Ep 149 Career: You're underpriced because you're under confident.

You don't have a pricing problem. You have a confidence problem, a business-literacy problem, and a habit of showing up as a pair of hands when you should be showing up with an opinion.

A new report from Fast Company and AIGA surveyed 1,273 freelance designers and 150 hiring managers about rates, income, and AI — and the real story isn't in the numbers everyone's quoting. It's in the gap between what designers charge and what they believe they're worth, the gap between how designers feel about AI (worse) and how the people paying them feel about it (better), and the gap between freelancers who deliver files and the ones who deliver thinking.

I still feel the pricing doubt this report describes — every quote, every negotiation. This episode is about closing that gap: building an actual rate card instead of guessing, and showing up to every project as a strategic partner instead of a production resource.

This one's for any freelancer who's ever second-guessed a quote, and for anyone who's realized their independence came without a business plan attached.

In this episode:
- Why the real gap in freelance pricing is confidence, not the market
- What the Fast Company/AIGA Design Pricing Transparency Project actually found across 1,273 freelancers and 150 hiring managers
- Why 70% of designers think AI is hurting creative quality — and only 41% of the people hiring them agree
- How to build a rate card instead of pricing from fear
- Why showing up as a thought partner, not a production resource, is the real hedge against AI
- Three moves to make this month if you don't know what you're actually worth

