How to price creative work - hourly, project or retainer strategies

Setting the right price for your work can sometimes feel challenging, particularly within the creative industry.

You want to earn a fair income, win work, and keep clients happy – but how do you set prices that reflect your value and cover your costs?

While there may not be one ‘right’ answer, understanding how pricing works in the creative industry might help you feel more confident and set yourself up for success.

There are several ways to approach pricing, with hourly, daily, project-based, and retainer models being some of the most common.

But which option could be right for your start-up?

Read more about how to price your products and services.

What is a pricing strategy, and why does it matter for creatives?

A strong pricing strategy does far more than simply cover your time.

It helps you build predictable cash flow so you can plan ahead, win the right clients and projects, protect your margins as you get quicker and more experienced, and communicate your value without undercutting yourself.

Creatives still face problems such as undercharging, scope creep, vague deliverables, uneven cash flow from one-off jobs, and difficulty comparing prices with competitors.

There isn’t one best way to price, so many creatives mix hourly, project, and retainer models depending on the client, the brief, and the stage of the work.

Hourly pricing

Charging by the hour means you get paid for the actual time you spend working on a project.

It can be a good choice when the scope isn’t clear, for ad hoc tasks, or during the discovery phase when exploring a client’s needs and troubleshooting.

There could be advantages to hourly pricing, such as:

• changes could be easier to handle
• extra requests could mean extra money
• less stress for you and your client on exploratory projects
• more time flexibility.

The downsides are less predictable income, some clients may worry about open-ended costs, you might earn less as you get faster at the work, and it demands careful time tracking and clear communication.

How to calculate a competitive hourly rate

To calculate a suitable hourly rate, you could start by considering your expenses, such as software, equipment, taxes, and the salary you are aiming for.

Use a simple formula to help you start considering what your hourly rate should be, such as:

1. Decide your target personal pay (before tax): £35,000 (in this example)
2. Calculate your annual overheads (such as software, equipment, insurance, workspace, marketing, accountant, pension, training, tax reserves), such as £10,000
3. Total required revenue equals £45,000 (£35,000 plus £10,000).
4. Calculate number of working hours per year: ~1,680 (52 weeks × 5 days × 6.5 hours/day after breaks) – adjust for your reality.
5. Decide your chargeable time ratio. This is the share of your working time you can charge to clients, allowing for non-billable time for activities such as sales, admin, holidays, sick days, and learning – in this example, we’ll say 60%. This means you will only be actively earning revenue from clients for 60% of your working time.
6. Therefore, your billable hours per year are 1,680 × 60% = 1,008.
7. Your base hourly rate is therefore £45,000 ÷ 1,008 = £44.64.
8. Add a profit/contingency margin (20% margin is typical), which takes your basic hourly rate to £53.57.
9. Therefore, you could set your market rate between £55 and £60 per hour.

It could also be useful to look at what others in your industry are charging, to check if your rate is competitive and appropriate.

When you’re charging by the hour, it could be vital to keep an accurate record of your time.

To maintain a positive relationship with your client, you could send detailed invoices that break down exactly what you worked on and how long it took.

Being open about how you track your time could help build trust and avoid misunderstandings.

Read about how to create customer invoices.

Day rate pricing

Some creatives work on a day rate rather than charging by the hour.

A day rate is a flat fee for a full day of your time, regardless of the number of hours worked during that day.

This approach could be useful for projects that need your full attention, work in the client’s office, or when the scope of work is likely to vary throughout the day.

You could work out your day rate in a similar way to an hourly rate, estimating the number of days you can realistically bill for work each year and dividing your total annual costs by your estimated billable days.

How to set a day rate

Start from your hourly figure × typical billable hours/day (such as 6–7 hours)

Or work from the annual revenue target divided by realistic billable days, such as 100–140 days after holidays, admin, and marketing.

For calculation purposes, if your annual costs and the salary you want add up to £50,000, and you expect to work 200 days per year, your day rate would be £250.

Project-based pricing

Project-based pricing involves charging a set fee for a defined scope and deliverables.

It’s client-friendly and rewards efficiency, provided you scope the project well.

Some possible benefits of project-based pricing could include:

• more predictable income
• less time tracking
• the client knows the price in advance
• more time management flexibility.

It’s also worth considering the potential challenges of this pricing model.

If a project takes longer than expected, or the plan changes along the way, you could end up working more than planned for the same fee.

