Hot to estimate & price creativity?

Howdy! 👋 You're at the 3rd in our series of posts about pricing software development services. We give you market data, underline common industry problems, share some good practices and help you sell more. Today's issue is all about making the intangible - tangible.

Coding a specific feature can usually be estimated to a degree. If your company has implemented Agile practices, most likely your developers can get together and produce a pretty reliable estimate of how much billable time the project will take. Things are way worse for one-stop-shops, agencies and when UI are involved, though.

Ideas are not predictable

If you were ever involved in inventing a project's name or logo you already know: good ideas are never scheduled. You cannot guarantee that a brilliant visual identity will suddenly appear out of nowhere, and it's also hard to judge how much time is needed for the creative process & overhead.

In our experience, most end customers of software development companies arrive with at least the name of their project. Logos usually are supplied as well, though not always. When it comes to UI, around 20-25% of customers (our own data) provide some mock-ups, wire frames or Sketch/Figma files. In extremely rare instances materials will be supplied, but too low of quality to use; please do not design important systems in PowerPoint.

Do not be afraid and always remember to price creatives. Make the rates based on the value your team provides. There is a story of a woman, let’s call her Carin, who met Pablo Picasso at a cafe. She approached him and asked for a sketch on a scrap of paper, priced however he wants. In a flurry of artistic passion, Picasso whips up a sketch. He says, “that will be $10,000.” Shocked, Carin says, “But that only took you thirty seconds!” Picasso responds with, “No, it took me 40 years to do that.”

This is a pretty well-known story that clearly illustrates 1 thing: the hourly rate of your designers and creative folks should be based on the time they put in learning and development, not just the time it takes them to open Photoshop and create a few vector layers. If your salary system is well-thought, you might be able to get a fair hourly rate by dividing the total monthly salary. For instance, a graphic designer worth $10,000/mo working 40 hours a week will end up with $50/h.

Your poor graphic designer

No one understands the pain points we have outlined so far as good as graphic designers - if you have any, please go to their desk and give them a nice, warm hug. When they look at you and ask what's going on, make a "sshhh" sound and tell them it's okay. Then leave in silence and glory. Good job!

Jokes aside, I have seen countless companies struggle to provide good estimates of UI and UX on their proposals. Usually it goes this way:

1. Sales rep or PM goes over to the graphic person/team and says "Heya, how long will it take you to design a CRM interface?"
2. A lot of questions are fired back: what kind of CRM? What data will it hold? What are the customer's priorities? And so on.
3. A lengthy and convoluted discussion takes place, taking many hours and - most likely - resulting in endless meetings
4. A very broad estimate is given, usually rounded up & inflated to account for potential misunderstandings, mistakes & back-and-forths

This process is common because it's fast. It also works (to an extent) for popular types of applications, small products, beta versions and POCs.

The problem with pricing creative work and UI design is that *it will have to change* based on customer and user feedback

Expect the unexpected

A design is rarely finished - it's a constantly evolving thing. That's a common truth that you are fully aware of. Something less people intimately know is that the 1st major change usually happens very fast. When a project is shown to the customer for the 1st time and when it is launched on the market for final users, you will get a flood of feedback. Feedback that will be hard to process due to the sheer scale and lack of common voice (design by committee, anyone?). You will need to take a look at all the comments and then group, analyze and proritise them, all the while new ideas pour in from all sides.

This process is shockingly rarely taken into account. It's hard to estimate it upfront, but you should strive to have a separate proposal section for end user feedback. What I see working the best so far is having a baseline of X hours, where X is based on your prediction of the particular customer and historic data of past projects. Specify the number clearly and state that each additional hour may be billed at Y.

How to price creative work at a software company

1. Don't make the sales rep or PM come up with an arbitrary number and hope it works. Just don't.
2. Get as much data & insight from the customer as humanly possible. If you did not receive a massive specification, organize meetings with the customer. These are the meetings that provide tremendous value. In-team meetings where you try to guess what the customers might want, not so much.
3. Break down the creative part of a project to the smallest chunks possible. For example, an account mechanism will be compromised of a login screen, password reminder screen, account edit/management screen, admin view & edit options and mobile counterparts of each of these. Since most screens feature a few elements at once, it's considerably easier to get a grasp on their complexity.
4. Stick to a common format. If you bill by hour (which I do and recommend), use billable hours also for creative work.
5. Always include billable feedback sections, both for analysis and potential changes.

Summary

As you can see, pricing the creative part of any software project is not trivial. Aside from the usual stuff, you have to take into account your team's worth and future feedback yet to come. Also, remember to hug your graphic designer(s).

Next time we will take a look at common work estimation practices and give you some tips on how to properly process team input, market data and risk predictions to end up with estimates fair for all parties involved

Stay tuned for the next time 👋

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