Costing/Pricing for Design
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- MSTRPLN
Are there any resources online to learn more about the costing and pricing aspects for the advertising/design industry?I'm familiar with the GAG handbook and what I would normally charge for design work on a freelance basis, but I'd like to learn more about how much advertising campaigns cost and what determines this.
Like project managers and account execs. at my day job are well versed in this, i'm sure it comes with experience, but to find out "yeah we can't do much with this banner project because we only have $20K to work with", I'd like to figure out how this costing is determined.
Any resources out there?
- Pupsipu0
costing, that sounds weird. Is that UK English?
- boobs0
In the advertising world, traditionally, the agency made it's money on the "agency discount." This was the 15% discount media outlets, like TV stations and magazines, would give on advertising rates. So, for instance, if you made ads for a client who bought $100,000 worth of space in a magazine, you would get that for $85,000. Out of this you would pay all the production costs of making the ad, and any left over would be profit.
So, when you see the term "billings" for an agency, if they are billing $100 million per year, they are running a business that is netting about $15 million per year.
This traditional model has undergone a lot of change in recent years, but it's the basic deal that the business is founded on.
- in 2004 I worked for firms with this model... afterwards not so muchvaxorcist
- d_rek0
Mark everything up 500%.
- vaxorcist0
what kind of client? What kind of overhead do you have?
Three are "overhead calculators" onlineThere are 2 other pricing models:
1. Cost-Plus.. i.e. our overhead is X, so we charge X + Y per hour after we estimate hours and add a fudge factor or client randomness factor2. Value-Minus: i.e. we have a hunch client has a maximum of X amount of money based on guesses and research, so we'll price out job almost at X....
- popovich0
boobs, you are describing a mediabuying agency scheme, the 15% discount, I mean.
or is it an industry standard -- "add 15% and off you go"?
- boobs0
Well, these days there are separate media buying firms, so many, many agencies are billing on an "a la carte" basis--charging the client item by item for each thing done. So many ad agencies are operating more like traditional design shops these days.
Really, if you want more detail, you should probably start looking at ad industry publications.
- Shaney0
if you are using a media buying company in the UK at least (and it's your client/design) you need a kickback % from them out of their discount. They don't like it, won't tell you about it but will cough up. Or you go elsewhere. Whatever you are told this is how they will work.