Are Your Fees Keeping Pace with Costs?

Many designers saw their business increase in 2015 but not their profitability. Clients are purchasing less product or shopping online, negotiating for lower fees, and maintaining a tight lid on hours billed. All of which are cutting into firms’ margins. Meanwhile, operating and human resource costs keep going up. This is not a sustainable scenario. You need to be earning a reasonable profit to stay in business.

With the new year approaching, this is a perfect time to consider a rate increase. This may seem counter-intuitive, since clients are demanding lower fees, but consider the bigger picture. Clients are accustomed to businesses and government raising prices and fees at the start of a new year. January is a slow month for many firms, which frees up some time for you to reach out to clients with your new pricing structure and update your website and marketing materials. Chances are your competition is contemplating raising fees as well.

You probably have a good idea of what level of increase your market will bear. Develop a pricing strategy that speaks to the value you bring to your clients. Consider a tiered approach, with a different fee scale for basic design services or consultation, another for design and sourcing, and a third for the full suite of services, including project management. If clients are pushing back on fees, look for other areas where you can increase rates, mark up or chargebacks. Depending on the type of project and how you bill, you may be able to unbundle some services.

Raising fees always involves the risk that some clients may balk. For the most part, though, clients who value you and your work will normally accept a reasonable increase if you communicate to them in advance your reasons for doing so. Those who are interested only in hiring you for the cheapest rate are not the ones you want to keep anyway.



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