Pricing Projects
Overview
You will probably work between 1,800 and 2,200 hours in an average work year... only 1,000 of those may be billable in your first year. By your 3rd year that should be around 1,500. To make $40,000 in 1,000 billable hours your average rate must be $40/hour.
Establishing Project Pricing
How big is your client?
Large corporations will pay up to three times as much as a small company for the same media.
Ask the Client What Their Budget Is
Assure them that you can give them something of value for that price. Do research to find out what a potential client is willing to pay. Do this by developing a network of professional friends that you can share this kind of information with.
Hourly Rate Usually Doesn't Apply
Many projects have a "market value". That is simply the amount that, say an industry trade journal, will pay for an illustration. Wired magazine, a different market, will pay a lot more than a trade journal. AAA game companies pay more than indy game companies. Look in the Graphic Artists guide to Pricing to find these market values. It's also available in the Kendall Library.
There can be a wide range of price recommendations. You may see something like $2,000 - $4,000 for a single type of project. $2,000 would be for a small company with a small distribution. $4,000 would be for a large company with massive distribution. Likewise, rates in small cities are less than rates in mid-sized cities which are less than large cities.
Estimate Your Hours, Then Multiply Times 1.25
That will cover most client revisions without having to nickel and dime them every time they change their mind. Big changes that cause you to go over budget have to be quoted and approved prior to execution! In Grand Rapids, free-lance hourly rates for projects you can get can range from $30 - $90 (depending on the size of the client).
Getting Paid the the Hour Is Awesome
Make sure your client agrees with that rate before you do the work. Figure that you are going to only pocket about half after taxes, insurance and expenses. You may be able to contract by the hour, but the client will probably ask you for an estimate of how many hours you think it will take to complete the project.
In GR hourly rates for contract projects where you supply your own equipment and work from your studio can range from $30 - $70 (depending on the size of the client).
In GR hourly rates for contracting in-house with the client supplying the equipment is $20 - $50. If you are working thru a contract agency this will be $15 - $40 but they will provide some benefits like health insurance and vacation.
Don't Expect to Make a High Rate Out of the Gate
You're not that fast at doing this work yet. That comes with practice.
You probably don't have rich clients yet. That comes with up-selling your portfolio of commercial work (once you have one) to a richer market. Keep in mind, that you get referred in the market that you work in. It's easy to get stuck there. Eventually you will want to over-design some over your client projects so you have some more substantial things to show larger clients and improve your market position.
Contests
Watch out for Freelance sties that are running contests. They drive the prices down which hurts the entire industry.
There are many other ways that companies can be devious and this Webinar by Stephen Silver covers many of them: