The Design Business Association paints a sombre picture of the financial health of the design sector. Charge-out rates fail to keep up with inflation, and are putting pressure on margins and salaries (DW 12 October).
I’m not surprised. Charge-out rates only work when they are applied ruthlessly – every minute must be accounted for. Unfortunately, this is very hard and can result in overservicing.
Designers should try to find ways of adding value beyond time-based work. Advertising and PR firms approach their clients with project or retained fees for their work – which are based on idea-generation rather than time (they do have established charge-out rates). Professional services companies, such as law firms, do use charge-out rates, but are very strict: we all know that even calls are billable.
For design consultancies to move away from overservicing clients, to command a premium for creativity and idea-generation, sustain growth and create value, design firms need to think beyond charge-out rates.
Rose Lewis, Partner, Pembridge Partners LLP, London W1