Project Estimating and Setting Your Design Fees

The difference between a good estimate and a bad estimate, is the difference between profit and loss.
• The better you understand the project, the better you will estimate the costs.
• NOTE: always build in a certain amount of safety or “padding”

The Basics for Calculating
A. Project Phases-> Tasks x Time + “padding” = Duration
B. Time-> Personnel x Billable Rate(s)= Creative Cost
C. Materials + Services including markups= Production Cost

Project Phases

Although project phases tend to be relatively standardized, the tasks required to complete each phase and the time allotment for each task will be more or less project dependent.
An important part of successful estimating is knowing approximately how long it will take to do each task and the ability to add on just enough time for hitches and breakdowns in the process.

Part I: Pre-Produciton
• initial creative briefings
• competitive research
• concept development
Part II: Design Development
• refinement to concepts based on client input
• application of concept to other components
• tweaking and re-visits up to client approval
Part III: Production of Finished Art
Part IV: Printing / Fabrication of Project

Personnel Factor

Once you have outlined all of the phase or elements of the project and their production requirements, attach to each step the different personnel, their hourly rates, and how long it will take them to complete the task.
• different staff / staff levels = different rates
• different staff / individuals = different time allotments

staff categories / levels
using levels vs. individual staff will help to avoid revealing salary information to anyone within the organization, as well as to your clients
• principals
• senior designers
• junior designers
• production personnel
• administrative

The “Padding” Factor / Contingencies

After adding up the personnel hours/ days; making sure to account for time to prepare for presentations, allowances for client approval processes, delivery requirements, creative direction responsibilities and direct expenses multiply by 15% for contingencies.
• For well defined or “standardized” projects this figure can be lower.
• For vaguely defined or “new” projects this figure should be a little higher.

Out of Pocket Expenses

These are made up of both reimbursable and non-reimbursable costs within a project. The degree to which these may be marked up or reimbursed is a matter of negotiation between the designer or firm and the client.
Generally the following are included in this category:
• illustration
• photography
• copywriting
• prototyping
• outputting
• delivery services
• models and props

Changes and Additions

Changes and additions to projects should be considered separated in project agreements.
The following should be addressed, or included within the project agreement AND discussed with the client prior to starting the project:
• where the project boundaries lie
• what the plan or standard protocol is for making change(s)
(rates, change orders, time allowances, etc)

Negotiating

The cycle of a project is a process that graphic designers will repeat hundreds of times in the life of their careers. The beginning of a project can be marked by the negotiation of terms with the potential client.
Remember that Graphic artists have little professional prupose without a buyer or user of their services. Therefore the client / artist relationship is one of the most important professional relationships a graphic artist can have.

Evaluating the Terms of an Offer

Being able to analyze and evaluate the terms of an offer, understanding the scope of work and the terms of a contractual agreement is crucial.
• avoid the winner-take-all attitude
• be able to articulate your needs in a straight forward manner
• be frank
• be prepared to address budgets
• know the value of the project or relationship
• don’t be afraid to ask questions or raise objections
• be objective

Prepare to Negotiate

Asking the Right Questions
• get the information you need
• prepare an agenda or check list to fill out during the process
• job description / due dates / fees / expenses / ...
Determine Your Own Needs
• know your highest expectations for the job
• set your bottom line
• itemize the things you must have (reasonable deadlines…)
Determine Your Client’s Needs
• most client’s needs extend well beyond the visual solution
Research Your Client

Dealing with Common Tactics

Tactics are used in every negotiation, and it’s important to understand them and not take them personally.
Limited Authority
Tactic: client’s negotiator claims not to have final say
Solution: establish a partnership with this negotiator or kinship
Phony Legitimacy
Tactic: negotiator stats that offer is “standard contract” and cannot be changed
Solution: remember that contracts are working documents and don’t be afraid to strike through unfavorable terms
Emotions
Tactic: anger, threats, laughter, insults
Solution: listen closely for the point of the message and separate it from the style of delivery
NEVER Escalate and emotional situation

Phone Negotiations

Telephone negotiations have both advantages and disadvantages. If you are faced with the circumstance of negotiation of a project over the phone the following rules of “do’s” and “don’ts” will be helpful:
• Do use a simple agenda or checklist
• Do consider preparing scripts to deal with difficult situations
• Do take notes
• Don’t continue the call if the discussion gets difficult
• Don’t feel obligated to accept the offer in the same call
• Do take time to review your notes and consider the project before accepting

On-Site Negotiations

Regardless of whether or not the meeting will take place on “your own turf” , it is important to create an environment that is comfortable and relaxed.
• Always arrive on time
• Be well rested
• Plan and rehearse your presentation
• Refrain from small talk
• Take note or be aware of physical clues
• Listen, and show you are listening.

Deal with Money Last

Although it may have surfaced earlier on in the discussion or even prior to any negotiation meeting, it is best to leave this for last.
It is important to focus on the specific terms of the project first, because they are the very premise for the “bottom line”. Negotiating about money before reaching agreement on such essential items could prove to be a big mistake.
Terms of the project include factors like:
• project description
• degree of difficulty
• usage and re-production rights
• deadlines
• expenses
Things to remember
• Don’t feel obligated to respond right away
• Don’t feel obligated to respond in an absolute way
• Do realize it’s ok to counter offer
• Do be careful of “the ball park estimate”
• Do find out who your competition is

Reading Assignment (RECAP)

• TEXT: GAG Handbook for Pricing and Ethical Guidelines; chapter 5; pgs 78-90

Reading Assignment (PREP)

• TEXT: GAG Handbook for Pricing and Ethical Guidelines; chapter 13; pgs 238-246
• TEXT: AIGA Professional Practices in Graphic Design; chapter 4; pgs 29-50
• TEXT: AIGA Professional Practices in Graphic Design; chapter 5; pgs 51-58