The Price We Pay

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In other cities that have it all figured out, the really good creative people consistently make the really okay people look bad because their work is so much better. But there’s a funny thing going on here in Denver. The tables are turned.

The really okay people in this town are making the really good people look like the dumb ones. And here’s why. The rates the half-baked shops and individuals are charging are so low that it makes the first rate people seem crazy for asking clients to pay what they truly deserve. And the whole thing is making us all look dumber in the end (and equating to all of us making less cake).

We’re not just pulling this point-of-view out of thin air. Did you know the best freelance copywriter in Denver only charges $100 an hour? If that doesn’t have you throwing up on your keyboard, consider that one of the best freelance writers in Portland pulls down $850 an hour. Granted, he works with Sandstrom, Nike and W+K, but we’d argue our guy is landing the same number of awards and helping shops land an equal number of new accounts here. The issue is the same for designers, art directors, programmers, illustrators, photographers, production companies, actors, the list goes on…

As part of the research for this piece, we had an in-depth discussion with the people at Creative Manager – an online system used to track time much like Clients and Profits. Know what they told us? The average hourly rate across the country is $275 an hour. Creative Manager has a lot of agency accounts in every type of market in the nation, from small to Saatchi & Saatchi. If the average is $275, that means the green account people are about $125 and the heavy-hitter CD is somewhere around $425. Certainly, that should put you, as an individual or as an agency in this city, somewhere in the middle.

The problem with getting there is twofold. The bottom feeders consistently undercut the good people and unsophisticated clients often choose cost over quality. Secondly, even when clients are trained to look for quality, the bottom feeder pricing gives them leverage to push back on the upper tier’s pricing and whittle it down to a place where everyone is disgruntled going into a new project or new account. That’s not how good work gets created. We’re making our clients a mint and they’re paying us with change from their car ashtrays.

Enough of the problem. Here’s our recommended solution. We’ve heard the argument for charging for “the value” of work, but we believe the vast majority of the city still thinks of client fees on an hourly basis. On January 1st, 2008, everyone in the creative industry in Denver should abide by the following tiered pricing hike structure for any new client they acquire. That goes for every freelancer all the way up to the biggest agency in town. It’s the only way we can begin to get the respect we deserve. Don’t think about it. We’ve done the thinking for you. This has gone on for far too long. Here’s how it works:

Current rate $25: 120% fee increase = $55
Current rate $50: 50% fee increase = $75
Current rate $75: 40% fee increase = $105
Current rate $100: 30% fee increase = $130
Current rate $125: 25% fee increase = $156.25
Current rate $150: 20% fee increase = $180
Current rate $175: 15% fee increase = $201.25
Current rate $200+: Stay where you’re at, let’s see how this goes

It’s time we decide what the market will bear. But it only works if we all embrace it.

Comments

I’ll just give a good old “fuck yeah”.

Hear hear. (and a “hooray” for great ideas but wishful thinking)

Sure. We’ll do it. Count us in. Sounds fair.

While we bill hourly for a lot of things, I feel hourly rates sometimes hurt experienced pros. We come-up with solutions quicker, hence, get paid less. I much prefer an assignment fee that’s loosly based on an estimated hourly rates.. give or take. ok, give.. but regular hourly rates are certainly good for certain projects or clients.

I was once told a million years ago in a marketing class… “the three biggest words in advertising are IT ALL DEPENDS”. And a lot of that depends on what the market will handle.. what clients you have.. etc. But setting the bar low only will lead to lower expectations. We’ll never be able to get all those guys out there charging $300 for a logo to go away. But, perhaps, there’s a reason they’re only charging that? The cream rises to the top.. and do you really want to work with people only willing to pay peanuts? So many avenues have opened-up for clients to find resources for less capital investment. So it’s up to all of us to educate our clients to the value of what they’re paying for.

I recently had a client ask why they should pay $XXK for a service when they could go down the street and buy it for less or allocate their resource on any number of different things.. The answer is simple. Proven results. Market and channel expertise. And not just a bunch of hunches and educated guesses.. although, a lot of what we do is just that. The key is the calculated thought.

I’m all for raising rates. Let the games begin.

