Episode #13:

Are These Essentials in Your Design Contracts and Estimates?

Design estimates and contracts

Do you know what to include in your design contracts and estimates? Do you know if your projects are profitable? Do you have trouble pricing your work? Do you suck up out-of-scope work that you should be charging for? Do you wonder if your contracts are protecting you? Find out when I use a contract, what I take into consideration when pricing work and what I include to protect myself from scope creep or potential legal issues.


Show Notes


Note: I’m not a lawyer and what I am going to talk about should not be taken or relied upon as legal advice. I have had a lot of experience in many client situations over the past 21 years and I’ve worked with lawyers to refine agreement terms. I’m just sharing my own knowledge and experience. Some of it may not apply to your situation or your jurisdiction. So be sure to consult a lawyer.

When You Need a Formal Contract

A formal contract isn’t necessarily needed for every project. Before working with a new client, I always have a formal contract in place, which gets signed electronically. For new work for existing clients, I usually provide an estimate or a statement of work via e-mail, then have them accept it (by clicking Accept on the estimate or responding to the e-mail that they accept it). That includes:

  • what’s being done (the scope of work),
  • when it’s due,
  • the rate for the work and
  • what they’re getting (deliverables).

Now, if I’ve only done print work for a particular client and they now want a website, that warrants a new and separate contract because the nature of that work has different terms, which I’ll get into later.

If any terms have changed since I last worked with a client, that is a good time to have clients sign a new contract. I could have a document or page on my website with terms, like a master service agreement, and I could reference that in an estimate or statement of work instead.

Pricing Considerations

So that you can provide a more accurate estimate, there are many questions I recommend you get answers to, depending on the nature of the work. In this episode, I won’t include what to cover when consulting with the client over needs and goals, target audience, etc., as I will cover that in another one.

  • What is the deadline? Faster means you should charge more, unless you’re not that busy. You don’t want to find out later that the job was a rush and that you should have charged more to account for that. Plus, you might need to now stay up later or work weekends to get it done in time.
  • Is there an existing brand style guide that needs to be followed? If so, that could be only a few pages or 50. Consider the time you will need to spend reviewing it.
  • Does the design need to look at all like any other materials, like something in a series? If so, then you likely don’t need to spend as much effort on design.
  • Can the client provide a few pages in Word, so you can review the setup and content? By setup, I mean, did they happen to use paragraph and character styles for formatting the text, or are they like most clients, who don’t use any styles and you will need to manually apply them? In the former—and rare—case, it makes layout a breeze because you can import or map those styles into your page layout program. The latter will take a lot more time. Paragraph and character styles also make it easier to add text to a website because it retains the formatting. Now, by the content, I mean, are there graphs, charts, figures, sidebars and hyperlinks to be addressed, and are there a lot of them, or is the content mostly text? Let’s say they want you to lay out a catalog that is typically 200-some pages. There’s a lot of time to be accounted for to not only place the text but the images as well. But you also may need to adjust or crop them.
  • Will photos be provided by the client or will you need to find them? And are we talking 10 photos or 100? You may or may not know that at this point. Account for the hours you will spend searching for the right photos. Alternatively, maybe they need your help arranging for custom photography or illustration.
  • Does the client need any proofreading or editorial assistance? That may be an additional service you provide or you may recommend a colleague who does that, or have that colleague work as part of your team. Regardless, you want any editing or proofreading to have been done before you start working on the design or layout.

For design or layout

There are some considerations that are specific to design or layout work that is for print or digital purposes.

