[Hervé]

Money Money Money.... It's a rich man's world....

Abba

hehe..

well done Chris... nice Theory..

[ivox3]

Money Money Money.... It's a rich man's world....

Abba

hehe..

well done Chris... nice Theory..

Thanks Hervé and thanks to all for the other comments, ...but this is no theory, ...it's many years of doing it the wrong way.

Let's say that an individual arrives at a client hourly rate of $65.32/hour , ..yet he's never worked for that much an hour in his life , ... what happens? One of two things will happen when he approaches the client, ... he sticks to his guns OR and most likely, ...he'll become fearful that his demand will be rejected, ... so before even finding that out ... , ..he lowers it.

The real truth behind his lowering the price is not just that he fears the client rejection, ... it's really because he himself doesn't believe in his own price, ... even though the math clearly shows that the price is a reasonable sum based on current costs of living, market and skillset. This is an emotional decisoin, and not a rational one .... so he's not convinced at all.

Apparently, ...he needs more pain in his life, ... maybe a lot more until he's finally convinced he will not take anything less than what he deserves for the work performed ever again.

I hate to say it, ... but this is pretty much a standard cycle most will go through, ... I'm also saying that it isn't necessary. Act like a professional, ..be treated like one, ... be a nice pushover type of guy, ... get treated like one. Customers only behave towards you as you give them information to act on, ... simply put, ... you tell them how to treat you. I hear a lot of stories about this bad client and that bad client, ... really ?? Two sides to every story, ... what we don't see is how the freelancer, artist whatever began creating that sour relationship from the moment go with with a lack or protocol, ambiguos terms etc.. If this bad client is so bad, ..do you think he treats all the services he buys from professional individuals that way? ..doctor, ...mechanic, ..veterinarian ??? Exactly. Nope, ... he's pretty much just treating the guy who created this type of situation to begin with that way.

This is no theory.

[JDHill]

Good stuff.

As far as bid-work (hourly billing is very non-standard in some trades), I have a rule-of-thumb...give an honest bid to a customer (I'm talking here about private party-type work...homeowner, small business), you can tell with 90% certainty if they're going to try to stiff you on the back-end (I'm talking about a 50%-down type of scenario) purely by their reaction to the number. If they're hesitant at all...walk...you're going to have to fight for your money in the end...unless you can get them to give 100% down (good luck ). This type of customer isn't serious about your work...in fact, it's almost always the case that they (maybe even only unconsciously) actually want something for nothing.

I'm not talking about the kind that will be matter-of-fact about haggling over your price...these will pay, they're pragmatists who just don't want to pay more than they *have* to. It's the ones who are trepidatious (is that a word? I mean sheepish, whiney, him & haw, etc...) that _will not_ be paying the final bill. It's all in reading the attitude and emotional response. Also...if your customer starts to *become* this kind of nit-picking whiner some-ways into the job...walk, or demand the final payment early (read: now) ...you won't likely be able to 'remedy' the problems they're creating...in fact, they don't have any problem with the work (you're not doing crappy work, after all), but for whatever reason, they just realized that they don't want to pay the rest of the bill.

I don't know this from my own experience...never been stung yet...but growing up my family had (has) a small cabinet shop...by observation of the hard lessons (read: many 1000s of $) of my father, I learned never to ignore the hallmarks of the cheapskate.

...that's the 2 cents.

[jjs]

Ivox - good to put it down on paper - what prompted it? You're obviously all heart for your fellow man

I would just add - never do miricles for free, or you always have to do miracles.

For those who have know idea what they spend - an alternative way to calculate an hourly rate -

On entering the client's carpark - see the parking sign that says "Managing Director" (CEO for those in USA)
Note the car make.
On entering the lift (elevator) do a rapid calculation - 2 x the hourly rate that the dealer charges for servicing the car.

Then if there is any negotiation you can always mention that you have a love of Germany's finest export and an expensive car to keep serviced, and thats why you need to charge so much. They usually get the hint and agree the rate.

If anyone tries this - let us know how you got on


Jonathan

[glypticmax]

Very interesting thread.
Like some of you guys, I've been bidding and winning and losing for some decades.
It would be nice to get together and share the stories about homeruns and getting screwed. Stay away from the IOC and their local vampires is one hint.
But I do have a favorite line when somebody is pushing too hard to hard to lower my price.
"I'm sorry. I don't think I can afford to do your work.".
They either get reasonable, or I just got rid of a client with which I have no future.
Its *marketing* that gives you the option to say no and walk out to the next meeting.
And never let one client be more of your business than you can afford to lose. You don't want to lose too much sleep when they move on, die or get jail time. A six figure account getting Federal jail time is a real pisser.
Anybody remember Ivan Boesky?

