Consultant work, in any field, can pose a big challenge when first deciding how to charge your clients. For someone in the creative world, it seems like an impossible task to align the compensation, to the value your work brings to the client. Traditional fee structures, such as time and materials (deliverables), encourages "ethical conflicts of interest," noted by Alan Weiss in his book, "Value-Based Fees." He talks about when a consultant is being paid for time spent on a project–meaning making money when physically present, or able to demonstrate that time is being expended somehow, and somewhere for the client–then the following conflicts occur:
- Maximize, not minimize, the number of physical activities (focus groups, interviews, observations, meetings, and so on)
- Accept peripheral assignments that may not be integral–or even important–to the actual project
- Encourage and not discourage scope creep, since there is no penalty for blurring the project boundaries
- Recommend nonessential tasks that dont contribute to results but do contribute to billable hours"
I am guilty of having fallen into a similar pattern in some of my previous freelance work, and as I look ahead to my professional life after graduate school, I can see how switching to a value-based fee structure will be crucial to my work.
In the design field I am studying currently, and hope to work in, the research and synthesis stages of the process are the most important to the project; however, these are the most unquantifiable and unpredictable–in terms of time and deliverables. This typically results in undercharging or worse–not charging for these phases at all.
Design Intelligence comments how a time and materials structure can affect a firm:
"They also reinforce client perceptions that engineering, architecture, and design services are simply commodities to be purchased on the basis of lowest cost. The insufficient returns generated by these pricing methods starve firms of the resources they need to grow and foster a survival mentality in which many professionals are unwilling or unable to apply their unique expertise, dedication, and vision to the complex challenges that confront clients, communities, and society."
and how the value-based pricing strategy benefits both the consultant and client side:
"[...]lump-sum compensation rests squarely on a determination of the value or benefit that a firm will produce for the client. It also looks beyond the specific project objectives to a consideration of the wider benefits that may accrue to the client and other stakeholders as a result of the achievement of those objectives."
My hope is that as design's value becomes increasingly exposed, and designers take more responsibility in fighting for their right to be paid fairly, that the traditional mis-alignment of compensation will become better balanced.