How much should you charge? – More.

When i was just starting out, i always strived to be booked, so that i would always be working. I remember I was doing this real shitty job. It was stressful and uncreative, it was a lot of cleaning up of scene files and watching renders. Would not call it rewarding, something very corporate. And I could only get $300/day out of them at that point. and then 3 days into the job, i got a call from another studio who had an awesome project Lindt, it involved animating chocolate rabbits and a whimsical world around them and they really wanted me to work with them. They actually volunteered the rate of $600/day to me, and then when I said that I already had a commitment to an existing project they actually offered me $800/day. At that point I realized it is important to keep your schedule free for the projects you actually want to come along. And to do that, i needed to raise my rates.

I’ve been wanting to write about this for a while. There are lots of ways to figure out how much to charge, but most of the time the answer is: “you should be charging more”.

(quick disclaimer: these rates are US based, the rest of the world will have much lower rates, but the concept still applies)

Let’s say you are in a position where you are on the verge of burnout because you have been working so much, your clients are riding you, you don’t have time for your friends and family and personal projects are a distant dream. The only way this happens is if you are not charging enough money for your services.

Let’s say you charge $500/day and you are always booked. If you are not turning down any projects then you are probably charging the optimal amount to be always booked( that is a problem in itself, will cover it further down). Now there is a high likelihood that you have clients that are willing to pay you more, you just don’t know about it, because you gave them your rate and they agreed. If you raise your rate to let’s say $600/day let’s assume for a moment that because of this, you are only booked for 4 out of every 5 days. BUT you only make $100 less a week. ( 5×500=$2500, 4×600=$2400). Which means you have a whole day to spend with family, hiking, learning, working on personal projects etc.

BUT in reality you don’t know how much your workload will change. You might raise it by $50 and now you are only booked for 1 day a week. OR you might raise it to $1000/day and STILL be booked all week. And there is only one way to find this stuff out. It is to try it. You only learn by doing. In my example above, where you get one less day a week, might not sound like a lot. BUT over the course of a year that would be 52 days. That’s nearly 2 months off. And you only lose $5200, could you spend 2 months learning new skills? To offset that loss? But more importantly, you don’t know what your price could actually be. If you raise it $1,000 and are still booked 3 out 5 days, you are making more, and you have 40% of the year to spend on stuff where you are your own boss, you pick the projects, you spend time with family etc. And there is no way to know what you can charge until you try. And the thing is you have to keep trying, because the environment will consistently change around you. Your competition will change, demand for the type of work you do will change, your skills will change.

Minimizing risk

Obviously there is a lot of risk involved in doing this, and as humans we don’t like risk, we rather stick with a sure thing in most cases rather than take a chance. So here are some ways to approach this slightly more delicately than just rolling out new rates.

1. Ask your existing clients how they would feel about and increase in rates. You’d be surprised often they will flat out tell you: “about time”. Pick the ones you are on good terms with. here though you introduce the risk, that they simply might not want to raise your rates. Especially if they are small shops. I would recommend, start with situations where you are working with producers who aren’t using their own money, since they might be more likely, to tell you “yeah, actually other freelancers we are working with charge way more”
2. Raise rates for new clients. This is the easiest way. To make it even more effective. Give raised rates on projects that you aren’t very keen on doing.
3. Start charging project rates. Instead of just working per hour, figure out how to package your service as a product. You can still charge extra hourly for revisions etc. But your core offering will be a flat rate.

Don’t try to be 100% booked

The world of computer graphics is moving at colossal speeds. There are new plugins and software packages and updates every day. Some of them have ground breaking impacts on the work we do. They flat out make many jobs redundant. Octane render and mixamo jump to mind first. The ability to do super faster renders with GPU renderers and using mixamo to quickly do rough rigs of characters and populate your scenes with the mocap animation provided is revolutionary. If you don’t know how to use either of these technologies you will work MUCH slower than your competition. The list of useful software is long. Xparticles, various auto retopo tools, and don’t even get me started on the potential of Machine learning for generating ideas and versioning. Substance painter and designer have also been revolutionary in texture workflow, saving many many hours of work.

The reason i go over these things is because, if you are 100% booked you don’t have time to learn all this new software, and the longer you put off learning new stuff, the more you will fall behind.

Furthermore, sometimes when we are always booked we end up doing jobs that aren’t really the direction we want to move our careers in. And while initially might not seem like such a big deal, right now we live in a time, where its never been easier to find someone who loves what they do and hire them. This means that no matter what you do, especially in the creative fields you will be competing with people who LOVE what they do, and they will do it better, faster and cheaper then you. So with every passing day it is becoming more and more essential to do what you love, otherwise people who Love what you are doing will take your job away from you.

 

Should I charge more for Net45 Net60?

Especially in the States many companies will pay your invoice Net30, which means 30 days after you send an invoice, some studios have net45, net60 terms in their contracts. These are important thing to find out during the negotiating period. Should you charge higher rates to clients who take longer to pay?

There are so many variables here. It’s like any business, it depends on how hard it is for them to replace you. Also consider that if net 45 – net 60 is a problem for you that you perhaps should reconsider how you manage your finances. As a freelancer, you should try really hard to get your savings up to at least 6 months of living expenses. That way net 30, net 60, doesn’t matter to you that much. just add it to your calendar to remember to chase it up. It’s very dangerous to run a business pay check to pay check. 

A good way to look at it is that basically until you have 6 months of expenses, you have to pretend that you are effectively in debt/broke, and your main priority is to pay back the debt. Which means eating vegetables and noodles, not buying anything that you don’t absolutely need.

Because if you have 6 months of expenses, Then you have leverage to negotiate terms, because you have the freedom to turn down a job, since you know you have 6 months to find a new one. If you are running out of money while negotiating, then they have all the power, and you are more likely to agree to any terms they dictate. So having the savings both makes you not care about net60, and also gives you the power to negotiate them down to something you like.

When establishing your rate, include the calculation that you might be waiting for 30-60 days for this payment. 

 

What is the Minimum I should charge?

Double what a McDonald’s employee makes in your place of residence 🙂 That’s the easiest way I can think of calculating it. 

Plan of action: 

1. Charge double a McDonald’s employee
2. Keep making stuff and upskilling yourself until you can fill your schedule at that rate.
3. start increasing your rates until you don’t have enough clients
4. again start upskilling yourself until you are filling up your schedule

And keep building your savings! It’ll make every other step that much easier. 

 

The rest of the world

I wrote this article from the perspective and experience of someone in a western country in a central city. These rates may seem high to you, but with rent and insurance prices of the cities in which they were charged they are not that high ( Sydney, New York, LA )

What you charge is completely up to you. If you live in an Eastern European country, and you make $2,000/month you will probably have a much better life than someone who makes $400/day in Sydney.

But something to encourage you. On this planet there are people who can pay up to $1000/day to graphics professionals, so if you are charging $100/day or $50 a day, it is going to be much easier for you to quadruple your day rate, than it is for someone who earns $600/day. Since there are simply very very few studio’s who would agree to $2400/day, but there are plenty who would agree to $400.

The main point of this article is to encourage people everywhere to charge more, and not be afraid to try. Because this way the free market will function better in delivering good to everyone. A company/studio or any employer, in general tries to pay the least and get the most. In the same way when you buy computer hardware, shoes or look for plane tickets. So it’s your job to constantly increase the amount you charge, so that you are not competing with the new entrants to the market.

I hope this article helps you figure out how much to charge and how to start increasing your rates, so you can have a better life.