Standard small agency billing rate
Out of context: Reply #8
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- Amicus0
Been thinking about this a lot lately.
some thoughts....
I'm against the idea of billing by hours model full stop. Sometimes everything runs smooth as silk and you are done in a quarter of the estimated and time, and other times it takes 4 times as long.
It really doesn't matter.
What really does matter is the value your work is bringing to the company. If you build them the next facebook or google in 1000 hours is that work really worth 1000 x $x?
I'd say – not necessarily.
If your work brings the customers and the profits jump hugely then so does the value of what you have done.
An example – you rebrand a $Billion company that has broken even the last 3 years, and it makes a $500 million profit the year after the relaunch. Is that worth $200,000 due to Hours x $XXX or is that worth $5,000,000 (or more!) ?
Obviously this model isn't without it's flaws – what if it takes 3 years for a profit to show up. What %age is due to the rebrand etc. etc.
The Teehan & Lax Tiered Value-Based Model only goes part way to what I'm proposing which is to actually partner a company and take a share in any increased profits. I'm looking working this way with a couple of my clients, but it's tricky and needs the involvement of lawyers and accountants.
Clients Pros – The upside for the client is they have lower costs now and there designer/developer has more incentive to provide quality.
Clients Cons – potentially much larger bill in the long run (offset by larger profits)
Designer Pros – potentially much larger returns. Potential for a longer term passive income from past work. More buy-in from the real decision makers. Potential to leverage brand ideas in a more concrete way throughout an organisation than just marketing materials.
Designer Cons – lower initial payments only cover costs. risk that work won't pay off and no profit is made at all.
If you've heard of firms doing this I'd love to hear some information.