Hello, hope you’re doing well! Last time we talked about promoting yourself and generating traffic and leads. In today’s lesson we’re going to talk about converting all that into sales!
Lesson 4: Making Money
How do you make your money? Is it primarily from checks that come in from clients requesting you to do custom work? How satisfied are you with this process? It could probably be better right?
We’re going to help you make more money. Just follow these key points. If you have the Business Plan Workbook, go to the money section and use that to strategize and take action.
Addition by subtraction
There have been times when we realized everyone in the company was working on a self-initiated project, blog post, marketing idea, side project, website update, etc. This was great until we realized that nobody was working on anything that was generating money!
We didn’t want to stop entirely, but we did have to kill a few projects and ideas and focus on paying work. Look around your company to see how much time you and your team spend on non-paying work. It’s crazy how much time we spend checking email, organizing tasks and projects, promoting ourselves, networking, and socializing online.
We like to ask our production staff to be logging at least 4 billable hours a day. Don’t be afraid to put some projects on hold so you can focus on money generating work.
Pricing tips
Most designers undercharge for their work. It’s true they could be earning more. How do you know how much to charge? Well there are a few ways.
The first is hourly pricing – which you might already be doing. You figure out an hourly rate by knowing your break even point and going up from there (like say 30%).
Another way is flat fee pricing. Think of it like a menu at a restaurant. You treat your services more like products and clients know what they’re getting right up front. But the problems arise when what they want doesn’t exactly fit into one of your projects.
The third method is called value pricing. Depending on the client’s needs, you can figure out what they really value and offer a solution and price it at what they are willing to pay for it, regardless of how much time it actually takes you to produce it. Say they value a new website that converts visitors better at $10,000 – but you have developed a solution that allows your team to build one in under 30 hours. If you were charging by the hour, you are leaving a lot of money on the table!
Be flexible with your rates
When was the last time you raised your rates? Try it on your next project and see if you get a backlash. If you’re slammed with work, you’re probably not charging enough. If you’re slow, maybe you’re charging too much.
We have formalized a procedure called the Responsive Pricing System that allows us to be flexible with our prices. When we’re slow, we discount our rates to bring in new work. And when we’re busy, we raise our rates. It’s a little more detailed than that, but that’s the gist.
Generate some passive income
I can’t stress this enough. Find a side project that helps promote your services but also generates a passive income for you. Lots of designers sell merch like t-shirts and posters, but that’s a physical product that has a steep overhead and not a huge profit margin. It’s not very passive.
I’m talking about selling digital products. Find solutions for your customers that they can buy right off your site that give them what they need at a lower price point. Not every one of your customers is going to be able to drop a few thousand dollars in hiring you for custom work. But maybe they would pay $50 for brand refresh kit that they can implement themselves and move them closer to where they want to be. Who knows, they might end up hiring you in the future!
If you need some ideas, we wrote an article called 7 side income strategies for designers.
More advice is out there
That’s all for this week. If you’re looking for more advice on increasing revenue, we’ve got a 10 minute video on pricing and billing and a How to Make More Money bonus PDF in our Drawn to Business Plus Package. Download all that for no extra charge, dear subscribers!
If you have any specific questions about what we’ve covered so far, just ask.
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