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Transcript

SPEAKER_00 0:00

So it's interesting. Not too long ago, I came across this really interesting survey. It was a survey of about 1,300 freelance designers and creatives. And the interesting part to me was that in this survey, they told the truth to the survey that they won't tell their clients. That whenever they actually have to price something, whenever they need to put a value on what they do, only 12% of them actually feel confident in pricing their work. Half of them are often afraid to ask for more. And this is something I've touched on in the past of knowing your value, of how do you price it? Where do you draw the line? Where do you do those sort of things? And once again, we're back here because what we're talking about, it's not a design problem. It's not a pricing problem, it's a business problem. And so today that's what I want to dig into. I want to take a look at this survey. I want to talk about what should go into how do you actually price and build a business as a freelancer or as an agency owner. And also just again, sort of share some of the things that I've learned as I've gone through this. Because I think there's a conversation we all need to have, that in what has been the gig economy for a while and things like that, these aren't nice to have anymore. And if only 12% of us actually feel like we have any grip on pricing our business, the rest of the results that are in there aren't going to be much of a big surprise. So welcome to episode 149 of the Crazy One Podcast. As always, I'm your host, Steven Gates. This is the show where we talk about creativity, leadership, design, and everything that matters to creative people. Now, as always, always appreciate it. Subscribe to the show so you whenever you get new episodes when they come out. I've been trying desperately to do them more often. I'll be honest in confessing that I've definitely been derailed over the last couple weeks. For those of you who follow me on LinkedIn, you might have seen this. I think due to a series of events, I made the heartbreaking, frustrating, blindingly angry decision to leave ADP list as doing my free mentoring that I did there every week. You can go to LinkedIn and find out why behind all that. I've now transitioned onto a new platform called Hop where I'm again doing free mentoring every week. But after seven years of helping advise and be on that platform every week and do that, coming to that decision and doing those things wasn't easy. I'm not going to sit here and pretend like it was just business as usual. It had an effect on a lot of things, and I think that the show was probably the one that took the biggest one on the chin. But here we are back here again working on this. And so the thing that I came across was that, you know, Fast Company is one of my usual sort of reads that I'll peruse through. And back in the end of July, they put out an interesting kind of article study, that sort of thing. And it was called the Design Pricing Transparency Project. And I think that for me, right, like this was one of the first real transparency studies that I've seen that got freelance, like got freelancer data, and they've done it at this sort of scale. And look, I know lately I've been doing a lot of more AI-focused episodes on sort of like 138 through 146. This isn't gonna be another one of those. Because I think as I went through this report, I think that this report proves a really big problem that continues to persist in the industry. And it's this crisis that I think most creatives have a hard time describing, have a hard time admitting, have a hard time admitting that they're actually in. Now, look, this is something I struggle with all the time. Whenever it comes to pricing and running the business and putting a value on what I do and drawing the line and holding clients accountable, look, I I feel the doubt. Every quote, every negotiation, every time I candidly want to tell a client to just go take a flying leap because I'm so sick of all the ones that hire experts and then do everything in their power not to listen to them. But this is always the question, right? And I think for a lot of people, this is it's more a question of like what do I charge? Whenever I guess for me, this is more a question of like, what are you worth? This isn't a beginner problem, it's not a freelance problem, like it's a creative problem, it's a business problem. And I think because to me, the thing that I'll find is that for most creatives, the thing that we seem to be the quickest at devaluing is our time. Where it's kind of like, oh, unless there's a hard cost of I need to do a photo shoot, I need to do something where I need to pay something, buy a piece of equipment, do something like that. We seem to be so willing to give away and devalue our time. Maybe I've done this long enough, maybe I've done it too long, maybe I've become too hardened or bitter or something, but for me, there is nothing that is more valuable than my time and my skill, my perspective, what I bring to the table. I don't want to devalue that because once you start doing that, at a time when our value is already under siege, I may have to laugh at the number of conversations I have, if not every week, damn near every day. People are going, like, oh wow, like you, your AI was really good. And it's like, no, that was that was actual talent. That was work, that was us sitting down and doing something, not doing an AI. That it's funny how quickly everybody's run to just assuming that if it's good, oh, it must have been AI. No, there's there's still talent in the world. I hate to break it to you. But that's the part that for me, and as I think as I started this, as I started doing my own agency or freelancing or whatever it is, and and I think like this is the twist in the data is that the rates designers charge and what companies pay what are willing to pay actually aren't misaligned. You know, it it this isn't one of those things where they're kind of saying, like, oh, look, you know, I should charge 150, 175 an hour or whatever it is, and companies are like, oh, I want to pay like $20. Whatever you look at that the data, they're actually saying, look, the companies will pay if if they see the value, if they see what that is. And to me, that I think that's the biggest part that we keep coming back to over and over again on the show, is that the gap that we're talking about here isn't in numbers, it's a gap in confidence. It's a gap in knowing your value, of actually believing your value, of standing up for it whenever it matters, of pushing back, of doing those sort of things, right? Again, I think to the numbers I cited at the top of the show, only 12% of people are very confident in pricing their work, and half of people are afraid to actually ask for more. Right? And I think that the hard part is, in the parts, this is where the surveys fall off, is why. And I think that this is the the challenge. And I think as you look at this, there really isn't much information shared about this. So I think everybody just sort of starts guessing alone. And you know, look, I talked about this back in episode 147, where sort of like, right, like busy and effective aren't the same thing, that you're measuring and valuing the wrong thing, that you think the problem is your rate, whenever I think the problem is your understanding of your value and your certainty. Because I think, right, like what's the difference between somebody that charges a thousand dollars for a flyer and somebody that charges $50,000 for a like a communications system, right? Like a series of flyers of templates of those sort of things, right? Like, what's the difference? That that big range, it's not random, it's not chaos, it's