The issue of fees for illustration is often confusing and mysterious.
In addition to my 25+ years of experience working as an illustrator, I teach 'Professional Business Practices' to aspiring illustration students every year at Sheridan College and OCAD University in the Toronto area. Pricing work is one of the many subjects that I cover in my classes. Managing the business side of an art career is every bit as important as the creative side and my students graduate knowing how to do just that.
Artists, who haven't been taught how to manage a business, struggle for years to learn by trial and multiple errors. For that reason, business training in art schools should be mandatory. Unfortunately, the subject is often omitted entirely from professional training. Illustrators, in particular, typically work in isolation as freelancers which makes them feel even more alone when it comes to the issue of money. Makeshift, but often impractical and/or illogical, solutions wander in to fill the 'how-to-price-work' void.
I came across an article (posted 18 January, 2011) about pricing work on the 'Escape From Illustration Island' website.
Last May I contacted Thomas James, the editor of EFII, about the article (and my differing opinion) and he graciously offered to allow me to write a counterpoint. EFII exists only through his hard work and is derived from his wish to inform as many illustrators as possible about business matters. My counterpoint wasn't posted on EFFI, yet an alternative view may be of some use. It isn't meant to disrespect Thomas but rather to serve as a more structured variant to the pricing method put forward in the EFFI article.
My counterpoint is this:
I disagree with the article's assertion that fees are affected by "lifestyle". The wording in the EFII articles states: "As you know, the amount you charge depends largely on how much you need in order to survive."
The wording "As you know" suggests that pricing one's work "largely" on one's lifestyle aspirations is the standard way to price work in the illustration business. It is nothing of the kind and would constitute a wholly unreliable criterion upon which to set fees. Some artists may rely on this method in the absence of knowing what else to do, but that doesn't make it a cogent one. It isn't how clients should assume that fees are calculated either.
Illustrators are in the image copyright licensing business. Fees, therefore, are based on copyright usage. That's what all those biblical-sounding (whereas, hereinafter, witnesseth) contracts, that clients frequently ask you to sign, are all about. For those who are unfamiliar with the concept of licensing, just make it analogous to renting a car. The cost of the car rental is determined by the use of the car (i.e. three days, one driver, local driving etc.) and the description of the car type (i.e. small econo-box). Should the use and description of the car change (a six month rental of a Lamborghini Countach) the fee changes accordingly. Note that the rental fees do NOT transfer ownership of the car to the renter ... unless the business owner has lost his/her marbles.
While there is competition within the car rental marketplace, each individual company has to charge fees that are economically sustainable or they'll under-price themselves right out of business. The clients of any business are fickle. Illustrators dearly want to believe that doing work for a ridiculously low price will ensure client loyalty and bring in handsomely-paid work from that client in the future. It won't. It will just generate a list of clients who know where to get comically cheap work.
"Lifestyle" has nothing to do with the copyright use of, or rights to, an image. Usage includes factors such as media (i.e. print or web), territory (distribution), time (period of use) and the rights (i.e. first rights or buyout). The image description also plays a price-setting role in terms of colour, size and complexity of the image content (a drawing of a football, for example, versus a drawing of an entire football stadium with the home team scoring the winning touchdown).
All of those specifics of use are quantifiable. "What success means to" the illustrator can vary wildly within one day, let alone over time. First rights, however, has the same copyright meaning today as it will tomorrow and next year. When submitting a quote, the artist doesn't want the client assuming that fees are based on the artist's desired luxuries. When negotiating, for example : if the client's budget is limited, one can reduce the amount of copyright use (less time, less media, less territory) or reduce the image content (make it simpler) or reduce the number of images in total --- all as quantifiable reasons to reduce one's fee to an amount that perhaps can work with the client's budget. Such a pricing method is far more rational to a client than the artist seemingly grabbing numbers out of the air, or sheepishly mumbling something about wanting to get the newest MacBook when asked to justify a quoted fee.
"Lifestyle" doesn't affect fees one iota, nor do the number of hours it took to complete the work or the art materials / computer gear used. One of my biggest jobs (in terms of fees) took three days to do, but I was paid what would be a respectable salary for a year. That's because the fee was appropriate for the extensive copyright use that the clients wanted to license. Charging on an hourly basis, just for my time alone, instead of calculating the licensing fee would have earned me 95% LESS than the amount that I actually billed. The client didn't bat an eye at my fees because they knew they got a licensing bargain in comparison to far more expensive custom photography, which also would have been too generic-looking for the project. My fees are not affected by my fame (I'm not 'famous' within the illustration business) or my level of experience. Copyright usage determines all.
I charge appropriate copyright usage fees for my work and live within the means of what I earn. Yes, I do teach but it's seasonal work and I lived exclusively on freelance work for 15+ years after I left school. I've had lean years and lush years, yet my pricing structure remains the same because the fee parameters are based on consistent criteria (copyright usage). If I don't earn enough money to pay for the lifestyle I want, well dem's da berries.
As an aside to the EFFI article content, but in relation to fees: "hourly rates" only make economic sense, as a freelance illustrator, if you are illustrating every working hour of every working day and the instant that you complete one paid job it's immediately followed by another. No illustrator has a constant, uninterrupted stream of work across their desks for their entire careers. That just doesn't happen. If you charge $500 for an illustration that took you an hour to complete, but it's the only job you got that month, you aren't making $500 an hour. You're making $500 a month. Charging by the hour for freelance illustration is NOT economically sustainable. The word "rates" suggests hourly income. The word "fees" is perhaps more in line with the concept of copyright licensing.
For those thirsty for more on this topic, here's a link to an interview I did for Pete Ryan's blog, entitled 'Non-Slick', which further delves into pricing matters, including advice for those who have been offered the equivalent of "pizza money" for their custom work.
Here is a link to an anonymously-written article (captured and re-posted by a graphic designer) entitled "Craigs-Pissed" about the folly of doing cheap/free work. It also makes many a good point about fees. Illustrators everywhere, especially rookies, should print it out, laminate it and nail it to the wall right at eye level.
To sum up my counterpoint: Fees affect lifestyle, lifestyle does not affect fees.