Any way to make this more of a campaign than a post? If we can get enough people on board, we can collectively raise the bar.

It is a lot harder to educate clients than it is to convince people to charge more.

Do the design/ad orgs here focus any energy or resources on that?

it seems to me, at least so far, in my short stint into the world of being a freelancer that in being one you must have two rates. the rate you would charge a client to do a project and the rate you would charge a design firm / ad agency to work for them on their projects.

when it’s your client you are the be all end all it provides the justification for a premium rate. however when your working on site for a studio / agency you are working for their clients with their team and therefore you can not charge the same rate as if it was your own client. so my studio / agency rate is significantly lower than my client rate.

does this seem accurate? or am i getting rolled and am in turn one of the masses collectively lowering the bar?

Next on CNN, the entire Denver advertising market gets busted for price fixing.

Just kidding. Another good editorial, Egotist.

Recently i took a position at a “Cut-rate” agency which was definitely part of the problem. I was tasked with helping them raise the level of their work and ultimately be able to raise their level of billings.
What I found was not a case of needing to educate clients, it was needing to educate the agency’s owner. She didn’t know how to sell the value of her own services. As a result, she was completely unrealistic in what she billed the clients, ended up discounting everything, and as a result, was (and still is) severely underpaying her staff.

Maybe this is more the root of the problem?

AND WHAT ABOUT “PLACEMENT AGENCIES” (AQUENT FOR ONE) WHO DEVALUE OUR SKILLS EVEN MORE BY TAKING 30-40% OFF THE TOP MAKING IT IMPOSSIBLE FOR AGENCIES & COMPANIES TO PAY US AN EQUITABLE RATE.

I WOULD LOVE TO SEE AGENCIES TELL THESE PEOPLE TO TAKE A HIKE.

Hey Hack Boy. Part of what we’re trying to do with this piece is educate the agency owners who are oftentimes as much to blame as the green creatives coming out of school for the miserable rates in Colorado.

The roots of this problem are deep because individuals and agency owners alike spend so little time researching to figure out what they should be charging.

Plus, there are very few who fight tooth and nail with a logical line of reasoning as to why they won’t back down on their rates. If everyone did this, we’d be a much stronger community for it. But because so many are in the habit of caving and allowing the client to get their way and, in turn, grab all the power, we’re all suffering for it. It’s like a flushing toilet sucking us downward.

Additionally, if we can continue to make this site the best resource for talent in Colorado, we’ll be overjoyed that shops can work around the placement agencies by finding talent here for free. That way, no one is compromised on their pricing when they’re hired.

I am in agreement.

A great, single resource is an important piece in raising the way the Denver market is viewed.

There isn’t a quick fix to this problem, but your turning the harsh light of reality upon the problem is a great place to start. Thank you.

Wow. This is by far the most important, well written and valid post on this site in the past 2 months. I am encouraged that an entity like the Egotist has this issue on its radar and is done talking about and ready to take action. We devalue ourselves and our profession every time we accept a bullshit fee for solid work. No more.

“She didn’t know how to sell the value of her own services.”

In the UK they have this org called the Design Council. It’s all about helping creatives sell the value of design.
http://www.designcouncil.org.uk/

As much as I’d like to have a nonprofit like that in the U.S., one thing is clear: the people who make it in this biz right now are the ones with the balls, bravado and sales skills to ask for big checks.

Ian

It doesnt make sense why you would charge an agency less. you should always. always charge your rate… Your not worth any less if your freelancing at a studio are you? And chances are the studios have big clients w huge budgets. And your direct clients prob dont have network budgets. My suggestion is to travel and gain experience, then you will know where u stand on a national level… not only skill set but value as well.

huh.

i was afraid that might be the answer… basically, what i’ve been getting as a daily/weekly rate is comparable, if not a little better than what my salary was before i started this whole freelance thing. but it is nowhere near the $240 national average quoted in the main article. not by a long shot.

but that is what i have been offered when working onsite at an several different agencies.

i don’t think my services are any less valuable, but i am also a part of the team that the agency is billing out at their rate and i don’t see them paying me a large percentage of the billable rate for a project when i’m not the only one working on it. I think it would be different if i was providing an estimate to complete a specific project rather that being on site working on what needs to be worked on.

why am i arguing myself out of money? i’m curious what other peoples take on this is.

