Boosting Profits

The Top 5 Financial Mistakes Graphic Designers Make

By October 2, 2013 16 Comments

Running your own design business and being your own boss should be fun. And it is! It’s great to have full creative control over your designs (well except for those pesky clients with their opinions, lol).

Yep, it’s great living like a boss, not to mention if you want to go home early… you can! Geez it’s so much fun, what on earth could go wrong?

Well… unfortunately all this fun and freedom has a cost. And the cost is: responsibility. And your biggest (and most painful) responsibility is the money, right?

Your finances don’t have to be the worst part of being a boss and I’ll show you why.

It’s not as hard as you fear. Take it from me, the least-mathmatical person I know, once you’ve mastered a few key concepts and you have a smart financial plan, being a boss becomes a breeze… well almost!


Let’s look at the top 5 financial sins that almost all graphic designers make… and some simple solutions to make your life that bit easier.

(BTW I’ll be impressed if you’re not making any of them!) 

1. Not knowing the true cost of your design services.

On the surface, charging for your services should be a simple process… in theory right? You figure out how much you think your time is worth per hour, and charge for the amount of time you work.

Simple right? Not so quick!

“Design work can, and often will, take longer than you estimate.”
[Click to tweet]

In addition to that, do you REALLY know how much your time is worth?

Are you taking into account absolutely every aspect of your business? I know that when I started I didn’t, and I quickly realised that I wasn’t…. and I ended up with small (to utterly NO) profit margins on many jobs.
Some simple solutions:

  • Make sure you add extra hours to all jobs. Estimate how many hours you think this design task will take you, and add a good 20% on top of it! Just in case jobs run over.
  • Calculate your TRUE hourly rate. If you have multiple designers / developers / etc working for you, you need to take this into account.As part of your ‘true’ costs, you should also take into account your utility costs (after all electricity isn’t free!) and then add your profit margin on top. Don’t ever under sell yourself… you’ll only hate yourself when you spending 20 extra hours on a job with no profit at the end of it.

2. Cutting costs rather than driving revenue.

When looking at how they can improve their profitability, many design businesses may be tempted to cut costs. However, the danger is that it’s a false saving, and you could be in danger of cutting out the legs from underneath your own business.

What a lot of designers often overlook, is that instead of cutting costs, it can often be a better use of time to find out how you can stimulate more business from the money you are spending.

So for example, a design professional who runs their own business should look at:

  • The number of clients they have.
  • The number of times these customers use your services.
  • The average amount you make from each client.

Once you understand the above drivers to your business, you can begin to create small tactics to help increase your income.

So some general habits you might want to get into include:

  • Following up with your previous clients to see if they have any other new design jobs they need help with.
  • Ask your clients if they have any friends who are looking for a designer, or even refer you to their friends, in case they need a designer.
  • When creating a quote for a client, offer them add-on services (new logos, email templates, banners etc) so that you can maximise the amount of work you get from them. The old “would you like fries with that?” theory.

Long story short, before cutting costs, you should look at your strategies in place as to how to increase your business, because once you start cutting costs, you will likely find you will have to continue cutting costs to survive… and that can lead to a downward spiral from which there is no escape.

3. If you fail to plan, you are planning to fail!

There are many design businesses out there who go from month to month, not truly knowing their expenditures and incomes, and as a result are unaware if they’re doing better (or more dangerously, worse) from month to month.

It is VITAL that you develop a working understanding of your financial incomings and outgoings. Otherwise, you might be running your business into the ground and not actually be aware of it!!!

Seriously, don’t rely on guess work. Instead, every month, make the time to note down:

  • Your sales income.
  • Your costs.

In addition, you should do the above, for each major design service you supply. This way you can identify which services are making you money, and which need to be improved upon.

4. Make sure you know your exact figures.

Ultimately it’s easy to quickly write up some figures from the top of your head and say “yep, that’s my outgoings and incomings.”
No. Because even the best of us will make mistakes. You should always know:

  • The EXACT amount of money you’ve spent this month.
  • The EXACT amount of money you’ve made this month.
  • The EXACT amount of money your business has at the end of the month.
  • What money you’re EXPECTING next month.
  • What outgoings you are EXPECTING next month.