not luck, it's specialization. And I think for the people that are charging the thousand dollars on that end, I look at that and think, one, they're selling their execution, they don't understand what their value is, they haven't picked a tier, they aren't doing systems thinking, they're doing executional thinking. And I think that's where a lot of the value has shifted. And again, this is something I've talked about in the past, that as we talked about working on design systems, as we talked about design thinking, as we talked about a lot of these things, it is the ability to do systems thinking. To say this is not just a one-off, this is part of a bigger system. This is going to provide value, this is going to have an ongoing value to your business, or other people can pick it up or be able to do those sort of things. And that's often the difference is that the individual execution gets paid $1,000 while the system gets paid $50,000. And this is often the hard part because I think there's a lot of clients that just want the execution. There's a lot of times where you have to push back against them and argue with them and get them to understand what that value is because they want to make it simple and cheap and do those sort of things. And look, I'm not blind to the fact that for a lot of them, there is real business pressure, there is real budget pressure. But at the end of the day, I also know what my time is worth. And as soon as I start giving that away, then I'm it's a chase to the bottom. And I think that this is why for so many people, you need to actually develop a rate card. You have to stop pricing out of fear, and you actually have to price from a system. A system you can share, a system that is transparent, a system you can defend, a system you can set what the point is for why it costs what it costs. And again, like because to me, that is just you know, the continuation of this conversation around what do we do, what are we worth, what's it worth? Because look, I think that what a rate card actually requires is knowing what what is your what is your actual annual target income, right? If if this was a full-time job that you were doing for a company, what would they pay you? What is a reasonable amount, not some crazy, like, look, we're not buying a boat or a Ferrari, but again, like what is the reasonable place where you could expect to earn that? You need to also then have the conversation on what is your billing capacity, meaning, are you willing to work seven days a week, five days a week, three days a week? Is it eight hours a day, ten hours a day, whatever it needs to be? What is your tier and your level of seniority, right? What's the minimum that you are willing to do to be able to say, look, under this amount, under this amount of time, under what this is, this is not worth my time, this is not going to be successful. Because I think that's the other thing that I find is so many people set themselves up for failure before they even begin. They agree to budgets, to timelines, to things like that, where you know going into it that what you're gonna do is not possible. And the answer often internally in your head is, well, it's better than nothing. Well, but I think that this is the problem, right? Is that most freelancers, most people like this, they don't do the math. They just simply react and they jump from project to project without a business, without a baseline. Now, I've gone over this in the past, but let's do a refresher. If you do not know what your hourly rate is, the simplest way to calculate it is again, let's go back to what do you think your target annual income should be? So, whatever that number is. Let's say for the sake of argument, and here I'll get up my calculator because I I am a designer by profession and a writer and accountant by extreme necessity. So let's say that number is $150,000 a year. Now, what we want to do is then divide that by let's say you're willing to work every week, so there's 52 weeks in a year. That means I want to be making somewhere around $2,884.62 per week. So generally that's about what I need to be able to bring in. So then let's divide that number by 40, 40 hours in a week. That means to make $150,000 a year. If I'm gonna be able to be booked all the time, my base rate is $72. Now, do not make the mistake of thinking that that is the rate that you need to charge, which is the other massive mistake that I see people making. Because that's not the rate that you should be charging. That is the minimum amount that you need to make. If you want to pay for insurance, if you want to pay for your computer or software to keep the lights on, or anything else like that, guess what? You need to then factor that in, which means you take all of those expenses and divide them by 12, or again, divide them by 12, then by four, add that number onto what that is, that is what your base rate is. And that that is what you need to price things from. So that whenever you go to a client, you are not sticking your finger in the air, you are saying, This is what my hourly rate is to do this, this is how long it is going to take to do this, that is how I have arrived at this number. And again, if you're doing anything less than that, then you are in that 88% of people who have very low confidence in pricing what they do. But that is why a rate card is so important. Because at the base value of that, you have got to know what is your work worth. Because if not, then you let the clients dictate it. And that you let them set what the hourly rate is. Now, again, you can negotiate it, you can start higher and negotiate your way down. But again, that I think this is the other place where people get things conflated, right? We're not hired hands. We're not somebody that is just showing up to do executional work. You show up as a thought partner, as a partner to what you do. You bring value and perspective and pushback and experience, right? That your freelance status does not equal production resource status. And I think too often those get conflated. Whenever people see freelancer, they think cheap. They think that's somebody I can push around, they think that that's somebody that, and look, that's why for me, like I would say, even if it's just you, you are an agency. You are not a freelancer. Because again, too often freelancers are the things that start to get into trouble. And again, as we go back to the report, nearly 40% of the companies that use AI to start creative projects now. Clients are showing up with AI sketches as a brief. They're starting to be able to do a lot of this sort of stuff. Now, again, it's backfiring a lot of ways. We've talked about it being a yes machine and the plausible noise in episode 142. But again, that work is walking straight into your inbox. And if you are just going to execute an AI sketch, you're not going to continue to get projects, right? That you basically what you've done is if that's the way you work with people, you have confirmed that you are just a production resource. That is how they see you, that is how they treat you. They do not see you as an equal or a thought partner, anybody that's going to contribute to that. Now, and look, I know that I'm in a privileged position, that I talk to a lot of those people, and anybody who wants me to just be a production resource is not the work I'm interested in doing. Right? I am not the one who just shows up as like the hands and whatever that is, and you can say that you worked with me and that those sort of things, right? Like that's that's not what I'm here for. Again, I am very clear, and to me, that is often the most interesting moment, right? You people that have really strong convictions and really believe in this stuff and they really talk about it. But in the