[Hervé]

mmmmm... but if you're Nosferatu, ghost of night... can you still ask for an hourly rate...?

[dd_]

very nice thread mate and thanks for sharing your thoughts/ ways

[w i l l]

I think it's a predictable/basic theory which is a bit flawed for those who are in certain life situations. At the moment i'm just starting out and doing a lot of work for free just to build up a portfolio.. it's either do this, do nothing or get a high street job which in my opinion is a complete waste of time. Why should I have to enter data into a PC that I know how to design and build etc.

Also what if I was extremely slow at modelling or setting up renders... the company isn't going to pay an infinite hourly rate. I think its best to use your hourly rate technique, multiply by the amount of hours then offer this total to the company and explain that any extra work will be charged by the hourly rate.

I'd probably never base my rates on my living costs either.... its's like when doing Product Design they teach you not to base your product costs on the cost of manufacturing.... just charge what the customer will pay. It's the same for work. If my freinds who left school at 16 (who don't have debts from student loans) can charge £50 an hour to an individual to fit brake callipers to their car then I think that I should be able to charge that amount to do design work for a big corporation.

[ivox3]

jjs: Well, ... I've actually wanted to do it for awhile now, ..but the other day I saw a thread where someone was asking the question about what to charge ?? (a frequent question in forums) ...so, I figured I'd finally lay out my thoughts on the matter.

btw: ..the car thing, ..very funny, ..but it's been known to happen.

And never let one client be more of your business than you can afford to lose. You don't want to lose too much sleep when they move on, die or get jail time. A six figure account getting Federal jail time is a real pisser.

Larry: Absolutely true, ...no doubt, ..a real life circumstance and one to just be watchful for. Some people will think it's a dream when they land that type of account, ...I'd say to remember to just keep your wings spread or it's like starting over from scratch.

JD: I believe your parents fall under the category of 'seasoned' individuals, ..hence having the knowledge and experience to accurately bid out a project. ...but remember, ..that bid will still calculate back to an hourly figure, ...but they are just confidant that they have enough experience to actually consider all the factors that go into constructing an estimate bid and then maintain a profitable timeframe when executing the given project.
Remember now ... I did say for folks with under 5 years experience.

Hervé: Have you seen the kind of places vampires rent? ...pretty fancy castles, manors and chateaus ... so, ...the answer is yes.

Dave: ...sure thing.

[Frances]

Hervé: Have you seen the kind of places vampires rent? ...pretty fancy castles, manors and chateaus ... so, ...the answer is yes.

They don't seem to be able to afford maid service - or maybe they can't help but do the poor maids in before they are finished with the dusting and cobweb removal.

[lebbeus]

What I did for my current project (I do this stuff on the side as well as for my current day-job, though I'm primarily a designer) is estimate how long it would take me to complete each phase, then multiply by my hourly rate and give them that price. This client didn't want to see an hourly rate, just an overall price so I deliberately padded the time just in case there were some unforeseen problems, which there were. Plus i added a clause that stated a set price for edits after a certain point and this seems to be working out so far

Even though I have 10+ years of experience as a drafter, I still have trouble sometimes estimating how much time things will take. My first (3D) job that I did, I was nearly spot-on, though I forgot to account for the fact that architects like to change things after they see the results, so I ended up going a bit over the initial time estimate.

It takes practice, and a bit of honesty with your client; but no one should ever do work for someone else "for free" just to build up their portfolio. If that's all you're looking to do, do your own projects and push yourself to increase your skillset while working a day-job that's beneath you (and that pays your bills and lets you go see movies and possibly find a girl/guy to spend time with).

I've been close to doing this with architecture, wanting to work for some local talent "for free" in my spare time just so I could learn and put the work in my portfolio; but it's really not worth it, besides it's more about self-exploration and challenge, than it is about being able to name-drop.

[ivox3]

I think it's a predictable/basic theory which is a bit flawed for those who are in certain life situations. At the moment i'm just starting out and doing a lot of work for free just to build up a portfolio.. it's either do this, do nothing or get a high street job which in my opinion is a complete waste of time. Why should I have to enter data into a PC that I know how to design and build etc.

Also what if I was extremely slow at modelling or setting up renders... the company isn't going to pay an infinite hourly rate. I think its best to use your hourly rate technique, multiply by the amount of hours then offer this total to the company and explain that any extra work will be charged by the hourly rate.

hey Will: I am aware of the flaw. ..and I was actually waiting for someone to address it before I elaborated on it. ...and here you are. Well done, ..by the way.

