Updated: Mar 18, 2019
If you are a freelance visual designer, especially if based in India, then here is a thoroughly researched and comprehensively compiled guide to pricing for you! I have tried to make it as elaborate and detailed as possible; in case of any further queries, kindly post them in the comments section and I will try my best to answer them.
This blog post is dedicated to the first two sets of students that I had the opportunity to teach.
Factors to Consider when Pricing a Project
Nature of Deliverables
Deliverables are what you have to create for the client. It is the nature of these deliverables that determine the basis of your project price.
The categories of the deliverables and their determinants are listed below:
• Number of options for the deliverable
• Size of the illustration
• Number of illustrations
• Surface on which the illustration must be produced
• Analogue or digital rendering
• Simplicity or complexity of the style of illustration
• Number of frames/Time of motion graphic (in case motion is involved)
Identity & Branding
• Number of options for the deliverable
• Number of collaterals to design
• Requirement of support documents (file usage guide/brand guidelines)
• Number of pages or screens (applicable to publications/websites/applications/any other collateral)
Cost of Production
The nature of the deliverables may involve a certain cost of production, which can be included in the project price. These costs may be for the following:
• Surface material such as canvasses, metals, woods or any other
• Project specific tools, equipment or rendering mediums such as paints, markers etc.
• A portion of the annual software subscriptions such as Adobe
• In case of website design, domain name and hosting charges
• In case of application design, user testing charges
• Printing charges
• Any other sizeable charges
Time Span for Creation
A reasonable time span must be granted to create the required deliverables, of a desired quality. In case of a shorter time span, you can charge a higher amount considering the ‘rushed’ nature of the project. In case the time span is shortened after the commencement of the project, you can discuss the same with the client and accordingly charge an additional amount, to compensate for the shortened deadline of the project.
The design fee is levied for the study or expertise in the subject. It is proportionate to the level of your education, your work experience, your popularity and sometimes even the number of clients you are working with at the given time.
The design fee is also levied in accordance with the industry trends of the corresponding times. Charging a fee much higher than the industry trends can lead to loss of client and charging a fee much lower than the industry trends can be a monetary loss for you.
In case the client is from a different country, then the design fee could be levied in accordance to the industry trends of the client’s country, provided it is agreeable to both the parties.
Nature of Client
The project price varies depending on the nature of the client. You have the liberty to charge higher when working with a multi-national company or a more popular and established company as compared to a start-up firm or a local and relatively smaller company.
Scale of the Project
The scale and impact of the project also influences its pricing. The larger the size of the target audience, the higher the price. For example, you may charge higher when creating illustrations or motion graphics for a musician’s concert background screen in comparison to creating similar artwork for a regular school or college concert.
Geography of the Project
The geographic coverage of the project must also be considered while pricing it. The wider the geographic coverage of the project, the higher the price. For example, creating illustrations for merchandising products to be sold in a particular city may be priced lower in comparison to the same being sold nationally, internationally or digitally worldwide.
Ownership & Licensing
Ownership and licensing is an important part of pricing, when it comes to illustration projects. All work created for yourself as part of personal projects are automatically copyrighted as your own and the use of which by others could be allowed temporarily, by transfer of license for a specific time span and purpose. The permit to use the same, ends after the completion of the time span or purpose, however agreed upon. The copyright ownership could also be transferred on a permanent basis, but for a much higher price, taking into consideration the complete transfer and freedom to use the given illustration multiple times and for multiple purposes.
Cost of Revisions & Additions
A set number of revisions on the final creation may be pre-decided in the agreement, as part of the project price. If the client requests for major revisions exceeding the set pre-decided number, you can decide to levy an additional charge for these extra revisions.
As the name suggests, it is a pricing strategy based on the number of hours you take to complete working on a project. It is one of the easiest ways to calculate compensation for the work done in the initial stages of freelancing. You could choose to raise the hourly rate as you gain experience in the business, however other factors mentioned above must be considered and accounted for when pricing by the hour. It is a great way to start your freelancing business, but gradually you might want to move to other pricing strategies.
