What's in a Price?
In the cinematic masterpiece Trading Places, Randolph and Mortimer Duke lose their shirts because they believed the price of frozen concentrated orange juice would skyrocket due to an unusually harsh winter. If you're like us, this plot point only made a modicum of sense, and is not nearly as memorable as Jamie Lee Curtis requesting help with her rucksack. (Or Dan Aykroyd dressed as Santa Claus stuffing a ham down his pants.)
Point is, pricing is complicated and it hinges on countless variables, including abundance of material, fabrication time and resources, shipping, final markup, taxes, et cetera. At least with grocery items, there is a fair amount of price stability. The cost of a bag of Doritos at one grocery store, for example, is likely the same as a grocery store a few miles away. If frozen concentrated OJ is astronomically expensive because of a harsh winter, you're not going to be able to find better prices the next town over.
With professional services, pricing can be all over the place and hard to interpret. How do you know you're not being taken for a ride?
We here at Poolhouse Creative consider the following three factors into all of our pricing:
- Time and effort on the job.
Obviously , if you're hiring someone to provide a service for you, that person has to spend some time and use his/her skills to produce the desired result. What's less obvious is that much more time goes into a job than mere work on the finished product. There's time spent doing research and putting together a proposal; time spent setting new clients up in our bookkeeping system and preparing service agreements and statements of work; time setting up schedules and communicating via email, phone, or in person; time revising the work; time preparing and delivering the finished job; and then time preparing and sending an invoice.
That's a lot of time. Before we even get hired for a job we have spent a few hours on researching and writing a proposal as well as back-end administrative tasks.
A final time consideration: we don't just have to charge for our time, but we have to charge to keep ourselves on schedule and available to our current clients. If we have to turn down jobs so that we can keep our current clients satisfied, then we also have to factor in what it costs to keep ourselves doing good and timely work.
2. Cost of doing business.
Nothing comes free these days. We're able to keep our overhead low by being small and thrifty. We still have to keep an office roof over our heads, the lights on in that office, and beer in our mini fridge.
We also need computers that don't take 15 minutes to open the incredibly large files we are working in. We have to pay to keep this website active, to print our business cards, to run any ads we may place for our services. Finally, we have to pay for the software we use to keep our ship sailing smoothly: bookkeeping, project organization, Adobe Creative programs...you get the idea. It stacks up pretty quickly. To say nothing of insurance premiums we pay to make sure we can recoup anything lost in an office fire, or to be protected against any kind of litigation.
Bottom line: it costs money to make money. Which brings us to:
3. A girl's gotta eat.
We are a for-profit enterprise, and we operate with the ultimate goal of making a buck. We aren't trying to lease Bentleys; we'd just like to send our smartest kid to state school for at least two years. The others can scrape together volleyball scholarships.
So there you have it. When seeking bids, you can often be faced with the too low/too high conundrum. You don't want to be overcharged for what you're getting, but if the price is too low, you aren't sure you'll be getting quality work or effective communication. We try to value our work and keep a roof over our heads, without a 50% markup.
You should always feel comfortable asking questions about pricing, whether you're working with us or any other creative firm. For more information on us and what we do, get on the horn!