Risky Business

5.1.3

When calculating a price to quote a prospective client, there are a great number of factors to take into consideration; many of which aren’t immediately apparent. Often the idea of adding a cushion to the cost is seen as lazy calculation at best and underhanded and greedy at worst. This notion of charging extra with supposedly no justification for doing so is seen as bad business.

But here’s the thing.

When you go to the supermarket to buy a loaf of bread, do you suppose that you’re paying only for that loaf of bread? Or could it be that you’re also paying a small percentage of the employees’ wages; a small percentage of the utility costs to operate the facility; a small percentage of the loaves of bread stolen each year; and a small percentage of the projected loss incurred by the supermarket when, say, 10% of its bread inventory exceeds the pull-date and is therefore unsellable?

The issue of risk is a huge factor in determining the final price of nearly everything.

Consider also the automobile manufacturers. What keeps Toyota from going out of business when it becomes necessary—due to some design or mechanical flaw—to recall several million vehicles? Toyota stays afloat because teams of shrewd individuals sat down and conducted risk analysis, figuring exactly what can go wrong and has gone wrong in the past, and how much it can set the company back. This safeguard number is then factored into the price of their automobiles.

The voice of protest resounds: “Wait just a minute! I’m no thief! Why should I have to pay extra for a loaf of bread because of thieves and employees who can’t manage inventory?”

The answer is simple: businesses can’t think in terms of individuals only if they’re going to stay in business. The truth is, you probably aren’t the reason prices are the way they are. But others are, and those others could cost a business big-time if those behind the risk analysis don’t consider every penny lost and compensate accordingly.

Unfortunately, because the world is the way it is, businesses cannot expect the best possible outcome. Instead, they must analyze every risk and determine how much it will cost them.

This is not something that applies only to big corporations like Walmart or Toyota; it applies also to individuals.

Being self-employed is risky. It’s much more risky than being employed by a boss. Being self-employed means, among other things, never being certain how frequent your work will be. And while client A’s project may go off without a hitch, client B’s project could run into a serious snag.

So what is the individual to do? He or she must be safe, looking carefully at the big picture of the ups and downs of business (which means future-thinking rather than per-job only) and price accordingly. I’m not talking about price-gouging. I’m talking about accounting for unforeseeable outcomes and being realistic. And really, this could and likely would be an applicable principle on a per-job basis as well.

Say you’re hired to prep a wall and install a large, hanging cabinet. You price out the cost of travel to get to and from the job site, the cost of materials needed to complete the task, the value of subcontracting another person to assist you; but when you get there, you see that there’s been some water damage to the wall that seeped in and rotted the studs. Now you have to tear out the old drywall, replace the studs and install new drywall in addition to the work originally discussed. This added extra material costs and a great deal more time to your labor and that of the other individual you hired. You might break even on this project, but more likely, you’ll suffer some loss—unless you accounted for this sort of thing in your initial quote. If you didn’t this time, you’d be smart to do so next time.

Individuals and large corporations do not stay in business by failing to account for the certainty of unforeseen loss. Bad things happen. That’s the way of the world. And as I’ve said in the past, businesses aren’t meant to break even, they’re meant to profit; otherwise, they die.

When you do price with a reasonable cushion, you will certainly get comments about how high your prices are; these voices of concern are sometimes accompanied by the loss of a work opportunity. But then again, it’s always possible that even without the cushion the same potential client would have scoffed at your quote. That’s because each person views the value of goods and services a little (sometimes a lot) differently. That has to be expected. The important thing is that the person determining and quoting the price stands by the quote and doesn’t second-guess even if the price is laughed to scorn.

Being sure of your price and standing by it shows integrity. That means no negotiating. You know your expenses, you’ve accounted for the potential risks and you’ve quoted accordingly—not yielding if the prospective client wants to negotiate.

At the end of the day, it’s not always easy to arrive at the right price for a project. Be sure to take as much time as you need to think things through. I hope these considerations are helpful in getting you there.

One Key Principle of Logo Design

Although showing visual hints is acceptable, never should a logo show exactly what it’s representing; doing this shows ignorance on the part of the designer.  A logo should have a connection to what it’s representing, but not entirely reveal what that thing is; this gives it the quality of being an invitation to discover exactly what’s lying just around the bend.