Project Based Pricing
It is a flat fee charged for the entire project. It may be calculated by simply multiplying the hourly rate with an estimated number of hours it would take to complete the project. However, this is a premium pricing strategy, since you can easily take into account all of the above mentioned factors and accordingly make a decision on the lump sum amount to be charged for the project. As you gain experience in the industry, you could gradually shift from hourly pricing to project based pricing.
Tiered pricing, also known as package pricing, is a strategy wherein, you can offer certain fixed services at fixed prices and with additional services the package prices may vary. You could begin with three simple tiers/packages of services such as elementary, intermediate and premium, with elementary offering the most basic services, intermediate with some additional services and premium offering the maximum services. This strategy of pricing can be used when you have enough experience and bandwidth to offer the additional services.
Full Commission / Royalties
To charge full commission or royalty is a decision you must make when creating artwork for a product that has recurring sales, such as illustrations for picture books, designs or lettering for merchandise and such others.
Full commission, just like project based pricing, refers to charging a lump sum amount conclusively, for creating the artwork, which may be used to sell any number of products. Royalty refers to charging a certain percentage of the sales of the product, for which the artwork is created. In the case of low or moderate sales of a product, a full commission is more beneficial and in the case of high sales of a product, charging royalty is more beneficial.
However, in case you are unable to decide how to charge, when taking on the project, you can decide to charge a certain fixed amount up to a certain number of product sales and further you can charge royalty on all units of the product sold over and above the pre-decided amount. For example, if you have to create illustrations for T-shirts and you are unsure of the quantity of its sales, you could charge a fixed amount for the first 100 T-shirts sold and a percentage of the selling price on all the T-shirts sold over and above the initial 100 sales. That way it is mutually beneficial to you and the client. Although in such cases, you would need to have access to the authentic sales figures from the client.
Terms of Payment
Terms of payment may also be pre-decided in the Agreement. You can choose to accept payment in instalments on the completion of certain milestones of the project, or you can choose to accept complete payment on the completion of the entire project.
How to Estimate the Hourly Pricing?
In order to get an estimate of your hourly pricing, you must simply add all the expenses incurred specifically for work purpose and the desired yet achievable profits per month and divide the total by the number of hours worked in a month.
I have illustrated two different scenarios below, to depict with examples, how to estimate the hourly price as freelance designers. All quantities of time and money, for calculation purpose, are assumed based on general averages, keeping India as a point of reference and Mumbai city in particular. You may calculate as applicable to you.
Students at an under-graduate or post-graduate level, in most countries worldwide are allowed to work for 20 hours. So for students, a work week is estimated of about 20 hours. So, in a month a student might work for about 80 hours. (20 hours x 4 weeks)
And, desired yet achievable profits per month for a student may be Rs. 10,000.
So, the hourly rate for a working student may be Rs. 191.75.
(Rs. 5340 + Rs. 10,000)/ 80 Hours
Therefore, on an average a student working in the field of Design may charge within a range of Rs. 175 - Rs. 225 on an hourly basis. It may gradually increase with growing clientele and experience.
For Independent Designers:
Independent freelance designers in India, on an average, may work for about 40 productive hours in a week. So, in a month the designer may work for about 120 hours.
(40 hours x 4 weeks)
And, desired yet achievable profits per month for an independent freelance designer may be Rs. 35,000.
So, the hourly rate for an independent freelance designer may be Rs. 550 (approximate).
(Rs. 33,015 + Rs. 35,000)/ 120 Hours
Therefore, on an average a freelance designer may charge within a range of Rs. 500 - Rs. 600 on an hourly basis. It may gradually increase with growing clientele and experience.
(All the text in orange must be filled by you as applicable)
(All the text in orange must be filled by you as applicable)
Frequently Asked Questions (FAQs)
Note: I have tried to answer, few Frequently Asked Questions, particularly pertaining to the legal and financial aspects of conducting a freelance Design business. The answers to some of them are subject to change based on the changing nature of the policies of the Government of India. Hence, it is strongly recommended to consult professional experts before taking significant decisions in the area of Accounting and Legal matters.