Andy—

That is a fantastic site.

Thank you for passing it along.

What do you do when the creatives themselves fight against us getting what we’re worth? I wont mention any names but I work at a shop downtown and while I like the people I’m working with, they are all total wage slaves. They actually give people shit if they ask for a reasonable fee. They label designers and programmers as greedy and unrealistic if they charge more than bargain basement rates. I’ve heard the Creative Director himself slam people for asking market price for a job and then haggle them into ridiculously low hourly rates – and they take it because they need the work.

If the people running the studios don’t even respect the talent, what then? Refuse the work? Only work with shops that pay what a job is worth? I’m not sure everyone can afford to do that out here on these dusty plains.

Really? The average hourly rate for creative/design/ad/programming is $275/Hr in the US? Holy shit! That means we should be making half a million dollars per year if we choose to work a mere 40 weeks per year full time. The other 12 weeks of course are there to enjoy our bounty. Wow, life must be cake for those of us “average” creatives…

Get real. We are not saving lives, we are not risking our lives. we are working on a professional level doing what we love to do. To suggest that we should be raking in hundreds of thousands of dollars per year as a freelancer for understanding and implementing persuasive writing/art/programming is absolutey asinine (not to mention greedy, uninformed, and unaware.)

if you’re really interested in finding out what your “hourly rate” should be try this: http://freelanceswitch.com/rates/

But also realize that agencies with which you might subcontract will require fixed bids for work rendered, and if you are not that great at estimating effort, hourly rate is out the window…

Even if that number of $275 per hour is misleading and seems way off, the original point is well taken. And, the pervasive attitude of “we’re just a bunch of folks doing what we like to do. We dont deserve a lot of money” shows through in the response from ‘Reality Check’.

Let’s talk about who deserves what.

So, the Salesman, the guy that talks clients into signing on the dotted line – many times with bullshit promises that keep creatives and engineers working nights and weekends – deserves 20% of all money charged to an account? If so, what do the people doing the actual work and building the reputation that probably got the business in the first place, deserve? Let’s say, a big job, 500k for a new corporate sight and email campaign for XYZ fastfood… The salesman get’s $100,000. Yes, a hundred grand. That’s the way it works. Salesman that work on straight commission get 20% of every cent that comes in the door. So, Reality Check thinks that it’s “asinine, uninformed and greedy” for those of us that “understand and implement persuasive writing/art/programming” to expect to get paid and paid well. While the salesman that simply knows how to talk the talk pulls down crazy loot and a company car. I call bullshit. Plain and simple. And just because this is how it’s always been, doesn’t mean this is how it should be. We need to start spreading the wealth in this game. Decentralize. And in a town like Denver, with a culture of treating creatives like dirt – dime a dozen, replaceable, worthless – even more so.

look at where the figure of $275 is coming from. creative manager, a lot of agency accounts. this isn’t what freelancers are making it’s what agencies and studios are charging. it’s the agency rate. and none of those agencies are paying their freelancer $275 for those same projects

It is no longer okay to excuse this problem by saying “we have fun doing what we love to do so it’s alright that we don’t make much money.” You don’t think doctors and lawyers have fun doing what they like to do? And they get compensated for their real value.

If you’re playing this game right, and by that we mean taking a relatively reasonable marketing budget and turning it into a lot of money for the clients or the agencies you work for, that’s meaningful. And you should be properly rewarded for it. Stop thinking with a pea brain Denver mentality and open your minds to the bigger picture perspective we’re offering you.

Even the bad ass people in this market are so uncertain and lack the confidence in their skill to demand a respectable rate. Give yourselves more credit and step up to the next rung on the ladder.

So does anyone think $64K a year for a straight-up graphic design position is reasonable? I ask because I was just offered that in DC, but I’m moving back to Colorado next week and that seemed fairly unattainable when I was living in CO.

Also, not sure where to post this, but what does everyone think is the best group (AIGA, ADC, etc) in town is. OR, what are the pros and cons of each one?