Unfortunately I know lots of designers who forget their key costs, who think they have enough to cover it all, then they check their bank balance to find that the money they thought was in there… well… wasn’t.


“Once you’ve made your first BIG financial mistake, once you’ve really suffered from lazy guesstimating you’ll never do it again.
But…wouldn’t you prefer to avoid the pain in the first place? “

Likewise, if you map out what you’re EXPECTING to come in next month, then you’ll know if you’re making enough to cover your outgoings… or if you’ll need to push extra hard to earn what you need.

These little financial health checks can help you stay in the black… where you deserve to be! 

5. Remember to get your money into your actual hands!

What’s the point of doing all this work, if you don’t get the money you are due?

When you move forward with design work for a client, it’s important to lay out with your client exactly how much you will be charging them, and more importantly, WHEN you’re expecting payment to be made.

Personally, if a project value is less than $2,000, I always aim to get all monies upfront, but if you want to, you can setup a payment schedule like this:

  • 50% upfront as a deposit.
  • 25% once initial designs are complete.
  • 25% at the end of the job.

One thing I must stress is that you should NEVER start any work whatsoever without having a paid deposit from the client IN YOUR BANK.

If I had a dollar every time I’ve heard of a designer who had done free design drafts before they had received money, I would be one very rich lady! Often this can lead to heartbreak, so make sure you get some sort of deposit that covers your initial work every time.

So once you’ve laid out the terms, make a note to chase the client when money is due. And when the client says that they’ve paid, actually CHECK your bank account and make sure the money has landed.

DO NOT continue your work until the money is actually in your hands. Trust me, I’ve done enough “free” work to know that it only leads to heartbreak when you do work before you receive your money.

Got any tales of financial hardship you want to share with us?

Continue to enjoy your business, just remember to be responsible with your money. I wouldn’t want you feel fed up with your business due to a financial mishap.

Have you ever had any financial mishaps or hardships that have made you want to throw your hands up in the air and almost quit? Let us know below!

All the best!

 Bianca Board

What do you think? Share your comments below.


Author Bianca Board

After 20 years inspiring more than 10,000 designers and small business owners to take control of their business, Bianca is now spearheading Foxley, a brand spanking new SaaS platform for designers. She is deeply passionate about helping distil the complexities of running a web design business - to make it easier for all designers to make the leap from designer to design entrepreneur. She’s a translator of web jargon, a lead generation master, a champion for small businesses and you can Google her brain for endless strategies on how to transform your business.

More posts by Bianca Board
  • Sarah

    There’s nothing more annoying than a client that won’t pay! I think I might have to look at using rule 5 for myself so I don’t end up doing hours of free work again.

  • Paul

    I personally have fallen into the trap of doing work for friends and not operating in my business style approach, I think its important to also treat friends as a client if possible, although on the flip side its usually friends that you get from work from starting off :0

    I like the idea of actually knowing your true costs as a designer, as starting off straight from UNI this can be a real hard task.

  • Liam

    Excellent blog! I wish I had this 3 years ago when I started out! I was doing gig posters for bands at the time, and I made the mistake of doing my first one for a friend on the house. Bad move. All I ever got when I talked money with these guys was “Oh, but you did it for Mick for free!” I eventually got over that hurdle, but because I really had no financial structure in place or any idea what my time and effort was worth, I wound up doing all this work and getting paid in beer (a 6 pack usually), a free ticket to the gig (which I could live with if it was Faith No More or someone of that calibre, alas…..), or worse, not at all. I stopped doing it for a while, and I’ve had a few requests in that time, so I’ll be getting back into it at some point, and when I do, I’ll be using this as my guide to keep me rolling in the Benjamins! Cheers Bianca!

    • Honour thyself O designer and the Benjamins will flow. 🙂

  • Over and over I’m horrified by how undervalued design is by the general public. I overhear people scoffing about how much this or that company paid for a new logo or branding.

    I think the worst thing a designer can do is to give in and undervalue themselves! The more designers give away their work or cut their profits the more we’re just re-enforcing the idea that design is easy, pointless or something “anyone can do”.