  • How will the work be used/distributed? Do they need native files because maybe they have an in-house designer who can make subsequent edits down the road if needed? Will it be printed? OK, you need to provide a press-quality PDF. Will it be distributed online? OK, you provide a web-quality PDF with bookmarks panel set to open in Acrobat. If the latter, does the PDF need to be accessible per Section 508/ADA guidelines? Few designers know how to do this, so you’d need to find someone to outsource that to. Will the work also need to be produced as an EPUB? Same there, you may need to outsource that part of the work.
  • If it’s for print, does the client need you to get print bids? Consider an hour or two (or more) to get consult with the printer if needed about setup, compiling the specs for the print bids, e-mailing the printers, answering any questions and reviewing proofs.
  • Do any graphs need to be recreated to look better or restyled to be consistent with any brand guidelines? Do any need to be rekeyed because they are not legible? I once worked on a 400-some-page book where I had to restyle about 200 graphs to use the same colors and fonts, type size and line thickness. That was a lot of work!
  • If it’s a book design: do they need a cover design and inside layout? If the client has in-house design staff, they may design the cover in-house and have you do layout only, cover design only, or they might have you do all of it. If you will be doing the layout, will there be an index? Depending on its complexity, you may be able to do it yourself with an InDesign plugin (if the client can provide a list of terms) or you may need to find a professional indexer.

For websites

Other considerations are specific to website design and development.

  • Will you be designing and/or developing? If developing, it’s best to see the design first, so you know what you’re dealing with—the complexity of the design, how many page templates need to be created, etc.
  • Will this be work you can accomplish with an existing theme? Or will this need to be heavily customized work?
  • Are any integrations or custom functionality needed? Can this be done easily with a plugin or will you need to write custom code for it?
  • Does the client need help figuring out what should go where on the website? If they have an existing website, do they need help figuring out if they should remove content and what should stay?
  • Will you need to redirect a lot of links? If the client is looking to change a lot of the content on their site, you may need to redirect quite a few pages.
  • Will you also need to address performance or security issues?

Scope of Work

A scope of work is essential to establish parameters around the work you’ll be doing. Otherwise, you could end up going down a very unprofitable rabbit hole. I think of the scope of work as a compilation of the information from your conversations. I recommend always including the following items in the scope of work.

  • Details about the work. Specify the nature of the work (whether it’s book design and layout, website design and development, etc.) and details about it. Pretty much, include the answers to the questions above. The more specific you can be, the better. I once had a client I did a book for, and they changed the size of the book just before it was about to go to the printer. I had listed the size in the scope of work, which just made it easier to say there would be a charge for that.
  • Number of designs. Regardless of how many designs you may provide, I suggest using the words “up to x designs.” Let’s say it’s “up to three designs.” If you create two awesome designs, you’re not obligated to provide a third. Plus, if you said you’d provide three and didn’t use the words “up to,” the client may ask to pay less because you didn’t provide a third. Trust me, I’ve heard it all. Some clients—bad ones—are focused on quantity, not quality. This makes where you draw the line clearer.
  • Revisions. Specify how many rounds of design refinements or revisions are included. Alternatively, this could be a set amount of time (x number of hours). The caveat with number of rounds is the potential for the client to make tons of revisions at each draft. The caveat with time is that the client cannot readily tell where they are with that time, as they can with drafts. Regardless of which way you choose, I suggest using the words “up to” and “of decreasing complexity.” So if they get “up to 2 rounds of revisions of decreasing complexity,” they shouldn’t be rewriting and sending all new text on round 2. Believe me. I speak from experience. I once had a client I did a conference brochure for, fitting in and formatting an insane amount of content. On the second draft, they sent all new text, no changes were tracked, so I had no idea what had changed. I had to redo most of the work. I felt I couldn’t technically charge for that because the number of drafts had not yet been exceeded. So I sucked it up. Then, after turning it around for the client to review again, I expected an approval to send it to the printer. Instead, the client said, “Oh. We still have another round of revisions left, right? OK, let me see what other changes we can make.” I’m sure you can imagine just how furious I was, which lead me to put this very line in all contracts since then!
  • Amount and type of content. You can reference a file if they sent you a Word document to review beforehand, or an approximate page count. I sometimes even list approximately how many graphics, photos or sidebars there are. That way, if what the client ends up sending you exceeds that or the content changes drastically, you can let them know it’s out of scope—meaning more work and will cost more. A note about referencing page count, whether it’s for a publication or a website. In publishing, a standard page is considered to be 250 words, and web pages vary in length, of course. So it’s necessary to base what you consider a page on a constant measurement. Say, for example, that you price a book for one client, who had 80 pages in Word, and use it as the basis to estimate a similar book for another client down the road. The first client could have crammed in a lot more words per page in smaller type size and half-inch margins in their Word document, and the second client could have fewer words per page because they used 1-inch margins. Using the measurement of 250 words per page makes sure you’re always comparing apples to apples to understand how many pages you’re dealing with—before laying them out. I emphasize “before laying them out,” because your design choices will affect the laid-out book and how many pages it contains. But, hopefully, you get the idea. It’s about setting some parameters to provide more accurate estimates now and in the future.

