How much should I charge for a product design? – DesignWanted – DesignWanted

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Laura Traldi / DesignAtLarge
Journalist, DesignAtLarge founder, internimagazine.it curator, scientific committee of the Compasso d’Oro Award member, Circular Design professor at NABA Milan.
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When you wonder, as a freelance designer, “how much should I charge my clients for a product design?”, you are not merely asking a question (actually the question) but starting a journey of discovery into what you can do, what you would do and what you will do.
True, the Internet is full of spreadsheets providing rough ideas on how to best negotiate your fee. Yet it’s pretty obvious that there cannot be a solid rule to apply: 
the amount that you can ask to be paid for an industrial design project clearly depends on who you and the client are.
There is a lot we can learn when discussing these issues from the advice of industrial designers who have already established themselves: professionals who work with companies yet still have a human-size studio and work in a wide array of fields. 
Sebastian Bergne fits this profile perfectly. 
The London-based acclaimed industrial designer works for international brands, but also designs and produces bespoke objects for restaurants, retailers and individuals, art directs new or established brands and even has time to develop a collection of his own editions. 
The purpose of our conversation was not to define a specific fee that applies to all but, rather, to explore the different strategies and thinking applied by an industrial designer who makes a successful living from industrial design to get where he is today.
Sebastian Bergne:
“At the moment I would say that very roughly speaking about 1/3 comes from royalties, 1/3 from fixed project fees, 1/6 from teaching, speaking etc.., 1/6 from my own editions. This changes every year in all directions”.
Sebastian Bergne:
“After studying at the Royal College of Art, where I graduated in 1990, I immediately opened my own studio. Naturally, I had an unknown value as a designer, neither to myself nor a client. To be honest, I was happy to get any design work at all. In fact, I usually had no work so 
I created my own briefs and projects to have real products to show rather that digital images.
Being an industrial designer is not so much a career but rather a life choice: so you really do all you can, especially when you start, to test and train your skills”.
Sebastian Bergne:
“At the very start, I invested any spare income I had in my personal projects. 
[ Also Sebastian Herckner did: as you can read here ]
I paid my living with other side jobs (non design-related) and by living at home. 
Keeping one’s overheads to a minimum is key to survival at the start. 
If I covered my costs in the end I considered (and still do) that the project was a success”. 
Sebastian Bergne:
“At the time, I didn’t think of it as an investment, R&D costs or even as a business, I just wanted to produce work. I was just dreaming”.
Sebastian Bergne:
“My first commissioned and paid design job was to design and make a device that counts the lengths swum in a pool for an individual client. It was simple and unexciting, but I produced it and it worked. 
I was paid two or three hundred pounds. After paying for the parts and making, 
I must have earned about £50 myself for several days work. 
Even in the early 90s this was a disaster business-wise but I enjoyed it”.
Sebastian Bergne:
“Roughly speaking 
I would always base a flat fee on the amount of time it would take me to do the work, calculated in hours or days. 
One can then make a discount or not, depending on how badly one wants the job.
It is precisely with this reasoning that I can now say that, for that first job, I didn’t ask for a suitable fee.
Being paid an hourly fee is the most straight forward and clear way to be paid. 
You know what you’re getting with no surprises. If one is happy with the hourly rate, then even better. Clearly, the issue is how to calculate your own rate by including a mix that covers all your costs, earnings and considers taxation. 
The only downside is that one doesn’t get to participate in the positive success of a product. That said, one doesn’t participate in a failure either”.
Sebastian Bergne:
“The fee is the most common alternative to being paid a royalty. 
The main difference is that when you are paid a fee the client is usually buying the copyright to the design, so the price is high but you lose the rights on future earnings and on the object. 
As designers we all tend to overestimate the future success of our work, but with experience 
I can recommend working for a good fee when it is offered as you receive a large lump sum. 
This will help finance your other projects”.
Sebastian Bergne:
“There are different ways to judge this that might help decide which way to go.
In a simplistic example, if I were to design a vase for a company, I could say it would take me 5 days to develop some ideas, have a meeting or two and make CAD models to pass to the client. 
If I am a young designer, I might charge £200 per day so my fee would be £1000. 
You could say this is reasonable payment for a simple job. 
Measured in another way, if the same vases were sold in a store for £50 each, with standard mark ups the client who is wholesaling the vase would get maybe £22 and so a royalty of 3% would earn me around £0.66 per vase (before tax) 
So, in this case your £1000 fee is equivalent to selling about 1500 vases. 
As a designer, your question is: how likely is it that your client will sell 1500 vases? 
It’s not easy to answer because this is partly to do with brand, distribution, marketing, your design, supply, fashion, etc, etc.: not an easy choice and don’t forget the difference in the copyright question. That said, this simple equivalent calculation is useful and works both ways.
On the other hand, when you are paid a royalty, one retains the copyright but earns less but keeps earning over a much longer period of time and there is always the chance you will earn a lot on a bestselling product, fingers crossed”.
Sebastian Bergne:
“Usually not the designer. Many companies have their preferred method of structuring their contracts. You can insist if you like but you risk losing the client. This is down to negotiation skills. As a young designer, I would not try and insist on something the client doesn’t want”. 
Sebastian Bergne:
“My general rule is that I like that my income comes from many different sources and types of contracts. I also enjoy variety of projects and clients, so this works for me.
When working on royalties, it’s important to negotiate an advance on the royalty like in the publishing or record business or a payment of initial expenses: both are effective and will help the development phase and guarantee a minimum income from the project.
That said, there are always other ways, people should imagine their own deals that seem right. 
I was once paid in wine for a job designing a wine label and that suited me right.
Sebastian Bergne:
“My understanding is that most product manufacturing businesses roughly 
double the manufacturing costs to arrive at their wholesale price. 
This should be the same for designers who produce their own work. 
But the price you can expect people to pay is strictly related to the type of object you have designed:
* if your product resembles mass produced equivalents, the customers’ price expectations will be relatively low: in this case you will need a strong storytelling to justify asking for higher amounts;
* if your product is obviously hand-made and contains an immediate, interesting narrative that the general public can understand more easily and is more likely to accept a higher price”.
Sebastian Bergne:
“I would say no job should always be accepted. But if there are clear advantages, you are more likely to accept poor payment conditions, this is human nature I guess. 
Saying this, the only cases when it makes sense to work completely for free is if it is clearly 
a ‘not for profit’ project where no-one is making money or if the pleasure of participating is enough payment. 
Otherwise, I would always try and establish the maximum design budget and design within that. Be sure to be clear to a client what they will get for the payment they offer.
This means spell out clearly what you do, and what it entails.
Be clear about the detail of what the work involves and what you will deliver. 
Many clients don’t really appreciate the complexities of developing a new design, some simply think it’s an “artistic’ sketch”. 
Sebastian Bergne:
“Talking generally about money or budget should be a relaxed activity and part of relatively early conversations. 
It should be considered an obvious and natural part of the discussion. While details of how and how much can come a little later”.
Sebastian Bergne:
“This has happened to me. If a project is taking a lot longer than anticipated or costing much more to make, then it is best to discuss it with the client as soon as possible. In my own experience, they have always understood, and we have worked together to solve the problem.
Generally speaking, I think it’s very important as a designer 
to consider oneself a team with your client. 
Getting to know them and creating a relationship before starting a project is important if possible. 
Each client and each project is different, that is what makes it fun”.
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