Pricing Design: A Review

Pricing Design by Dan Mall is an A Book Apart book about pricing design projects as an outside designer (or developer or, really, any type of consulting or service provider — but specifically as a web designer). It’s well written and concise — just on the verge of being too concise.

Pricing Design is specifically labeled as a “brief” on its book page. They explain,

“Briefs are ebook-only guides to essential fundamentals, of-the-moment techniques, or deep nerdery on a single aspect of a topic. Whatever the book, you’re only a quick break away from learning vital, practical know-how.”

Pricing Design has four chapters:

1. Pricing Methods
2. Value-Based Pricing
3. A Pricing Case Study
4. Value Pricing: What to Expect

In the book, Mall promotes value-based pricing. Mall feels designers tend to rely on a time-based pricing method because it’s simple — simple to determine, to explain to a prospective client, and to compare against competitors.

But he thinks it’s too simple. He argues that charging an hourly rate:

1. focuses your price (as a designer) solely on your own costs and experience, but tends to neglect what a client would be willing to pay
2. causes your clients to compare you against the rates of unrelated service providers, like plumbers or lawyers or fast-food workers
3. puts a cap on how much any given project could be priced at over a given time-frame (your rate times the number of billable hours)
4. aligns your incentives against your clients, as you’re being incentivized to work less efficiently so as to maximize billable hours

If done well, Mall feels, value-based pricing can skirt a lot of these problems. Value-based pricing is an attempt to quantify and charge for whatever value you’re providing to a customer, as well as whatever value that you’re giving up. Its advantages over a time-based, market-rate price includes:

1. a final price that more accurately reflects what you were hired to do
2. it encourages you to focus on the product, not on your time spent working on the product
3. increases flexibility for you to charge based on changes in your life that may cause you to be willing to accept work for significantly less or more than you normally would

In the book, Mall provides a walk-through example of how he would price-out a project for a customer. He also describes a quick exercise to help designers arrive at their price floor for a given project. He encourages you to imagine what item you would trade directly for completing the project. For instance, you might not be willing to do the work for a new iPhone, but perhaps you’d do it if it meant you could remodel your bathroom.

After reading Pricing Design, I did not suddenly feel like an expert in pricing theory, but I do feel the book provides enough information to serve as a framework for using value-based pricing in freelance projects. Although the book is written “for people who make websites,” I think it could be useful for any service provider.