Rates

There are various rates to include in your estimates and contracts: flat, hourly, a combination of the two, and minimum rates.

Flat Rates

I recommend flat rates for most work, especially creative work, as opposed to charging by the hour, which, personally, I’d only do if it’s for updating a brochure or content on a website, something minor. I also like flat rates for work where you have an idea of how long something will take and you’re really fast and good at it. While you could charge hourly for that work, if it takes you less time to do and the client can get it sooner, why should you be paid less, right? The value to the client hasn’t changed; it’s only increased. Plus, flat rates give the client a better idea of what to expect to pay.

Hourly Rates

If you provide only an hourly rate, that doesn’t help the client understand their actual costs unless they have an idea of how long it will take you, so you need to include that as well. Note that hourly rates put the emphasis on your time, not your expertise. So proceed with caution.

By the way, if you don’t know how long projects take you, I cannot stress enough how important that is! Even if you don’t charge by the hour, you need to know how long something will take you to do. This helps you with several things:

  • pricing future projects more accurately regardless of how you charge for them;
  • invoicing any hourly work without having to guess how long you spent;
  • seeing if you’re becoming more efficient over time with similar work, which means you’re increasing your profitability.

If you need a time tracking app, check out Zapier’s article on time tracking apps such as Harvest, Toggl, Everhour, etc. As I’ve mentioned in previous episodes, my team and I track all our time in Pancake, which is a project management system, so if you already have a project management system, track your time in there.

Minimum Rates

It’s also a great idea to specify if you have any minimum rates to cover your time setting up the project, getting settled in, communicating with the client on the updates and then digging into the work. Maybe you apply your minimum rate when a project has been approved and the client wants additional changes, such as for making edits to a print file and having to redo your quality checks, preparing the file and sending to the printer again. Or you have to get back into the custom code you put into a site and make some tweaks after the site has already launched. Like 90s supermodel Linda Evangelista once said, “I don’t wake up for less than $10,000 a day.” I’m not suggesting that rate—LOL—but maybe your minimum rate for these sorts of small changes is $50, $100 or so.

Revisions Outside of Scope

I also recommend including the rate for additional designs and text revisions (client changes, also known as author alterations, or AAs, that go outside of the scope of work). So if you include two rounds of revisions and then go to three or four, that’s where they’d be out of scope. I typically price the designs at a flat rate and the AAs as hourly.

Finally, I add notes that pricing is based on the assumption that the client will be providing finalized, edited and proofread text, unless I am doing some of the proofreading. (No rewrites allowed, like in that situation I described earlier).

Deliverables

You should always list the deliverables in the estimate or contract. Nothing’s worse than, at the end of a project, a client has been expecting to get something else from what you’re providing, say, that they thought you were going to give them a Word document of their letterhead instead of a PDF for the printer that you created from InDesign. Now you have to redo the work in anther program.

I’ve seen situations like this—usually with clients who hadn’t worked with designers before—that have caused a lot of confusion that could have been eliminated by simply listing the deliverables. So it’s about setting expectations.

By the way, most of my agreements specify deliverables as print-quality PDFs, web-quality PDFs or an actual website. Rarely has a client asked for or needed the native files. Most cannot do anything with them anyway, as they usually don’t have the right software or know how to use it. But if they want them, I price them out separately. Then they can decide if they want them. These are your intellectual property, so you have the right to charge for them.