Why do I need to sign an Agreement?
For a freelancer, signing an agreement with the client is of utmost importance. This is to safeguard your own interest. Signing an Agreement ensures putting on paper, the exact framework of the project and all the terms and conditions pertaining to it. In doing so, you fix the amount of remuneration, the exact nature of deliverables, the ownership of the artwork, the number of revisions, etc. such that both the parties are bound by the contents of the Agreement and liable to fulfill the conditions it mentions.
By not having an Agreement set in place before starting work, you increase the risk of not getting your dues. To add to this, if you ever discuss anything about your project with your client either face-to-face or via phone call then do send them an email later with what was discussed and ask them to confirm the same. Documentation in writing facilitates clarity in communication and smooth workflow.
As a freelance Designer, what deductions can I avail while paying my Income Tax?
While paying Income Tax, you do not calculate taxes directly on your gross income, you deduct various expenses to arrive at the Net Taxable Income.
Net Taxable Income = Gross Income – Deductions
Income Tax Deductions are expenses directly spent to conduct the work you do professionally, during the financial year.
Below is a list of the deductions you can avail as a freelance designer:
- Rent of Studio (complete rent amount in case you work from a studio/office; in case you work from home, a certain percentage of the house rent may be considered for professional use and deducted)
- Internet connection
- Utilities (Electricity, Gas, Water)
- Telephone/Mobile Phone Expenses
- Work Supplies and Processes Expenses (Printing, Framing etc.)
- Repairs and Maintenance
- Depreciation (on tools, equipment and gadgets used for work purpose, such as laptop; tablet; camera etc. at 40% as on FY 2017-18)
- Travel expenses (depreciation on vehicle, fuel, parking, toll, other conveyance fares etc.)
- Hospitality expenses (referring to the money spent on clients with the intention of getting new business or retaining current clientele)
- Domain and Hosting expenses
- Software expenses (Adobe licenses etc.)
- User Testing Expenses (in case of websites and application designers)
- Business Subscription and Registration Fees
- Membership Fees of Professional Associations
- Registration Fees for work related Events
- Advertising and Promotional expenses
- Public Provident Fund Investments (upto Rs. 1,50,000) OR LIC Policy purchases
(upto Rs. 1,50,000)
- Medical insurance premiums for you, your spouse, children and parents (upto Rs. 25,000 and upto Rs. 30,000 for senior citizen parents)
- Banking, Accounting and Legal fees
Important:The need to keep receipts is imperative. This tip applies to any expense incurred while freelancing – from large expenses down to parking and coffee for meetings and even stationery. If you incur an expense that is directly connected to working as a freelancer, you can usually claim it – as long as it is purely for your business.
As a freelance Designer can I charge GST to my clients?
Freelance Designers are liable to pay the Goods and Services Tax (GST), which has replaced the earlier levied VAT & Service Tax.
Any individual professional in India earning more than Rs. 20,00,000 a year is required to charge 18% GST to their clients, for the services provided and it must be included in the invoice. This changes to those earning more than Rs. 10,00,000 for those residing in the states of Arunachal Pradesh, Assam, Jammu & Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand. The invoice raised must be according to the GST laws.
In order to charge GST, you will also need to obtain a GST Identification Number and return filing will become compulsory for you. A total of 37 Returns should be filed which includes 3 monthly returns and 1 annual return (those with annual sales below Rs. 1,50,00,000 can file quarterly returns and 1 annual return).
The information contained in this blog post is for general information purposes only and in no event should be considered as the expert or legal advice on the issue(s) contained herein. Please seek your own legal or other advice. While I endeavor to keep the information up to date and correct, I make no representation or warranties of any kind whatsoever, express or implied, about the completeness, accuracy, reliability, suitability or availability of the information. Please exercise discretion and judgement and/or seek professional advise while relying on this information.