This is sometimes referred to as ‘scope creep’.

To help avoid these issues, it could be helpful to scope your project carefully from the beginning – learn more about effective scoping strategies below.

When setting your project fee, consider both your own costs and the client’s budget.

Researching typical rates in your industry and being upfront about your process could make conversations about money easier.

You could also try breaking the project into phases or offering different package options.

Consider aiming for a price that feels fair to both sides – and allows you to make a profit too.

Retainer agreements

A retainer agreement is when a client pays you a set amount regularly (typically monthly) for ongoing access to your creative services.

There could be several potential benefits, including:

• a regular income
• you can be more selective about the work you take on and maintain higher standards
• the opportunity to develop deeper client relationships
• client peace of mind as they have someone ‘on call’ who can respond urgently.

When structuring a retainer contract, it can be helpful to clearly outline what the client can expect.

You could specify the number of hours or projects included for a specific timeframe, what types of work are covered, and how requests should be made.

You could also clearly specify what you will do for the client and agree on any deadlines.

Putting all these details in writing could help you and your client avoid confusion and keep things running smoothly.

To determine your retainer fee, you might want to estimate how much time or how many deliverables a client expects.

You might consider your hourly or project rates as a starting point and offer a slight discount for the commitment.

If your workload changes or your experience increases, you may need to revisit the agreement and adjust the fee.

How do I choose the right pricing strategy for my start-up?

How you price your creative work depends on several factors, including the size and complexity of the project, how clear the scope is, and whether the client wants a one-off job or ongoing support.

Each pricing model has pros and cons, so choosing the right one could depend on what works best for you and your clients.

For example, a fixed project fee can work well if the brief is clear and it’s a one-time job. Hourly pricing offers more flexibility if the work is open-ended or likely to change.

Consider asking your client about their goals, timeline and budget, and be clear about what you’ll deliver.

You might notice that some clients prefer a fixed price, while others are happy to pay for your time as needed.

You may also have to adapt your pricing strategy over time – for example, offer retainers if clients want ongoing help or projects become more complex.

Being open to change and willing to experiment could help you find the best pricing strategies for you.

Learn 9 pricing strategies every small business should know.

Effective scoping and pricing techniques

Scoping means working out exactly what a project involves before you start.

It usually entails having a clear discussion with your client to understand their goals, needs, and expectations.

Good scoping helps avoid surprises and ensures everyone agrees on what’s being delivered.

Start with a thorough chat with your client – ask what they want, their budget, the deadline, what success looks like, and any special requirements.

Once you know what the project involves, you could put together a detailed proposal or contract.

Outline exactly what you’ll deliver, when you’ll deliver it, and what it will cost.

It could also be helpful to include information such as deadlines, the number of revisions, payment terms and what happens if the project changes.

When it comes to pricing, you could consider:

• value-based pricing – set your price based on the value your work might bring to the client, rather than just your hours or costs
• tiered packages – you offer different service levels (like basic, standard or premium), so clients can choose what fits them best
• clear boundaries – clearly outline what is included in your price and what costs extra
• deposits and phased payments – ask for part of your fee up front or set up payments in stages, which could help with your cash flow
• regular reviews – check in with your client during the project to confirm things are on track and adjust pricing if the scope changes.

Using these techniques might make it easier to set fair prices and build better relationships with your clients.

While there’s no single right way to price creative work, being clear and organised could help you feel more confident in your work and client interactions.

Discover 10 ways to strengthen your cash flow.

Pricing tools and software

The right tools could help you stay organised and keep your clients informed about costs and progress.

You could use a digital timer or time-tracking software, making sure you record your hours as you go.

Clockify is a free time-tracking tool designed for individuals working on an hourly rate, while Toggl is another option that lets you easily record hours spent on each task or project, making accurate billing a bit easier.

If you use QuickBooks, you might try the platform’s integrated time-tracking software.

Harvest is another option for tracking time, managing expenses and creating invoices, though it offers a limited free plan.

For project management, Trello and Asana could help you organise tasks and deadlines visually, with both having the ability to share task boards with clients for transparency.

These tools can make managing projects easier, communicating clearly, and maintaining trust with clients.

Read our guide to small business bookkeeping tips for success.

By understanding the different pricing models and communicating clearly, you could find an approach that suits your business and your clients’ needs.

Staying flexible and open to change could be key – don’t be afraid to experiment with different pricing methods to see what works best.