DAY FOUR – The cost to run a design agency

(reading time 6 minutes)

As promised (if you read DAY THREE – What had to change read here), I’m going to explain where we pull our figures from when preparing quotes for the services we offer at JemDigital. 

Later blogs will delve into the cost for each service in more detail but I want to highlight the costs. We have to consider and educate people that have been in the same position as we have by not fully understanding where your pricing should come from.

I’ll always say to people, “…you really shouldn’t have to justify your prices, if you have to, you’re marketing yourself to the wrong people”. So here I am contradicting myself, I can hear you say it as I type – fair enough, although I feel after a period of underselling my services as a designer, I need to address the issue.

Fortunately, it hasn’t affected my business, yes the prices have gone up but the studio location has changed, the team has expanded, therefore the skills of the workforce merit the cost and match what is being charged.

 

With every business in any industry, we all have this thing we need to take into consideration… what’s it called… ah, that’s right, ‘overheads’.

Overheads are part and parcel in every business, it’s the thing that a client or customer doesn’t touch or see, therefore, don’t realise that the price for what we do and why has to be taken into consideration at the quoting stage.

So let me break it down for you, our overheads are:

  1. Studio Rent

Most of our clients have had the pleasure of coming into our little creative hub, and trust me when I say, it’s beautiful. There’s a fair hike up three flights of a traditional old Glasgow tenement staircase to get to the top. When, and if you make it, you’ll be welcomed with a warm reception from the team, a hug (if you’re that we inclined, we’re huggers) and your choice of whatever Nescafé Dolce Gusto pods we have left after me and Aileen skelpt the cappuccinos. It’s a modest workspace but I really don’t fancy us all working from my home – I’ll be cleaning my oven when I’m supposed to be working and that’s my mum’s job. So it’s a necessary evil for us.

 

  1. Staff wages

I really don’t need to say too much on this subject, if I don’t pay the staff, they won’t come to work and quite rightly so.

 

  1. Marketing

Just like you, we need to market our services. There are printed and online marketing we have to consider. On top of that, there’s time. We have to factor in  time we spend on marketing which are not billable hours for the business. I set aside a specific portion of my week, as do the team to focus on non-fee earning marketing activities. I total the hours and remove them from the standard working hours of what the studio has to earn money to function in a working week.

  1. Bookkeeper & Accountant

This is something I would advise any new business to consider at the stage of incorporation. If your time in your business can generate a certain premium, and the cost of hiring someone to look after particular responsibilities is less, then it’s a better option to outsource that task. It costs me more if I carry out bookkeeping duties, without using a bookkeeper, and let’s be honest, they are the experts. If you pick the right accountant that is presented with perfectly prepared files from your bookkeeper, then they’ll save you more than they cost you.

  1. Insurance

A must-have for any business, and you should seek advice from industry experts as to what insurance you should have in place. We have Professional Indemnity insurance and Public liability. They are bot- must haves for our industry.

 

  1. Equipment

When I say equipment, I refer to everything we need to do what we do. First of all, there are the computers we use that need to be of a high specification and something close to my heart… stationery. I’m just going to put it out there, I’m obsessed with stationery. Love a notebook, don’t go anywhere without one or two. And Morgan’s Sharpie gift set she got from her lovely boyfriend at Christmas is at serious risk of being swiped when she least expects it. I’ve started buying the business stationery from my personal bank account to keep the costs down, my clients shouldn’t have to pay for my addiction; I’m working on it!

 

  1. Software

Nature of the beast of our industry, hairdressers need to pay for colour and product, we need pay for software. We only use the best, with everyone in the studio having access to the Adobe Creative Cloud platform, we never miss an update. There are some things in business that you can’t compromise on and this is one of them.

 

  1. Personal Development

In a world where technology is advancing at such a rapid pace, we need to make sure everyone has the opportunity to develop their skills. At the minute we have someone who has joined us on a work experience basis, we are investing in training for him so he can become part of the team. He has something I value and want in my squad.

 

  1. Stock Library Access

As a Design Agency, we have subscriptions to stock libraries to access high-quality images, and more importantly legally source images that can be used in our client’s marketing. Another essential.

 

  1. Staff parties and overnights SPA visits

Ok, I’m yanking yer chain with this one. There have been a few staff night outs where Morgan will wear more of the wine than she’ll consume (she awful clumsy) but this is paid for out our own pocket and isn’t a cost to our clients.

We are very reasonably-priced at what we do and we are very competitive in the arena we operate in, as mentioned in yesterday’s blog. I’m going to delve into our pricing in more detail in future blogs so keep an eye out for it.

 

Lots of love,

Victoria

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