Note that if you’ve agreed to provide native files, then, when you package them up for the client, you have to be mindful of font and stock image licenses. You cannot simply provide them. You must check to see if they can be given to the client freely—not in terms of money, but rights—or if the client needs to purchase their own license. This applies to websites too—in terms of web fonts and stock images.

Terms

There are several terms that I include in all of my contracts.

Authority

You’d think this wouldn’t be necessary, but a clause saying that the client contact is authorized on behalf of their company or organization to enter into the agreement with you and engage you for the services is a good idea. Sometimes people think they have more authority than they actually have. Don’t let that become your problem.

Copyrights

If I were to work as a subcontractor, then that is a work-for-hire situation. That means the client owns everything: the design, the files, etc.

In most cases, though, I only want to grant reproduction rights to the client, unless they are looking to buy the rights, meaning the rights to the design and to the native files.

For logo design, the client, of course, should be granted copyrights—but under two conditions: 1) upon payment in full and 2) only to the final design, not others you created in the process—unless they want t o pay additional for those too. I’ve actually had that happen, which was a nice bonus.

Payment Schedule and Late Fees

Getting money up front before starting work with a new client is non-negotiable. You don’t want to start work and they disappear—with or without your work. In the former case, they’ve run off with your ideas; in the latter, you’ve only lost the time spent on that work.

I specify how much they need to pay up front: maybe it’s 50% for small- to medium-sized jobs and 30% for larger jobs. Then I include dates or milestones that I will invoice again. But I don’t make them conditional on something being “approved” because a client could go round and round, and that approval never comes—so neither does the payment.

If the last payment is due before sending something to the printer or launching a website, I would specify that too. If it’s a new client, I recommend you get payment prior to job completion. If a client needs to take 10 or 30 days to pay, that’s fine. Just be sure to send the invoice to them, allowing plenty of time to be paid before the job completion.

I always include when invoices are due (upon receipt, 10 days, 30 days, etc.) and address late fees. The maximum amount you can charge for late fees may be set by your state. For example, in Maryland, I can charge 1.5% monthly, which is 18% APR. So you may not be able to charge a willy-nilly fee of, say, $50.

Expenses

Unless they’re being included in the pricing, I’ll include a line somewhere that says that the cost of a courier, fonts, printing, stock photos, hosting, plugins, etc.—depending on the type of work—are not included. Before I started including this, some clients would assume that some of these costs were included.

Cancellation

I include a clause that says if the job gets cancelled, I still get paid for the work and any incurred expenses.

Hold Harmless

To protect myself from being liable in situations such as, say, the client has ripped off their copy or photos from someone else, I include a clause that states that the client either has ownership of or has obtained proper licensing for all of their copy and any materials they are providing and will hold me harmless and indemnify me from any damages or liability, including reasonable attorney fees, as a result of a violation.

Limitation of Liability

Another important one is limitation of liability. I include a limitation of liability clause, which pretty much says that if I screw up something—say, I made an error and a print job had to be reprinted as a result, missed a deadline and it ended up costing the client, or built an e-commerce website and it went down and the client lost sales—the client can’t come after me for more than what’s stated in the clause. Well, here’s hoping anyway. These clauses may or may not be enforceable in some jurisdictions, so check with a lawyer on that.

There are examples of limitation of liability clauses online. In mine, I state that the liability shall not exceed half of the total fee for services rendered on the project. I decided that because the client does have a responsibility to check the work. So as accurate as the work may be, and I even find and correct errors they’ve made, what if a phone number was accidentally typed in wrong or what if I were to accidentally type a stray letter or delete one somewhere? Knock on wood since that has yet to happen, but you never know.

If you decide to include a limitation of liability clause, I recommend putting it in bold, underline or uppercase (although that looks awful, LOL, but, hey, it’s just a contract)—something that sets it apart from the rest of the text, so that it gets attention.

