Talent Is Not Enough: Business Secrets For Designers, Third Edition

Chapter 09. Setting rates for a firm

Calculating a standard billing rate for a design firm is a bit different from calculating an hourly rate for a freelancer (a process that we discussed in Chapter 06). However, the essential business challenge is the same — you need a rate that will cover your costs and produce a profit.

Freelancers tend to work on projects that are subcontracted to them by design firms and agencies. Because of this, most freelancers have a single rate, and their services are billed on a simple time-and-materials basis. In contrast, design firms tend to work for clients on a fixed-fee basis. This puts pressure on firms to use a very logical process for planning and pricing each project.

To calculate a fixed fee, design firms ...