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I know that if I worked based solely upon the formula of (overhead x time) + %profit = cost my clients would be thrilled by my low rates. Even if that profit% were something like 200%, 300%, 400%. However, I would still be broke and barely earning minimum wage (my overhead is low).

I see value-based pricing as really the only viable pricing model, primarily because there's little or no "cost of goods" to consider.

This is the basis for value-based pricing (1). I price based on the client's percieved value of a project, how enthusiastic I am to work on the project, and current market trends. Not any direct math formula.

• If I feel it'll be worthwhile to work with the client, and the client seems easy to deal with, and I want to work on the project I'll price lower.. in the $100-$150 range (remember anything above $20 is profit).

• If I think the client will be difficult or more demanding I'll price higher.. $200-$250 range.

• If I don't really want the work or don't really want to ever work with the client, I'll price very high.. $400-$500 range. Problem here is some clients will pay this, meaning you may have to work on something you'd rather not. However, the profit factor is much, much greater.

• If I'm adamant about not working with someone I merely refuse the work.

• One also needs to figure the number to clients they may need. When starting out, you may need to find more clients quicker. So pricing lower will garner more clients. Not necessarily good clients all the time, but more clients. Pricing higher will tend to weed out much of the "just want it done cheap" clients and garner more stable, repeat, clients.

I am horrible at tracking ideation time. Just horrible at it. Why? Because often ideation isn't a faucet that can be turned on and off. We all know that there are times where you can struggle to come up with the simplest solution. While other times you get an epiphany while doing something completely unrelated to work such as grocery shopping. Tracking when you got that spark of inspiration and then how long it takes to think through the idea is a difficult thing. At least for me.

With this, the longer it takes me for ideation, the smaller my profit margin. I put myself in a position where I am the one penalized if I struggle with ideation. The client never pays more because I can't find a solution fast enough. And I don't have to track how long it takes me for ideation with any real accuracy. The onus is on me where ideation is concerned in order to retain my profit margin. For me, this helps to drive motivation. Sitting and staring at a blank screen or piece of paper while trying to force an idea is often less fruitful for me than doing other things and merely thinking of the project in the process.

So, ultimately I price based on value-based pricing (1). I price according to the percieved value a project has for a client, how enthusiastic I am to work on the project, and current relative market trends. Not any direct math formula.

• If I feel it'll be worthwhile to work with the client, and the client seems easy to deal with, and I want to work on the project I'll price lower.. in the $100-$150 range (remember anything above my $20 in overhead is profit).

• If I think the client will be difficult or more demanding I'll price higher.. $200-$250 range.

• If I don't really want the work or don't really want to ever work with the client, I'll price very high.. $400-$500 range. Problem here is some clients will pay this, meaning you may have to work on something you'd rather not. However, the profit factor is much, much greater.

• If I'm adamant about not working with someone I merely refuse the work.

• One also needs to figure the number to clients they may need. When starting out, you may need to find more clients quicker. So pricing lower will garner more clients. Not necessarily good clients all the time, but more clients. Pricing higher will tend to weed out much of the "just want it done cheap" clients and garner more stable, repeat, clients.

In many instances I find this base hourly rate woefully low. Randomly, let say it amounts to $20 - my overhead is very low and my base hourly rate is only $10/hr. I know on many crowdsourcing sites, fliers are going for $35-$50. Now, am I going to charge the client $20 for a flier promoting an event? $35? $50?
Heck no!

So, I'm doing just as much work for half the price merely because I'm better at my job. I want pay raises as I get better, not pay cuts.

It's not a simple thing to increase hourly rates by 50% in 6 months for a repeat client. But with value-based pricing I can easily charge the same amount for the same project even though it now only takes me half the time, and merely profit more and more as I gain proficiency.

  So, in 6 months I would have increased my profits by 50%, rather than cutting them. If I charged the same amount, $80, for both fliers, I would have profited $20 from the first, and $40 from the second. And clients are happy there's been no price increase.

I literally look at a project's scope, estimate how long it's going to take me in my head, multiply that by my base hourly rate - this gives me my absolutely minimum fee without any profit. After that.. I honestly pull a number out of my hat which is above my base fee, as high as I think the client will pay, and reasonably within the market for similar projects. I'm not always correct in estimating how high a client will go... but I have plenty of room for negotiations should they be necessary.

In many instances I find this base hourly rate woefully low. Randomly, let say my estimated overhead for this flier production amounts to $20 - overhead is very low and the base hourly rate is only $10/hr. I know on many crowdsourcing sites, similar flier projects are going for $35-$50. Now, am I going to charge the client $20 for a flier promoting an event? $35? $50?
Heck no!

So, I'm doing just as much work for half the price merely because I'm better at my job.
I want pay raises as I get better, not pay cuts.

It's not a simple thing to increase hourly rates by 50% in 6 months for a repeat client. But with value-based pricing I can easily charge the same amount for the same project even though it now only takes me half the time, and merely profit more and more as I gain proficiency. So, in 6 months I would have increased my profits by 50%, rather than cutting them. 

If I charged the same amount, $100, for both fliers, I would have profited $40 from the first, and $60 from the second. Rewarding me for being more proficient. And clients remain happy because there's been no price increase.

_{(Above is merely an example. I would hope everyone is profiting more than a paltry $5-$10/hr for their work.)}

That all being posted, I do have some standard go-to pricing as a start. For example...

• a one-sheet design for print starts at $xxx
• a single responsive web page/email design starts at $xxx
• a 24-page booklet design starts at $xxx
• a postcard design starts at $xxx
• etc.

These are merely what I see as "minimums" and are used as qualifying figures for clients --- i.e. when asked, I'll tell clients "Postcard design starts at $xxx and then prices can go up depending upon demands." This allows the client to judge pricing and helps me to avoid the "what's your per hour rate" question. And all the minimums are well above any overhead with allotment for some additional ideation time.

When I price I look at a project's scope, estimate how long it's going to take me, multiply that time by my base hourly rate - this gives me my absolutely minimum fee without any profit. After that... I honestly pull a number out of my hat which is above my base fee, reasonably within the market for similar projects, and what I feel is appropriate for the client to pay. I'm not always correct in estimating how much a client will pay... but I have plenty of room for negotiations should they be necessary.