Thanks.

YES! YES YES YES YES YES! God damn I love the Denver Egotist. On this topic, you are right on point. I hope people finally get this concept into their thick skulls and shed these juvenile attitudes. The pay scale in this town sucks because we allow it to suck. Dead simple. If you are sick of spending your nights and weekends in your studio for a salary that would make a receptionist cringe, it’s up to you to fix that. If you REALLY dont care, that’s on you. And that’s cool.

But if you believe that there are far too many people getting rich as a result of your hard work, then do something about it. Demand better pay or move on. If the price of talent goes up, the cut for the others just has to come down. The execs, owners and salesman who currently capture a disproportionate amount of the fee-booty, do so because we allow it. Demand better pay in Denver! Act like an adult and shed this bullshit mentality that you dont derve to get yours when it’s your ideas concepts and designs that make the money. Just grow up.

Hey J Dizzle. We just got our hands on a juicy piece we’re going to scan and post from The Creative Group outlining appropriate salaries per position.

You should multiply the following numbers by 1.025 (2.5% higher) for Denver to know what you should be making.

Graphic Designer (1-3 years): $35,750-46,750
Graphic Designer (3+ years): $44,750-61,000
Sr. Graphic Designer (5+ years): $57,000-74,750

As for your question about the clubs, we feel none of them are really worth the annual fee. Each time a speaker comes, you can pay a little more to see them speak. Otherwise, the additional benefits don’t seem to be worth the cash. Just our opinion of them today. Could change tomorrow.

Can i just add… when you calculate what a freelancer makes you’re not just multiplying the hourly rate by 2000 hours a year. $50/hr means your making $100k a year? Ya, no. 1st of all, keeping busy enough where I’m actually able to bill 40 hrs a weeks is pretty damn hard. And on top of that, as an independent contractor I have to pay for all my own expenses. Write offable? Yes, but it comes pretty damn close to breaking even after giving the gov’t a 1/3 of what I make. You may not realize it, but when a company hires you and pays you a salary, there’s also a large invisible overhead for each employee, they’re not just giving you every penny they make off you. Anyway, my point is, being a freelancer and essentially running your own business is expensive, and not easy.

That said, I am absolutely on board to upping our rates. I will admit though, I’m slightly scared that I’ll be one of the few who actually goes through with it. Especially with people like “reality check” around who are willing to price themselves down to $100/logo because they equate their services to that of a dog-shit-picker-upper. Is there some way we can make this goal a reality? How about a website where you sorta sign your pledge. I wonder how big that list would be?

I wholeheartedly agree that rates need to be raised across the board. However, we need to think about why clients are willing to go somewhere else to pay less for poor design. I think that reason is education. Many businesses don’t look at design as an important part of the equation. Think of how many times it’s felt like you’re trying to convince someone that design is important rather than just pitching your ideas.

There are a few routes you can go. You can turn down work from people who don’t get it. Which means they’ll just go somewhere else. Or you can try to educate people, which can take up a lot of time that you probably won’t get paid for. What are our other options?

Also, in reference to the website where you can sign a pledge…one of the reasons I was asking about the different design groups in the area is because I think it’s important to have a community that actively engages with itself, in person. All these blogs and articles and news are great, but think of how much could get done if we were actually meeting and hammering out ideas in real time rather than on a website.

AIGA published an annual survey of design salaries (in partnership with Aquent, so maybe take with a grain of salt, although any AIGA member is invited to take the survey each year….). Looking at last year’s survey for the “mountain Region” (denver-specific salaries didn’t have enough respondents to make it statistically reliable for a result) put the owner/principal of a smallish design studio with local clients making a median income of $70K, with total cash compensation of $85K. A whopping $42.50 per hour, folks. Wee hee!

Of course, that’s (as mentioned above) assuming you actually bill 40 hours per week for 50 weeks a year. And if you are (like me) pushing your own product, doing initial consultations with prospects, getting your own coffee, &c., you ain’t billing 40 hours per.

