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Costing Principles and Budgets in Graphic Design

written by: Haley Montgomery•edited by: Michele McDonough•updated: 3/2/2010

Knowing how costing is done in graphic design can be a huge asset for maintaining a successful graphic design business. This article offers suggestions for determining effective graphic design budgets based on design time, contracted service fees and project administration costs.

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    Graphic Design Budgets

    One of the most difficult aspects of conducting a graphic design business is determining accurate costs or budgets for potential projects. Clients regularly need cost estimates for projects before they can commit to move forward. Since it is a good business practice to stick to an estimate once it is given to a customer, the ability to accurately estimate the costs involved in a project is very important to the success of your graphic design business. This article offers a glimpse of how costing is done in graphic design. Read on for an overview of how to evaluate and assign costs to design time, contracted services and project administration.

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    Design Time

    The primary consideration when determining graphic design budgets is the estimation of design time. Most working graphic designers and desktop publishing professionals establish a consistent fee per hour that can be translated into cost estimates for specific projects. When determining this rate per hour, graphic designers should consider the local design market and what design peers are charging. A rate that is set too high will likely eliminate your services from being competitive, while a fee that is too low will tend to diminish the value of your design skills in the marketplace. Also, consider your overhead costs when determining an hourly rate. The on-going costs of utilities, materials and equipment should be factored in to your chosen hourly fee in the graphic design business.

    After determining an hourly rate, the next consideration regarding design time is to correctly estimate the time required to produce a specific project. One way for designers to make the estimating process more accurate is to keep a thorough record of time spent on every project – even projects done for self-promotion. This record can help you determine the average amount of time spent on various types of projects. These averages will provide the necessary information required to offer clients a realistic estimate of fees for upcoming projects.

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    Contracted Services

    Another aspect of graphic design services that needs to be addressed when determining cost estimates for a project is contracted services. Many desktop publishing projects include outside contracted services not provided by the designer. Such services might include stock photography, offset printing, binding, lamination, direct-mailing services or advertising space costs. Because these are costs that should rightly be passed on to the customer, they must be included in an accurate project estimate.

    A standard practice in the use of contracted services is to "mark up" the service slightly when invoicing a client. By adding a small percentage to the service costs, you can be sure any administrative leg-work required in securing the services is covered in your billing. For example, marking up the costs of contracted printing service can cover the costs of communicating with the printer on project specifications and reviewing proofs. By taking on the task of contracting these services directly rather than relying on the customer, a graphic design professional can have the tools necessary to make sure the project is completed to the standard expected by the client.

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    Project Administration

    One of the hidden costs involved in graphic design or desktop publishing projects is the time required for project administration. Aside from strict design time, hours can be spent in administrative tasks like client meetings, client correspondence, research of necessary services, etc. Because these actions require time, it is important to include them in the graphic design budget. One way to do this is to estimate a specific number of client meetings for each project and include that hourly rate in the estimate. It can also be beneficial to tack on an "administrative" flat fee to every project estimate so that the unpredicted time for correspondence and leg-work is covered.

    By taking into account the design time required for a project, the contracted services involved and the project administration needed to complete the project effectively, a desktop publishing professional can determine an accurate graphic design budget for each project. Always be sure to communicate your cost estimates accurately to your graphic design client, and keep him abreast of any changes to the projected estimate early in the project. This approach will ensure that you can keep your graphic design client coming back for additional projects.