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Guest csven

Realistic Hourly Rates

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Guest csven

Excerpts from an interesting LinkedIn Question regarding hourly rates (primarily engineering but ID is listed as well):

 

"My pricing would range from approximately $100 - $150 per hour for mechanical design & structural analysis & thermal analysis. Conceptual & industrial design prices may be in the same range as above." (U.S.-based)

 

"Our company provides similar services from India and charges would be between $20 - $30 depending on size of the project."

 

"Most of the CAD outsourcing companies in India would cater your requirement. The prevailing rates are as follows :- for initial conceptual design, industrial design, mechanical design, documentation range 12 - 15 USD."

 

"In the United States most connsultants need to charge $50 to $80 as a minimum base rate if..."

 

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For recent graduates who expect to charge $100/hr right out of school, you might want to keep tabs on that discussion.

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You pay for what you get. At the same time I think any fresh out of school grads would be so hungry for work that the thought of even asking $100 an hour would seem like a bad idea to them.

 

Either way, the correct rate for any project is $1 less then what your client is willing to pay.

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Guest csven
You pay for what you get.

Sometimes you pay too much for what you get; and other times you might get a bargain.

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Guest Buff

I research what other businesses charge and pitch my "as advertised rate" somewhere in the mid range of simmillarly equiped/experianced businesses.

 

If im in face to face negotiations on price with a prospect, i ask, "what is your budget" and "what is the scope of your project. from that I can work out what hourly rate Im being offered

 

if im bidding on a project and a little unsure about the pricing, i go high and work down with some negotiating tactics, like, "I want £12,000, but if it takes less time, i'll refund £2,000" other times ive tendered "if you bring repeat buiness, ill give you 12% off the next project"

 

Often I can get a project to run longer than just some CAD work by offering project management right through prototyping to mass production

 

I never turn a job away, unless I think i'm not going to get allong with the client, in which case I recomend someone else i think they could work with

 

If im too busy, i find a freelance to do the job who will work for one third less, if im not busy, then i will work at almost any rate to keep the cashflow healty

hy

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$100 hr?!?!

 

I am in the south, and my skills are, eh, averageish, and I'm probably not cocky/pushy/confident enough, but it's like pulling teeth to get $10hr around here. I'd pull one of my own teeth out for $100hr. Sheesh!

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Guest csven

Rule of thumb for independent designers: if you want to earn $10/hr, charge $40-50/hr.

 

By the time you factor in self-employment tax, health insurance, unbillable hours, regular business costs (e.g. computer software, hardware, maintenance fees, aso), and all the rest, in order to make the equivalent of an employee salary you need to multiply by 4 or 5.

 

When freelance designers undercharge for their services they not only screw themselves, they bring down the entire fee structure. Same is arguably true for those designers who have regular jobs but pull in freelance gigs to earn extra cash, charging really low rates because stuff like health care is covered.

 

Notice two things in the quotes I culled: 1) the $50 - 80 comment, 2) many Indians live on $1-2/day and per capita income is somewhere around $1000/yr, so $12 - 30/hr (offered by the agency; not the hourly salary being earned) is probably about the equivalent of a Western freelance IDer charging $50 - 80/hr, all things considered.

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Guest Buff

csven, I'm curious about the possible differential between US based IDers and UK based.

 

$80 USD would be equivalent to around £60 GBP.

 

Of course some 6 months ago yhat would have been more like £40 GBP

 

I'm not sure, but I think $80 may go a little further in the US than £60 does in the UK

 

Cars, houses, clothing, food etc are all cheaper pro-rata

 

Over here, good freelance IDers on contract are getting somewhere between £30 - £50/ph.

 

ID studios, with rents, taxes, insurance, software, hardware etc to pay for are closer to £90-£100/ph

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Guest csven
csven, I'm curious about the possible differential between US based IDers and UK based.

 

$80 USD would be equivalent to around £60 GBP.

 

Of course some 6 months ago yhat would have been more like £40 GBP

 

I'm not sure, but I think $80 may go a little further in the US than £60 does in the UK

 

Cars, houses, clothing, food etc are all cheaper pro-rata

 

Over here, good freelance IDers on contract are getting somewhere between £30 - £50/ph.

 

ID studios, with rents, taxes, insurance, software, hardware etc to pay for are closer to £90-£100/ph

It might go further, but I suspect the disconnect is in the definition of freelancers. My own fees range from $35/hr to $120/hr depending on activity. Basic CAD work is billed on the low end; industrial design concept work for projects in which I have experience, utilize my engineering expertise and which I can do more quickly (so less billable time) is charged on the high end ... although a client only sees my fees per project phase and not hourly.

