesting and you'll be able to apply it to your illustration practice. If you have any feedback, I'd love to hear it. You know, I plan on updating this course in the future, with new things. And if you think there's anything I've missed, please tell me I'll add it in as soon as possible. Thanks for watching and hope it's been helpful. See you soon.