I also (as others mention above) prefer to bill on value, but pragmatically speaking, we all look to an “hourly rate” as a measure of money-making, and some clients insist on a time & materials package. So talking an hourly rate makes sense, even if you charge for value.

All that said, woo hoo! Who doesn’t like to hear they are worth more than they thought? I plan on calling up my clients after the holidays and tell them that they can have my services for a mere one mill- I mean, one billion dollars an hour!

You thought you were worth less than $42.50? I’m confused.

The people I know in other markets who are making $1200 a day freelance would make around $250k as a staff creative (Group Head). Is there anyone in Denver pulling down $250k on staff? Just curious.

The freelance rates are low because the staff salaries are low. The staff salaries are low because there’s no TV. This has always been the case here. Good creatives have always left this market in search or more TV and better money—and rarely do they ever return. This is what has stopped Denver from becoming a larger ad market. Until this cycle stops, the Denver ad market will never grow.

Actually, Mr. U, the “wee hee!” was a bit o sarcasm. i.e. um, I think I’m worth a bit more than that.

If one of the best freelance writers in Portland is pulling down $850 an hour then he’s probably one of the best paid freelancers in the U.S., not just Portland. A really good creative in Minneapolis (with, say, recent Cannes Lion wins, One Show pencils and a great pedigree) would make about 2000-2500k a day. I would imagine the individual you’re talking about has to be a nationally known ECD level creative to pull in that kind of cash—someone who has most likely won the Cannes Grand Prix several times.

If you want the rates of a major market, you may have to work in that market. Not move there, work there. A book travels quite nicely by PDF these days. (I’m guessing this isn’t absolutely aligned with the mission of this site, because it could result in out-migration, but what the hey.)

A few things to remember are: 1. Big budgets can absorb high rates; a small budget is a small budget anywhere. So you had better focus on the big shops. The ones with the big budgets—and lots of freelance choices, which brings me to my next point. 2. You had better be able to back up your bravado. If you’re a hack, you’re worthless anywhere. 3. “Potential” doesn’t count much in Freelanceworld. Big work already done for big clients does. 4. Higher rates put you into the mix with more talented competition. But I may be repeating myself.

All I really know is that in a free (unfixed) market, prices find their own level. If you think you deserve more, ask for it. You may get it, if your buyer agrees. But then you’d better deliver. Or you may never get it again. Just know where you fit.

Another random thought. If you are so underpaid, yet proven, what kind of guarantee do you offer your prospective employer? Will you rebate your fees for an unsuccessful pitch? Or just blame it on the agency as you head to the ATM? The door swings both ways you know.

Shit. Sorry about the double posting. ( I thought I was fixing a typo.) One more short one and I’ll shut up.

Universal price fixing/raising is not the answer. Determining your competitive market position is. Decide what you’re worth. Learn what the market will bear. Price yourself somewhere in between.

Do you want to work a lot for less? Or work less for all you’re worth? It’s a trade off, yes, but that’s the lancer life. BTW, that $100/hour “highest paid writer in the market” is not an idiot. I know him. He figured it out long ago.

This is really on target. Back in the telecom boom of 1998-2001 here along the Front Range, you couldn’t throw a pencil without hitting a techie somewhere. Now it’s creatives at ad agencies — tons of them, everywhere. If the Denver market isn’t yet saturated, it has to be soon. There’s only so much real talent to go around.

Back then, the techies garnered top salaries, bonuses and perks — even the mediocre ones. And I’m not talking about foosball tables and Guitar Hero. The fallout came later, but they were well compensated nonetheless. In comparison, local ad agencies all say they’re seeking top skills but they offer insulting salaries, at least as far as I can tell for web development.

The Denver market is definitely devalued. At some point they’ll learn that the kinds of skills they want aren’t particularly abundant, they aren’t transferable to just anyone, and that real skills demand real compensation. Hopefully that will come with a market shift – a combination of consolidation among agencies and competition from other kinds of entities (niche development shops).

As for the cut-rate competition, there’s a point of no return when people charge so low that they have to turn out deliverables at an unrealistic pace to pay the bills. Quality suffers, or there just isn’t enough time or business to make ends meet. They learn this sooner or later and either up their rates or close up shop.

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