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Fear Giving a Price Quote? The art of the Deal Memo

(This is a follow up to a post titled “The Artists Pain: Quoting and Negotiating Prices (A.K.A. the “BRO Deal”)”

It’s a funny phenomenon that many visual artists share; the fear of giving a price quote.

They worry that if their price is too high, it will scare the client away.  If it’s too low, then they’ll lose money.

And when put on the spot to pull a price out of thin air, they can screw it up.

It goes like this:  a potential client asks you to create something you’ve never done before.  And because you haven’t had experience with this particular item, you aren’t sure of the cost of materials, the time it will take, and the possible challenges that go with it.  But you’re glad for the opportunity.  And right on the spot the client eagerly asks “what is it going to cost me?”

You haven’t had time to consider price, but in your excitement, you blurt one out anyway. “Oh, it’ll only cost you about $2,000.00.”

That was a big mistake, because now that you’ve put a number in their head, they’ll hold you to it.  And once you start crunching the numbers on what your actual costs will be, you realize that you underpriced it by about 50%.  Ouch!

I’m speaking from experience here.  I’ve underpriced a few more jobs than I care to admit.  And it hurts when I do that.  Under-pricing your work creates a litany of problems:

1.)     The most obvious is that you don’t make money off the deal

2.)    You’ve set a standard now for work priced lower than it should be

3.)    You don’t give yourself any wiggle room in the event that the client wants to talk you down in price (some clients enjoy the art of the haggle).

Here’s a solution that helps keep you in line with giving a proper price quote:

FIRST:  Tell the client asking for the price quote “I’ll have to crunch some numbers and e-mail you a quote.  Let’s follow up tomorrow.”   Never give a price on the spot unless you’ve done this before and you already know how to quote it.

SECOND:  Take your time properly assessing the time, materials, and other costs involved with the project.  Come up with a price fair to the client, and one that will produce a profit for you.

THIRD:  Put together a Deal Memo or Proposal.

I use deal memos or proposals for everything, including mural paintings, one-time use fees, commissioned paintings and speaking engagements.  I sleep better at night knowing that everything is in writing, thus avoiding misunderstandings later.

THE DIFFERENCE BETWEEN A DEAL MEMO AND A PROPOSAL:

A proposal is a glorified deal memo – it gives great detail on the project and can be multiple pages long.

A deal memo is more of an outline of the deal you are offering or quoting.  It’s great to use before you put a lot of time into writing up a multiple page proposal – it will help to quickly determine if you and your client are on the same page with regards to pricing and the deal.

MORE ON THE DEAL MEMO: I started using deal memos years ago when we got into licensing.  In the licensing industry, deal memos are used in the beginning stages of every business relationship.

A deal memo is a simple, one-page sheet that describes the deal you are offering.  This sheet is meant to e-mail or hand to a client.  Use of a proper deal memo assures your client that you are a professional and they come to understand that your price is your price.

The most important points outlined on a deal memo are:

• The name of the client
• A date that the offer expires (I use 30 days)
• A brief description of the project, event or painting
• Price and price options they can choose from
• Payment terms (I require 50% down & balance at completion)
• The deadline
• Copyright notice (we always state that the artist retains copyright)

A deal memo is not a contract or a legal agreement.  It is simply a tool that you can use to provide a price quote while outlining the particular points that you want to agree on.  Your client can look it over and accept or ask to make changes to the deal.

Sometimes, a deal memo will be the document used prior to the formation of a formal contract.  But, it doesn’t have to be.  The main idea here is to make sure that your client agrees to your pricing, terms and conditions.

Below is a sample Deal Memo that we’ve used in the past.  I hope this is helpful to you, and please, forward onto your friends that may find this useful, too.

Maria xxoo

_________________________________________________________________________________________

DREW BROPHY DEAL MEMO

For Salong Restaurant, Fort McCoy, Florida (Client)

DATE:  May 6, 2009          Offer Expires 30 days from date of Deal Memo

Project:  Drew Brophy will paint a 36’ x 15’ wall mural depicting ocean scene.  Artwork will begin and finish in a 10 day window.

Materials:  Client is responsible to pay for materials

Cost: $16,000 plus travel expenses for Artist

Payment:  50% deposit required to schedule the painting.  Balance is due on the day of completion.

Rights Granted:  Client may use image for all marketing and advertising materials for ten (10) years.

Copyright:  Is retained by Artist.  The Copyright Notice:  “Artwork © 2009 Drew Brophy” must be printed legibly on all print material.

Agreed to by:

For the Artist:    ________________ For the Client: _______________

Add signature lines and date lines here

_________________________________________________________________________________________

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Similar Posts:

• The Artists Pain: Quoting and Negotiating Prices (A.K.A. the “BRO Deal”)
• How to Price a Wall Mural – Developing a Price Sheet and Proposal
• Filing Copyrights, Firing Clients and Avoiding Shysters

Tags: deal memo, fear of giving a price quote?, pricing art