Pricing for small studios

A few people have asked recently how I price work, so this is a short answer. It is also an argument against day rates, which I think most independent designers should leave behind earlier than they do.

The model: charge by the project, not by the day. The price is fixed at the start, written into the contract, and does not change unless the scope changes. If the work goes faster than expected, the studio makes a higher hourly margin. If it goes slower, that is the studio’s problem to absorb. This sounds risky. In practice it is the only model that aligns the studio’s incentives with the client’s.

Day rates do the opposite. The longer something takes, the more the studio earns. Clients know this. They become wary. They start scrutinising the time, second-guessing the design choices, asking why one approach is being explored instead of another. The trust never quite settles.

Three things make project pricing work without the studio losing money.

A small piece of paid discovery before the main contract. Two to four days, paid up front, with a written brief and a fixed-price quote at the end. This is the work that turns a fuzzy enquiry into a scoped project. Most studios do this for free as part of “the proposal”, which is a mistake.

A clear list of what the project does and does not include. Specifically: the number of design rounds, the number of pages or templates, the level of polish on supporting pieces, and what happens if the client wants something added. This last bit is the one that catches studios out. The contract should name a price for the most common types of additional request before they happen, not after.

A separate, smaller engagement model for ongoing work after launch. Either a small monthly retainer for tweaks and additions, or a “studio day” rate where the client buys a day at a time, on demand, with no monthly commitment. Most clients pick the second.

For pricing levels: the gap between what a small studio thinks it is worth and what clients actually expect to pay is, in my experience, almost always a gap on the studio’s side. The studios that consistently undercharge are the ones who are afraid to lose a project they have not won yet. Lose a few. Charge more for the next. The work gets better, the clients get better, the income goes up.

Useful reading on the same topic, from people I trust on the commercial side. Jonathan Stark’s Hourly Billing Is Nuts is short and free. Blair Enns at Win Without Pitching is sharper than most studios are ready for, but worth the discomfort. Brennan Dunn’s Double Your Freelancing covers the same ground for solo practitioners, with more practical scaffolding.

The companion pieces on the small print of small studios and invoicing earlier cover the contract and cashflow sides of the same conversation.