Promotional Use

Another clause I include is promotional use. In some situations, you may or may not be allowed to show the work publicly, but if you are, then I recommend including need a clause that says you are allowed to show the work on your website, in promotional materials and in other areas online. In some cases, you may not be allowed to, as it may be a confidential project. If you’re acting as a subcontractor, then you may not be allowed to either, or you might be allowed only if you specifically state your part of the work and that is was done under the direction of XYZ Company.

Websites

Working on a website has unique considerations so I have clauses for that type of work. So I have a clause that says the client is granting me access to their website, with write permissions to all directories and files, and access to their hosting provider. If it’s a WordPress site, I also include: “as well as permission to install any necessary WordPress plugins for maintenance and security.”

I also have a clause that says if the client or one of their subcontractors goes in and updates the website and something goes wrong, it may result in additional fees and time to repair the web pages. Here’s another situation where you could apply a minimum fee.

I include a clause that says I cannot guarantee a website’s security, search engine rank, hosting, uptime or that the site will be free from errors, etc. No one can guarantee a site will never be hacked, and you cannot be responsible for the code of plugin developers or the accuracy of the content that the client adds to a website if they’re maintaining it, etc.

If I’m creating a site that is accessible to people with disabilities (that is, WCAG, Section 508 or ADA compliant), then I also cannot guarantee that when a client takes over that site, it will remain that way. So I include something about that as well.

Expiration Date

I add a line somewhere—a bit prominently, so not in the “fine print”—that states how long the estimate/pricing/contract is good for. A shorter timeframe of, say, 30 days, can give a sense of urgency, provoking the client to accept it faster. But, also, if you don’t put an expiration date on it, they could come back months—or a year—later and expect to get the same price. It doesn’t mean you have to accept that, of course… Obviously your pricing can change any time. So just sayin’.

Timeline

Sometimes I need to include a project schedule with actual dates for when I’ll send the first proof, when the client should give feedback, I send revised proofs and they provide additional feedback, final approval and preparing for the printer or, if a website, the launch date. Usually this requires collaboration with the client to account for any holidays, time off, etc. But including a general timeline is helpful, such as “design will take 2 weeks” or “web development will take 6 weeks.”

This will help set expectations, so that the client, doesn’t—two days later—ask, “Is it done yet?”

Conclusion

Depending on the client—say, a corporate or government client—I might have to modify some of my terms. It might be something I don’t object to, such as getting paid within 45 days instead of 30, or it might be something major, in which case I will consult with an attorney. In some cases, I’ve had to use their contract instead, another case when I have attorney look at that.

I’ve seen some contracts where the client wants me to take on liability on their behalf. That’s never good, so I won’t sign those unless they remove or modify that.

I’ve also seen situations where a large corporate client wouldn’t pay anything up front but would pay after seeing a first draft.

I think I can say I’ve seen it all when it comes to potential opportunities for misinterpretation or mismanaging expectations. Whenever something new has come up that I wanted to prevent or to make sure someone works the way I want them to,  I’ve added a clause to my contracts about it.

What’s most important in estimates and contracts is clarity on all of the considerations I mentioned so that you protect yourself—not only from doing work without being paid but legally as well. It’s not necessary to use legalese to accomplish that either. You can write a contract yourself, adapting language from the AIGA Standard Form of Agreement for Design Services or the popular plain-English Contract Killer and have an attorney review it, or have an attorney well versed in copyright and intellectual property write one for you. But I recommend doing one of those, so you know you’re covered for the type of work you do.

Some other resources on contracts you might be interested in are Better Relationships Through Better Contracts by attorney Matthew S. Johnston, several business and legal forms books by Tad Crawford and Eva Doman Bruck, and The Business Side of Creativity by Cameron S. Foote.

Even if you have professional liability insurance, also known as E&O, which protects you from claims of negligent performance, that does not take the place of a good, solid contract.

And I can’t reiterate enough: for all new clients, get a signed contract and money up front.

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