First off, .. getting a supplemental job while you bring your skillset up is not a waste of time. We all know about starting out and doing cheap work or free work, ... but this implies that you can afford to do cheap or free work, ...meaning, ...that your living costs are somehow being handled by another means. I assume your not some homeless CG guy who's got a pc plugged into some bus station outlet and tapping a payphone for a connection ?? ...of course not. But still, ..I don't know your exact situation, but I can assume that you have some level of financial responsibility. Even if it's low,... then that would allow you to use the formula and create a very low charging rate or not, ... if your good there's no harm in getting what the market will bear when your personal living costs are low. An ideal situation.

As for being slow and modeling/rendering. Good question. Frankly, ..it's not fair to charge an individual or company a very competitive rate for this type of work. Unless all of this has been discussed and laid out and the client knows and understands your where your at skillswise, and a rate based on that knowledge is arrived at, ...then in any other case it would be unethical to charge a market rate for, ..let's someone's slowness without their informing a client of that fact. But, ...if work is performed and is delivered, ..and is accepted and used, ...then compensation is in order regardless of the time it took. My thought on this matter is to factor in a learning variable that accounts for this and creates an hourly rate that let's you still get paid, ..but isn't at par with market standards.

We all have to start somewhere, ..the beginning is definitely the most nebulous period. It's the famous catch 22, ... I can't get work without a commercial portfolio ! ,,, and I can't a commercial portfolio unless someone hires me ! And yes, ..the way to break that pattern is to offer up cheap or free services. ...but remember your goal, as your going along --- and that is to get your rate to where your actually making a living. Bad habits are created during this period and can propagate themselves into the future if your not mindful.

[ivox3]

I'd probably never base my rates on my living costs either.... its's like when doing Product Design they teach you not to base your product costs on the cost of manufacturing.... just charge what the customer will pay. It's the same for work. At the end of the day if my freinds who left school at 16 and don't have debts from student loans can charge £50 an hour to an individual to fit some brake callipers to their car then I think that I should be able to charge that amount to do design work for a big corporation.

Comparing this to product design is a mistake, ..when they figure out the profitability quotient on a product, it's all market based, ..essentially, a max profit number. As an individual though, .. you can defnitely take the tact of just charging what the customer will pay, ... but it's a financial roller coaster, ... a constant feast or famine way of life. Sometimes you might be working for the big company at $125.00/hour and tomorrow your between a rock and a hard place doing a local newspaper print ad for $20.00/hour. The point of all this Will is not comparing skillsets to mechanics or garbagemen and what they get paid, .. and saying, "I'm better and smarter than that damn it,...I should get more money!". It's about creating financial consistancy and all the while allowing for the expansion of your skillset which simultaneously raises your industry worth.

Basically, ..in any profession, ..your worth as much as you are replaceable. If your CG skills are tops, ... you can model like the devil, ..rig an animation while sleeping, particles and texture like Pixar then what's that worth? The only thing that'll offset a strong skillset is if someone's an ass to work with. Look to the American NFL for that one. Some people have more talent than the whole team, ...but if their difficult, ...everyone will know it and nobody wants them.

My simple advice to all: Be damn good at what you do and be friendly ...you'll have no financial worries.

[w i l l]

Yes I worked as a designer for 15 hours a day for a complete dickhead, for £300 a week in order to save up enough money as a financial backup to start doing freelance work without having another job. I now have some jobs for MONEY but to be honest (even though i've been through this process before) I didn't expect it to be this difficult to get work. I suppose it's just hard to get work by cold calling/emailing/free advertising and maybe this is the wrong time of year.

Funny you should mention homelessness as I was homeless for 3 months in Australia, although I still had a much better time than working for 15 hours a day for somebody with no understanding of design that made 1000% profits from MY work. I'm just bitter at the system.

Basically, ..in any profession, ..your worth as much as you are replaceable

Surely thats a slight contradiction to your theory as it shows that society does not base salary on lifestyle, but more skillset.

[Frances]

Basically, ..in any profession, ..your worth as much as you are replaceable

Surely thats a slight contradiction to your theory as it shows that society does not base salary on lifestyle, but more skillset.

Career decisions should be based on lifestyle choices. Chris's point is that many people fail to take into account what they need to live when calculating their hourly rate. Having all the work in the world is not a good thing if it doesn't pay enough to sustain you.

Let's all go back and watch the Cosby episode where Theo decides he's not going to college, but wants to get an ordinary job. He triumphantly holds $200 in Monopoly money and crows, "See, I've got $200 left!" His dad asks, "You going to have a girlfriend?" Theo answers, "You got that right!" Dad snatches away the $200.

ETA:
http://www.youtube.com/watch?v=-ITLVeVNvIQ

We entrust some of the lowest paid people to educate and guide our children. Even the best teachers make poor salaries. If salary really were based on skillset or the importance of an occupation, teachers should be getting paid a lot more than they are. My son's kindergarten teacher is one of the best I've ever met. She works as a night manager at Hardee's too. What's wrong with that picture?