    • I saw this video the other day which reminds me of this: “It will look good on your portfolio” does not pay the bills lol

    • Oh yes Elise, I totally agree. I’m not sure if it’s always been this way, but there’s a trend to undervalue creative works. Even commercially-driven graphic design gets penny-pinched by the ‘suits’ out there.

      We need to stay strong as a group, but we ALSO need to link our works with real results where we can. Yes I know that’s hard to do when you’re talking about a logo, but if you work in web design then at least everything is result-driven so you can PROVE how your design gives them a return.

      P.S. don’t even get me started on the whole Fiverrr/eLancer issue. If I hear ‘But I can get some dude from Timbucktoo to design that at a fraction of your price’ again, I might well scream, oh yes I might! 😉

      • Or worse – 99 designs. As if the time, talent, creativity, education and expertise that went into creating something is worth nothing at all!

  • Mel

    Then there’s the parents who expect you to build their web business for free cos it’s your expertise and they fed you for the first 20 years, argh! 😉

  • Eric

    I personally haven’t had too much experience in running my own design business. When I first finished college, as I think is the standard, I went out and tried to get as much work as cheap as possible to build up a folio. Perfect example of your point number one, I had no idea what to charge people, so I charged next to nothing, keep the client happy and all that! However at this point in my career it wasn’t much of an issue, living at the parents’ house with no financial responsibility, it was just some pocket money more than anything.

    It wasn’t until I started working for a small business (well after a couple of years) that I started to see just how much it cost to run a job. It was a bit of a shock! It has been a really good experience working through this stage of the business and getting to know just what we needed to cover in a job, and now being able to quote work confident that we are covering costs.

    Cutting costs is a good point! We have actually put up our price, as has most of the industry I guess (I always forget it has been almost 10 years!), but this was something that really worried me when we put this in place. What would the client think!? Turns out they were happy to pay the extra, because they understood business, and they knew how things work!

    I feel like I am rambling, but one quick last thing, I completely agree with the points made here, I think this should be a compulsory read for all designers! It is a hard one to get your head around, the finance, but is a really important aspect of any business! Great read.

  • Kahli

    Number 4 really points out what a lot of us designers aren’t doing as often or as thoroughly as we should be – working out expected sales and expenses. In saying that, it’s easy enough to quote clients on projects and pay the bills with that income, but knowing what’s coming up so we can “push extra hard” if we have to is something I’m going to start paying a little extra attention to from now on – thanks Bianca!

  • Ben

    If only I had this a few years ago Bianca! Especially number 5, it’s way too easy to get caught up in the work before receiving payment. I liked to think it was because I was too excited to start something new and I wanted to get stuck in, but often that came back to bite me later on. It is a lesson I learnt the hard way, but a good lesson in the end.

  • Oh man! When I ran my own business (going back 8 years now… phew) I was the worst for starting work without taking payment first. Looking back on it… it was ridiculous. In my head at the time though it made sense. Start the work, impress them, get full payment before completing the job.

    What REALLY happened is that they took and inch, then another inch, then another… before I knew they hadn’t just taken the mile, but they took the car and the destination with it! They ended up using my work and gave it to another designer to improve upon.

    Never again.

  • Sarah Adirondack

    I had a client for over 6 years and when I initially started doing design work for them I accepted payment after the work was done because I didn’t really know better at the time. Never again will I do this because I have tried to change them over to pre-paying and they wouldn’t do it, so I had to let them go as a client. I told them that other clients were pre-paying and I just couldn’t give them that benefit any longer. Even though you may deliver design work quickly to the client, they don’t care, they will drag their heels when it comes time for payment and like Wingey Pom said, they took an inch, then another inch, then another until it became a mile. I’ll never understand why…because I wouldn’t go to Nordstroms and pick up a dress and walk off with it without paying and then tell the clerk I’ll pay them in 30 days.

    • I’m glad you stayed strong Sarah! And tell me, are you happier now they’re gone? Did you replace that slow-paying client with more clients who are happy to prepay?

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