How to Pay Your Talent

A 2014 Creative Compensation Guide

I’d like to talk today about compensation for creatives.
Yes, this is a hot button issue, but we can agree this sort of conversation is overdue, and I have myself benefitted greatly from reading others’ thoughts on the subject.

I enter this post with a sense of wide-eyed acceptance at what may come after this is posted. But it needs to exist, even only as a reference point. This article is aimed at creatives, and the people who may hire them.

Portland, Oregon is the context for the numbers you will see in this post. Certainly other cities will have a 10–20% jump in these rates, based many factors. Here we go.

Talent

This post will define talent in this way:

A creative person working in a leading agency or small studio setting. This person will have been making cultural influence and/or impact in the field of communication design, advertising, or adjacent creative fields.

What kind of work should this “talented” person do?

Well, that I’m not going to define. That list is rather long. If a creative has the above experience, they have LIKELY worked on global brands with high cultural significance. If not, this person likely has made their own cultural impact in their field, which is why they work in a leading agency or smaller leading studio.

This post will not refer to junior designers, or fresh graduates as talent. Because to be talent, in this context, you also need experience.

Experience, I define as:
losing things you can’t lose, and gaining wisdom from it.

Things can only be lost with time logged in the field, working your buns off.
Working.
Risking.
Losing.

That is not to say, however, that fresh graduates, or students can’t be talented! They may be very progressive in the industry. Also realizing many in our field have no relevant formal education! For the purposes of this post, I’m referring to talent as having industry-specific experience, and that is how I will defend what they should be paid.

Understanding years of experience and impact, it is worth noting why talent is “talented,” though creatives already know this part.
Designers, Art Directors, Creative Directors, and all manner of titles in the creative field have one thing in common.

They see.
They have been seeing their whole lives.
This is why we pay them.
Their value is greatly increased if they can also hear.

Example: There is a reason Dan Wieden owns a lake in Central Oregon.

Because he looked into the eyes of Phil Knight, saw right down into his soul, and heard what Phil was trying to say himself, but couldn’t. When you see someone and hear them deeply, and have the ability to apply that in a cultural sense, the ingredients for greatness begin to cook. There lies value. Guys, I’m talking great, great value!

This is where we start. Value.

Paying full time talent

Part of these numbers will not apply to absolutely every incorporated creative studio, because it just can’t. This is a frame of reference, so please don’t get upset. I’m basing this entire post on my years of connection, relationship, work, and community up and down the West Coast. But also, the West Coast is huge, and so are the ranges of pay.

There are agencies, studios, mega-corporations, and head-hunting services around town that are offering talent $30–35,000 per year, for full time employment. They will have plenty of excuses as to why.
These excuses are bullshit.

Having seen, and known the numbers that these entities bill out those same services to their clients, I need to say that no talented person should consider this rate. You are providing a quadruple amount of value to the company, and it is beyond unreasonable for you to accept this sort of compensation. Now, many companies will try to squeeze you in by offering perks, because they know the money is not enough. They may offer you exposure, the promise of future earnings, or great portfolio pieces.

Let me tell you now, anyone who offers talent “portfolio” compensation, does not value your contribution to their company. They undervalue you. This will become clear within the first 2 weeks of employment.

And, of course, if you are talent, you already have a strong enough portfolio to defend, and that’s OK to say that out loud to yourself.

So, let’s talk more value. On a scale from low, to acceptable.


Small, scrappy, and nimble local studio with a bunch of quirky clients that excite you, here’s what is acceptable:

$45,000:
Not OK. Not ideal. Don’t stay for long, instead use it as a stepping stone to proper compensation. You are talented, your ideas are capable of generating profits in the millions of dollars for clients. You are providing great value, and getting just enough in return to cover your expenses. Just surviving.

$50,000:
Getting closer, but if you are talent, this is really basic. There is a lack of trust going on here, in that you may not be providing true-blue value to the company. They are likely feeling you out, to see how long you will accept this. Or they may feel that working for them is a feather in your cap. If you are talented, never work for someone who believes they are the shit. Their ego is just going to get in the way of the work anyway. Look for the studio/agency that stays warm, never hot. Cool doesn’t pay your bills.