If the whole brand is being shown in the logo this reveals that a designer is unskilled in visual communication.  If he or she can’t show an impression of something and is only able to portray the thing itself, can’t everyone else do that as well?  Business isn’t about same-ness.  It’s about distinction.

But the biggest failure is the disservice this sort of design does to a brand.  Besides cheapening the whole brand for the reasons mentioned above, it gives the potential customer no incentive to search out the brand more.  If everything is revealed upfront, why look any further than the logo?

The logo isn’t designed to do everything; it’s a visual element that should be created to act as a leading line from point A (introduction to a brand) to point B (becoming acquainted with the brand).

Surround Yourself with Creative Stimuli

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Creativity doesn’t ever have to go to sleep so don’t try to make it.

The “work” of creativity is usually that which is enjoyable so it’s not taxing to be a 24 hour creative.  An influx of ideas isn’t burdensome, so don’t make it be.

There are a lot of jobs that require no creativity whatsoever.  But there are a lot of other jobs that do.  So, what do you do when your income depends upon your creativity?  The natural tendency would be to try to make it happen.  But here’s the problem:

Creativity is something that can’t be forced—and that’s by its definition.  It has to do with imaginative, original ideas.  If I said, “Think of the next million dollar idea; you’ve got until 3:00” you wouldn’t be able to make it happen;  as the deadline got closer, you’d start to panic and more of your time would be spent telling yourself, “I HAVE to think of something” than actually thinking of something.  Sort of like trying to go to sleep when you keep informing yourself how late it is.  Doesn’t work.  So being creative means taking pressure out of the equation.

You’ll probably be able to think of something completely random under obligation to do so, but it won’t be your best idea.  It might not even be worth pursuing.  It’s probably not going to be profitable as a business.  It most likely won’t make your boss happy.

The best ideas happen when you’re as John Cleese states, “in the open mode.”  According to Cleese, backed by a great deal of psychological research, the open mode is where ideas are allowed to flow freely.  The obvious alternative is the “closed mode” where you’re ready to execute the ideas you’ve come up with.  The open mode is all about freedom of thought; the closed is obviously quite the opposite.  When we’re devoting time to open thought we can’t focus on executing anything.  When we’re executing ideas we’re too preoccupied to think of new ones.  His lecture on creativity is definitely worth a look.

With open and closed modes realized, I’ll submit that it’s also possible to find yourself halfway in between.  Hovering in limbo means you may be thinking of a lot of ideas but none or only a few are working.  But if you’re completely in the open mode, it’s very possible to come up with the best solution within a very short period of time.

Graphic designers often press the issue of time involved in a project.  But usually the length of time is due to two independent minds (creative and client) trying to reach consensus on the best design.  Whatever time is spent actually coming up with ideas can be shortened significantly if a designer surrounds him or herself with creative stimuli at all times, being open to any and all ideas, shunning none initially, no pressure whatsoever.

In 1998, Citigroup merged with Travelers—the largest merger in the world at the time—and eventually adopted the logo design Paula Scher came up with; the thing is, she created it in just a few seconds, literally scribbling it on a napkin.  According to Pentagram, it took Citi nearly nine years to implement the design; but ultimately that’s irrelevant.  The winning idea was realized in just a few seconds.

Thinking of creative ideas should be like observational comedy.  It doesn’t take much to notice the hilarity of everyday life.  Observational comedians are essentially just clever life commentators; and in my opinion, they’re the funniest.  Really all they do is look at the world around them with an eye for the humorous.  If they want material, they just go about living life and watching others do the same.  If something’s funny, add it to the list and use it as material for the next gig.

I am convinced that the more time we spend, day or night, just existing in a state of open-mindedness, ready to simply consider and use anything that we experience throughout the day,  the more quickly and efficiently we’ll arrive at the best creative solutions when it’s time to deliver.  When you decide to be creative in the way I’m sharing with you here, it becomes more of a lifestyle than a business practice.  And the full-time creative is going to be much more adept than the 9-5 creative.