You can find this topic in a million different places throughout the internet, so I won’t rehash the issue of “What does logo design cost” other than to make one point which I don’t think has been discussed very much so far.
I’ve read about a lot of different factors that go into figuring a price. I’ve seen some of the debate between the hourly wagers and the fixed price quoters and I see pros and cons on both sides. Personally I’m of the mindset that the fixed price is the way to go, at least for logo design, simply because I don’t believe logo design really should/can be boxed in to an hourly format. There are a lot of other considerations beyond time invested that need to be factored in. For instance, what other business purchase can you make that’s a one-time, maintenance free investment? What other investment takes care of itself and actually draws customers for years to come after the purchase is made? Like all good investments, good design should pay for itself in a relatively short period of time and then bring in a profit thereafter.
Which brings me to my next point: logo design doesn’t garner royalty payments. If I designed the Coke logo, my payment for that logo would extend no further than Coca-Cola commissioning me to design for them, and then securing that design via the final payment at project close. After that, I am not able to participate in the vast profits that are now visiting Coca-Cola because of the increased attraction that logo afforded them.
So what do I do? I consider that a factor in the price. How much will X Company spend on distribution? Is that logo going to be plastered on every city corner? Wrapped around a city bus? On fliers stuck to pegboard all around town? It’s good to know because it’s really only fair to be compensated for the distribution your design sees—especially when you consider that none of the profit X Company is making off that distribution (of which your logo design is the centerpiece) will reach you.
I’m not alone on this. I wrote accomplished designer Graham Smith on the subject a few months ago and he agreed wholeheartedly. To me, as I’m sure it is to him, it’s just common sense.
Cost transparency is a valuable aspect of client trust. Everyone wants to know what they’re paying for. It may not seem like a good idea to make this public knowledge for fear of appearing “greedy”, but if you think of it this way, most everyone would agree that it’s a fair addition to the cost factor:
Let’s say you have been cleaning out your garage and you think, “I really should just have a yard sale and get rid of this stuff.” You stick your John Deere lawn mower out in the yard and put a price tag of $500 on it. Your neighbor comes over, says he’s willing to pay the $500. He gets his trailer from home, comes over, loads it up, brings it back and puts it in his garage.
A few weeks later, you find out that your neighbor has started a lawn care business and uses the $500 lawn mower he purchased from you, to make around $500 per week. The first week he’s made back his investment and it’s all profit from there on out. What would be the first thought on your mind?
“I should have charged more!”
Because if you had known the profit potential a smart business person could have using the tool you sold, you would have factored that into the purchase price so you could make the sale satisfying to you, right?
The largest profit potential for businesses with regard to their logos is distribution. Pens, fliers, vinyl wraps—anything that’s branded with the company name and makes its way to the general public has the potential for increasing profits on two bases: 1) attracting new customers , and 2) reminding repeat customers to come back. A logo offers that extra edge that taps into individuals’ memories, thus influencing their choices.
The best a graphic designer can hope for as far as money connected to an already-completed project is referrals. They are valuable, and if your work is good, they are very likely. But to what extent and how often, it isn’t certain. What is certain is that good business is about satisfaction for both parties and that’s why these things need to be discussed.
About.com contributor Eric Miller stated,
…[L]ogo designs are often valued high regardless of actual hours worked, because of their frequent use and [sic] visability.
It’s often said that the Nike logo cost $35. What isn’t said, is that years later the co-founder of Nike, Phil Knight, who commissioned Carolyn Davidson to design for the then-fledgling company (initially Blue Ribbon Sports, Inc.) invited her to a business lunch meeting and presented her with a Nike-swoosh-engraved diamond ring, as well as an envelope containing an undisclosed amount of stock in the company.
Apparently, Mr. Knight thought that the logo had a significant impact on the company’s growth and profit potential. And I tend to doubt that envelope contained only a few shares.