Lesson 7: Pricing

What You’ll Learn: One of the hardest things to do in a creative field is to price your creativity to be competitive and support the lifestyle you’re trying to achieve. In this lesson, we’ll explore different pricing strategies that will allow you to make bank without getting taken to the bank.

Pricing (continued)

A Final Word

Getting paid what you are worth is the goal, but it’s only part of the measure of success. You can count all the potential projects coming in, but at the end of the day, it’s the money in the bank that matters.

Some clients out there won’t be good at paying you. Some may go months before they pay you, even though you have Net 30 clearly on your invoices. Others will dodge calls or blame it on someone in accounting. Still others won’t pay you at all because they are still thinking of you as a creative and not as a business.

Sadly, adding Net 30 to your invoices and adding a late payment penalty on it isn’t going to get you your money any more quickly. No one really pays attention to these terms when an account is small or doesn’t affect a client’s supply chain. In other words, if a restaurant needs to pay you or the guy who delivers the chicken for dinner tonight, he’s going to pay the chicken guy.

So how do you create leverage?

This largely depends on the creative business you’re in. A good rule of thumb, especially for any larger project, is to ask for 50% upfront as a deposit and 50% upon delivery. Film production folks know this well. They will ask for these terms and won’t hand over the final film assets until you hand them over that last 50%.

On project sites like Upwork.com, you can do a project using escrow. The client puts the entire project fee into the site’s escrow system before the project starts, and you can draw out the money according to the agreed-upon payment plateaus. For instance, you may ask for 30% upfront, 30% halfway through and the final 40% upon delivery. As long as the work is completed satisfactorily, the funds are released to you. The client would have to prove that the project didn’t meet their needs to have any clawback.

The deposit and final split works well for many different creative pursuits. If you’re performing at a festival, you can ask for these terms to ensure that you get paid at least something for your performance. Fifty percent upfront is better than nothing in the end. Ideally, the deposit covers most of your hard costs, and the final payment becomes mostly profit.

How you eventually handle this sticky issue is up to you. It’s hard to be the heavy and the service provider. If you want to be taken seriously, you need to address the terms before the project goes, put it into writing and if things go south in the end, you need to turn collections over to someone that can strike a deal or get you restitution. Before you do, ask if the cost to do this is worth it. An extended period of litigation or negotiation can quickly wipe out any gains you might realize if you were successful in your case. Sometimes it’s best to recognize that the money was used to teach you a harsh lesson.