 

Most people consider me a "freelancer" (your £30 - £50/ph) even though I'm legally a sole proprietor/self-employed individual. I still pay taxes, insurance, and pay for my own software and hardware even if I'm on "contract" (because I still work out of my own home office; a physically separate room by law). I still incur the basic costs of a studio (your £90-£100/ph); purchase markers, paper, templates, furniture, aso.

 

-

 

For U.S.-based designers reading who might be interested, here are some other things to consider:

 

- freelance designers are required to file self-employment taxes (Schedule C) which effectively amounts to paying your own Social Security Tax (iirc, employers pay a portion of an employee's Social Security Tax; a nice little fringe benefit of which most are unaware).

 

- health insurance is a huge issue in the U.S. and phenomenally expensive (even for someone like me, in excellent health, non-smoker, no family history of diseases, etc etc). If you're lucky, you're covered by your spouse's company plan. If you're not, be prepared to pay out the nose for insurance or pray you don't get sick.

 

- accountants, lawyers, and other professional service fees can impact an individual's bottom line. It adds up.

 

- when regular employees head to their employer's office and turn down their home utilities to save money while they're out, I obviously don't, so my bills during the middle of Summer and Winter go up substantially as a result. These are the little things that also add up. Free coffee/sugar/creamer at the office? You'll buy your own if you're on your own.

 

There are plenty of costs involved of which most inexperienced designers in the U.S. are unaware. And while, yes, business costs are tax-deductible, that doesn't mean you get all that money back. First off, it reduces liquidity. Second, realistically, you'll probably only get a small percentage back. Thus, purchasing a plane ticket to meet a new client can be a nasty, non-reimbursable expense which an independent designer will have to recover. Same goes with spending two or three days working on a tough proposal and then having the company decide not to move forward. That's unbillable time which also has to be recovered. The obvious way to do that is by raising the hourly rate.

 

So for all the designers who think going solo is easy, think again. It's much, much easier to work for someone else.

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Same is arguably true for those designers who have regular jobs but pull in freelance gigs to earn extra cash, charging really low rates because stuff like health care is covered.

 

Maybe you could check out the thread I started in this section on this topic, I'd like to have a bit of insight there as well if you don't mind.

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Guest Buff

LOL, I know what you mean csven about the overheads that some folk overlook. i'ts for sure why many start-ups fail.

 

I've had many debates with "staff" when I've worked on contract jobs. They think because your rate is twice what they get, that some how your better off than them. But they dont spend £10k a year in expenses, they get paid when sick and for holidays, plus the added security of not being able to be fired on the spot when theres a downturn in work.

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Guest ciao_alexisb

Hello everybody,

 

Any idea about rates in continental Europe?

 

Thanks a lot for the previous messages, they were very helpful!

 

Alex

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Guest Grant Howarth

I'd quite happily work for free just to get a start in this industry. Given the current job market, even that is asking too much even after graduating top of your class and being shortlisted for 2 well respected design competitions!!! haha.

 

*laughs, but secretly cries self to sleep*

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Guest Buff
I'd quite happily work for free just to get a start in this industry. Given the current job market, even that is asking too much even after graduating top of your class and being shortlisted for 2 well respected design competitions!!! haha.

 

*laughs, but secretly cries self to sleep*

 

Can you make it down to Cornwall? :-D

 

Seriously though, I'd be very interested tp read csven's opinion on that statement, re: de-valuing the profession. He does make some very valid points, even if I don't entierly agree with them entierly (well not yet anyway, I'm always open to debate and re evaluating my views)

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Guest Grant Howarth

Yea, I've read his comments and he does make some very good points. I studied product design with a strong emphasis on research, engineering, materials, manufacturing (yes! actually having a clue about manufacturing), business, marketing, yet, its very hard to make engineering drawings look sexy on a folio! I'm actually considering going back to uni and doing a masters just to beef up my folio with conceptual stuff..... whereas they're a lot of folk who have a massive folio full to the brim of unmanufacturable, ultra-niche/borderline unmarketable products....

 

When an employer takes on one of these people and realises beyond the pretty veneer there is no design, it makes it even harder for other graduates to get a job.

 

meh!

 

At the moment i would be mroe than willing to take on a part time job just so i could work for free for someone, but that limits me to a small financially viable commute or otherwise living in my car haha!

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