moment when a bill's due, in the moment whenever like it actually matters, when you have to work with a potential worth a client that won't pay you what you're working, doesn't align with your values, demeans you, degrades you, whatever that is, are you going to give up your value and do it? Or are you actually gonna say, no, look, I know what I'm worth? It's not an easy conversation. I don't know that I have the right answer to it. It's one that I struggle with all the time. Because look, there are people that I work with that there are days I would, like I said, I would love to tell them to go suck an egg. Right? There are a lot that I deeply love. There's a lot, and like for some of them, it's just days. For other ones, I'm not gonna lie, it is my goal to find a client to be able to replace them in our portfolio. Because again, I got bills to pay and do what those things are. But look, I think that this is where we need to get to sort of what is the honest and almost harder truth. And I think that this is probably the part that stings the most is that about 70% of designers will say that AI is hurting the quality of creative work, while only 41% of hiring managers agree with that. That gap should terrify you more than any pricing stat. And I've talked about this in the past, is that part of this conversation that we have to acknowledge is that saying I know my value and I know what quality is, is that you also have to be working with people who understand what quality is, who understand, you know, what the difference is, who don't just think that cheap and shipped is the goal. And look, I'm gonna say it's not that I don't think that clients don't care about quality. I think it's that a lot of them can just no longer tell the difference. That they do something that again, this is the plausible noise, it looks good enough. I get emails multiple times a week of like, hey, we did this thing, and you can tell it's clawed or Chat GPT or whatever it is, and we think it looks pretty good. And I have to sit there for 20 or 30 minutes going through and explaining to them all the things that is not on brand, the colors aren't brand on brand, the types not on brand, this isn't how we do it. Like, you know, look, I know that. And I think this is why for me this continues to be even more imperative and why I feel like this is a crisis moment. Because if you're not showing your thinking, if you are just showing up as an execution partner, you aren't giving them anything that AI can't fake. You you aren't pushing, because again, we know that AIs are yes machines. They're good at getting it close. And, you know, look, for a lot of them, they're gonna need to ship bad work, they're gonna need to let their brands fall apart, they're gonna need to recognize that, like, oh yeah, quality does actually matter, that fast and bad isn't an improvement in most cases. But I think that that's going to, we need to go through that process. And for a lot of it, is that yes, there's gonna be a lot of bumps in the road, and that's gonna be a real pain in the ass whenever we get there. But the question is gonna be what sort of shape are you in whenever we come out the other side of this? And it is about showing our thinking, knowing our worth, knowing what we should be able to charge, right? Like, and again, I think this is for me, what is that ultimate frustration? Because we will bitch and whine about why don't we have a seat at the leadership table? Why don't people take us seriously? Why are we left at the end of the process? And then we don't learn business, we don't actually have anything to say when we're there, we act like an executional resource, and then are somehow shocked that that's the way we get treated. And if you are somebody that has made it this far into the episode that is still listening, and is this is something you are struggling with, this is something you don't want to admit, if this is one of those things that is going on, there are three things that I want you to do this month or this week or whatever. Like in this can't go more than like three or four weeks, but there are three things you have got to do. I think the first one is you have got to build an actual rate card, a real annual number with real tiers, with real minimums, with a real understanding of what your business is that you can be transparent about, that you can again you can defend, you can show. You can't just keep quoting big flat numbers and thinking people are gonna go okay for what that is, right? I think that that is the first thing is that you actually have to have a real understanding of what your business is and what you are worth. Not in an abstract intellectual way, but in real defendable numbers that if somebody pushes you on, you can back up. The second thing you've got to do is stop fucking apologizing for what that rate is. Say it once, don't flinch, don't overexplain it, don't back it down. You've got to hold the line. Because look, I have a lot of those clients who candidly drive me insane because they constantly want to play let's make a deal, right? That somehow they think that they're the only client and there aren't other people who don't want our time or whatever it is. And look, and I get it, right? They don't want to spend more money than they have to. But like I said, I'm my talent is not negotiable. My impact is not negotiable. I know what I can do for a business. The number is the number. And I will send them quotes that break it down line by line, hour by hour, what it is for me, for my team, what the rate difference is, what that is actually going through all of that. So they can see exactly what it is. And if they don't like the number, then we either need to talk about how we reduce the scope, we do this differently, or like I said, or that this project candidly isn't for us. But that is the number one rule of negotiating, right? Like you need to go watch Chris Voss's masterclass, buy his book, don't split the difference. But again, the ability to actually negotiate. Because that's the thing, is there are a lot of other people in this that I know that they do have a rate card, and as soon as the client pushes back, they fold like a cheap chair. And that that's the thing. You say it once, you don't flinch, you don't overexplain it. Again, you can defend it, you can say where it came from, what it is. But again, I can go through all of our estimates line by line and explain it to people. And the biggest thing that I want you to do is in your next project, in your next meeting, whatever it is, is that you bring an opinion, you bring a point of view, you bring like what it is that you have done and what your process is before you bring a design or a copy deck or a file, right? Disagree with the brief if it's wrong. You know, if it's a client that has to have it that way, do it that way, but then show them the other way that it should have been done. Offer to A B test the two of them against each other and see which one will win. But that's the thing is stop leading with your execution. Stop leading with like stop creating portfolios that are just screenshots, right? Like all of this stuff is the telltale part of what our problems are. But again, bring a point of view, bring a thought. Actually show up with an opinion because I'm gonna tell you what, that's what clients continue to hire. That's the stuff that they will actually pay good money for. That's the thing that they are looking for, is somebody that actually shows up and has a point of view. Now, again, not all of them may love it. Not all of them are gonna want it right away. With a bunch of them, you have to earn it, you've got to push back on it. You have to continue to earn it all the time. You don't get to do it once and go, cool, they think I'm smart.

