Articles

By Neil Tortorella
Reference URL: http://www.creativelatitude.com

 Coming up with a fee for a logo can be an exercise in anxiety for new designers and seasoned pros, as well. How much should I charge? What if I charge too little and the company takes off with stellar success? Am I cutting my own throat? Oh geez, I’m competing against four other designers. Is my estimate too high? Too low? Where the heck did I put the antacid? We’ve all been there. Many of us have even taken up residence.

Logos and identity programs - especially for startups - are tough because of all the unknowns. Will the mark I create end up being plastered all over the planet in a few years? Here’s an email I received recently from a UK design student. What follows is my answer to her query.

“I am sort of confused on how to deal with a future client of mine. I am a graphic design major and am trying to get into the field so that I can get some experience before I graduate next year.

I just happened to tell one of my coworkers that I am trying to get started doing some freelance work. He told me his mom needed a logo for her up and coming fragrance business. I have never done a paying job before for my designs, but I feel that I have to get started sometime, and know how the business works.

He asked me how much I would charge to design the mark. From the top of my head I said that it depended on what she wants and a few other things. I hate to estimate too high and lose the project to someone else. But then again, I would hate to charge too little and then have her expect me to do other work in that same price range.

But since this is my first job, should I do it for free?

But what if the business does really well and I get no credit for my contribution?

I also read a lot that contracts and percentage deposits are very important and typical, but I don’t know what should be included in a contract, or the percentage I should ask for before starting work.

I would very much appreciate if you would share the procedures to go through, to make this job run smoothly.”

First off, you shouldn’t do it for free. Even though you’re still a student, you’re work is worth something and the logo will become a valuable branding asset to your client. How valuable depends on how successful her company becomes.

That said, the “something” becomes a bit tricky. I’ve been at this for over 30 years and I still need to consider price vs. competition vs. client budgets vs. valuation and a myriad of other factors. Working out a fee for a logo can be more art than science.

The ideal thing is to turn the tables and ask the client what budget range is comfortable for them. It’s the smartest path and most clients understand this. They set a cap they’re happy with that won’t break the bank. You know where you stand and how much time you can put into the design.

If they’re coy about sharing their budget, you might want to think twice about taking on the project. The designer/client relationship requires trust. We don’t deal in commodity items or hard goods. So, saying things like, “logos for 100 bucks” don’t really make sense. Each client is different. Each project is different. In my experience, the clients that choose to be clandestine are the toughest and usually problematic.

I often liken graphic design to building a house. You can build a huge thing or a wee little cottage. It all depends on how much you’ve got to spend. I explain to my clients that I can design and design and design, spending loads of hours in research and tweaking this, trying that. When I’ve got a budget range, I know the limitations.

Next, you’ll want to insure that you at least cover your time and expenses. If you haven’t done so already, take a peek at my article, “How Do You Rate?” You can find it here.

The three factors in figuring a logo project are:

1. Cover your time
2. Cover your costs
3. Cover the valuation factor

Let’s say you’ve got a small client with a budget of $1000 US and your rate is $50/hr. You know you’ve got 20 hours to tinker. Or do you? Well, you’ve got to buy, let’s say, a reference book of logo designs from the 1920s because something Deco might be just perfect - 20 bucks. You need to shell out some dough for presentation boards for show and tell - 15 clams. Your inkjet printer stinks, so you need high-quality printouts from the local copy shop for the preliminaries and final comps - another 15 smackers (you’ve got a coupon!). Your project related expenses come to a whopping $50. That drops your tinker time down to 19 hours ($950). Not a big change, but you’ve insured your expenses are covered. You don’t want to become a bank for your client and whittle away at your slice of the pie.

I find “backout” budgeting works well at this point. You’ve got 19 hours to play with, after expenses. So, you start with the end of the project and work backwards.

You figure final production’s going to take you about 5 hours to create various file formats, printouts, draft the logo standards and stuff. 14 hours left. Ut oh! We’re starting to sweat.

You’ll need time to painstakingly craft the selected logo design, tweak it, adjust colors, test it across a range of sizes for readability, tweak it some more, mount it to board for presentation, etc. Estimated time? Let’s say 6 hours.

So, now you’ve got 8 hours left. Can you do it? Well, it’s going to be tight. Figure in a couple of hours of meeting time and you’re down to 6 hours for research AND preliminary design. That’s probably not enough time to do a bang up job, so something has to give and we haven’t even talked about legal stuff like trademark searches. Can you cut your design options and present less? Forget buying the book and do less printouts to save a few shekels? Prepare fewer final file formats and forget the logo standards (not a good idea)? Do less research? The thing is to reduce expenses and services, not your rate.

Beyond this is the valuation factor. Logos are business assets that build equity over time. For a small mom & pop shop, that serves a local market, that value probably isn’t going to be as much as the future value of a logo for a startup company with a great product, solid business plan, investment capital coming out their corporate ears and potential customers chomping at the bit.

The valuation factor is your compensation for that future value. Coming up with a number can be a bit of design clairvoyance, but typically it depends on where you see the logo’s use and value down the road and how much you think that’s worth. It also can become a negotiating tool.

Okay, that was all just the prep work to answer your question. Whew! I’m tired now! The reason I chose a $1000 budget and a $50 hourly rate (aside from dividing nicely) was to show that a grand for a logo - even for a small operation - isn’t all that much. We ran out of time and money pretty quick and didn’t even get to that valuation factor. So what should you charge?

You’re still a student, so your rate isn’t going to be as high as somebody with Methuselah’s years of experience. Run the numbers shown in my “How do you rate” article. Odds are, you’ll come out at something like $25 - $35/hour based on an entry level target salary and minimal overhead. From there, figure the amount of time you think you’ll need to complete the project if you can’t get a budget figure from the client. Add 20% to your estimated time. Everything takes longer than you think - especially when you’re just starting out. Figure in your project costs. Consider the future value and - Voila!

Piece of cake, right? Don’t forget to bring a pillow or two with you to your client meeting. They help when the client falls over backwards. Seriously, a logo fee for a small to medium sized company can easily range from $2000 - $10,000 US. The Graphic Artists Guild’s Handbook of Pricing and Ethical Guidelines (10th ed.) estimates a logo fee range of $5,000 - $12,000 for companies with revenues under $1 million.

Consider this. In 1971, Oregon University student, Carolyn Davidson, designed the now famous Nike logo - a stylized wing, a.k.a. “the swoosh.” Her fee? $35. We’ve all heard that little horror story of underestimating. The point here is we don’t know what the future holds. It’s important to see our work as the creation of a huge business asset for our clients. It is, quite literally, their face before the public. In the case of Nike, a simple symbol, a great tagline, along with some select endorsements from various athletic superstars, resulted in a stellar brand. “Just do it!” became not just a tagline, but the battle cry of a generation. What’s that worth?

It’s important to note, because we don’t hear it often, that in 1983 Ms. Davidson received a gold and diamond “swoosh” ring in recognition of her design. Oh, and she also received a nifty, suitable for framing certificate … and an undisclosed amount of Nike stock. You might not be so lucky.

Time and money are big considerations in the field of logo design. There must be enough time to do the research and explore the design options. There must be a large enough budget to fund that time investment and provide compensation for the true value of the finished mark. Renowned designer, Primo Angeli, once said, “… time and money. Without them, design is mere decoration. Neither good design nor fine art.” Words to live by.