Chapter 08. Pricing models

When figuring out how to charge a client for creative services, designers have several different pricing models to choose from. How do you select the most appropriate one? This chapter explains each category of pricing and defines some of the key terminology that often comes up during the negotiating process.

When design firms sell work, there are several very different ways to structure the compensation. The most common pricing formats are

• Time and materials

• Fixed fee

• Licensing: use-based

• Licensing: royalty

• Hybrid

• Free

Time and materials

This is the simplest approach, although it’s not the best. When working on a project, you track the actual hours and bill them to the client at agreed-upon hourly rates. ...

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