unknown 22:04

Right?

SPEAKER_00 22:05

The old joke, yesterday's home run doesn't win tomorrow's game. You have to keep doing it. But I think that's the thing. Like, look, you can go to Fast Company and you can go through the whole report. Like, I don't need to sit here and read it to you. It's called the Design, it's called the Design Pricing Transparency Project. But the report just didn't tell us what freelancers charge. For me, whenever I look at it, it told us where we're stuck. And like I said, it's not where I think most of us think. That it is in the confidence of us knowing our value, of knowing what this is. This continues to be like the thing that I want to harp on. Because look, there's a lot of other easier answers out there. There's a lot of other people that look, if you take my course or give me money or do whatever it is that I'm going to tell you sort of how to be able to do all this. And at the end of it, if you don't have the confidence, if you can't do these things, like, yeah, you're going to have some new buzzwords, but you're still going to have the same old problems. And I think that's the part of it, is that these people to me are almost preying on these insecurities. And like I said, it's just whenever I look at studies like this, you can see that the numbers are real. And I think that's the part of all this is that I know that whenever you are in this place, the pull is to appeal to everyone, to take on every project, to get every dollar. I feel it all the time, right? Like I'm going through a moment with a client right now that I'll be honest, I got very little sleep last night because there's a big part of me that really wants to fire them. But at this point, it probably isn't the brightest idea to do. So I need to take a longer-term view of what this is. But again, it is the ability to weigh this stuff out, to be able to understand what the value is, to be able to say that look, you know, yes, the easier answer is to tell them to go fly off a cliff, but what I need to do is to work with them, to go back, to restate the value, to understand what it is, to not just be executional, to not let them diminish us, to be able to continue to hold the line on this stuff. And look, I've got to admit, like there are days, and especially there have been weeks lately, where I'm just exhausted because of the amount that I have to do this. But for me, this is the cost, right? This is the cost of doing what we do to get the opportunities, to do the good work, to push this sort of stuff. But again, for us, we have got to realize that we have to do the hard things. We have to figure out the business stuff. We have to understand our worth. Because again, this is the universal truth. Should everybody see it? Yes. Should they understand the value of it and see the impact of it? Yes. Should you show up and be able to show them great results and great work and rises and everything, and then they will come back and reward you. Should that happen? Yes. Does any of that happen? Hell no. And that's our fight to fight. And look, I think for a lot of people, this is often where the rubber meets the road on if they do want to do their own agency, if they do want to go freelance, because they just can't take the swings. They don't want to have the arguments, they don't want to have the fights. It wears them out. They would rather go work for somebody because it's just easier. You don't have to do all this. But to me, then the upside isn't there. Like that possibility isn't there. Because that's the thing at the end of the day, is that it is that balance of finding the right opportunity. But also, I think for so many of us, the realization that our best work comes whenever we feel valued. We see monetarily that we are valued, that our opinion is listened to. It's not shocking that the clients that we do the best work for are the ones we don't have to have those conversations, the ones we have to grind, the work is not at the same level because we have to grind and push and do that stuff. But again, I think we need to recognize the toll that that takes. And that, yes, it can make what you do easier and to do a lot of those sort of things. But again, I think that's the part that we just keep kind of coming back to in this show is this confidence gap. But like I said, go build a rate card. Stop apologizing for what that rate is and actually show up, not as somebody that's an ex just does execution, but as somebody that is a leader, a strategist, a creative, somebody that does bring a different perspective, that challenges the status quo, that does all of that stuff that we love to do, that we often romanticize, but in the moment, we seem to shrink from. And that's where it's gotta be different. So, as always, look, I know time is only the only real luxury any of us have. I'm always incredibly appreciative. You want to spend any of it listening to me to do this. Hopefully, this helps give you a start on some of this stuff. Like I said, I'm happy to go back and revisit any of these things in more depth. But look, go go build a business. Stop apologizing and actually bring a point of view. And while you're doing all of it, and as always, stay crazy.