$55,000:
Stay about 6 months, or make sure it’s a trial period of 90 days, at which time it would be fair to ask for a revaluation of your value in the company.
If not, consider moving on.

$60,000:
Value is just beginning to be apparent, but you are justified in asking for more, or taking this for a period of 120 days as a trial.

$65,000:
The studio likes you, you can build on this foundation.

$70,000:
Your value is becoming clearer, and in a small studio setting you are likely a cornerstone of the creative process.

$75,000:
This is a great place for you to build your career and sharpen your skills.

$80,000:
Common.

$90,000:
Yes this happens.

$100,000:
Yes this happens.


Larger entity with creative support, proper project managers, studio support staff, and some large-fish clients, a company with 25–700+ full time employees:

$45,000:
Completely inappropriate. They see you as a junior designer/fresh graduate. Or, they believe their clout is part of your pay. Step away, there’s too much kool-aid here to pay your bills.

$50,000:
They’ve recently had budget cuts or have too many high paid staff to compensate you fairly. Something is going on to justify this rate, and it’s likely out of your control. Look elsewhere for fair compensation.

$55,000:
Don’t stay long at all, focus on the human connections/relationships as there are likely to be opportunities with them outside the company later. It’s a small industry, people remember nice workers.

$60,000:
The first signs of life, this may be a trial period to test you out.

$65,000:
Value is beginning to be apparent.

$70,000:
This may be a place to grow and flex your creative muscles.

$75,000:
These people know your work and like you, and value your ideas.

$80,000:
You may be a key member of the creative team, and their clients may even be informed about you and your status in the company.

$90,000:
You are seen as an invaluable creative, and the company actively sought you out for that thing you do really well.

$95,000:
Based on the size of the company, you are managing creative teams in a dynamic, creatively engaging and challenging environment.

$100,000:
Rarer, but not unfair, based on your talent. Most companies of this size cannot support this. If they can and do, treat this company with affection, they are going out on a limb for you. It’s also worth noting your time. If you are expected to work more than 60 hours per week at this rate all the time, then you are obviously earning less for your time. Be wary of the companies that expect you to hand your whole life to them, for a six-figure salary. You are not a machine, and you should not be guilted into a work nightmare with money. Find the balance, it does exist, and it is OK to require your life to SPARKLE.

$110,000:
Yes this happens.

$120,000:
Yes this happens.

$130,000:
Yes this happens.

In this field, you are going to get an offer, so please prepare to make a counter-offer. If your initial offer is more than 30% lower than your value, consider it a serious red flag and start talking to other entities.

Do not take offers because they are the only ones in front of you, it is your responsibility to accumulate offers. It is fair to play offers off one another to get closer to your rate. It is common practice, and though some employers resent it, they do the same with their vendors on a daily basis.

Do not shy away from explaining your value and standing by it.
Sometimes that means walking away from money on the table.

If you are talented, the money will come. If you are emotionally intelligent, can see AND hear people, large amounts of money will come. Just you wait.

Paying Freelancers

Many companies hire extra talent on an as-needed basis when they get busier than they predicted. This happens so often that legions of creative talent can spend their entire careers hopping in and out of agencies in a single city, or even around the globe. There has been disturbing activity lately around Portland where agencies are simply taking what they pay a full time staff member, and dividing that by the number of days or weeks they need a freelancer, and offering it to them!

For example, if a company pays $95k for full time creative talent, that means they are paying about $8k per month, or $50 per hour for that full time staff member.

This is where the justification comes from for offering a freelancer $50 per hour. But, remember, we are not talking about just ANY freelancer, we are talking about talent as defined above.

Let me explain how inappropriate this math is.
Freelancers, you already know this, because one thing you are good as is math, in addition to your talent.

Depending on the type of incorporation, a freelancer can pay between 25–40% of their income in taxes. They also have overhead costs associated with working. A minimum of $2,0o0 in hardware/software expenses, $200–900 per month in studio rent expenses, $100–250 per month in insurance expenses, plus travel expenses, and of course time not working. We are assuming these freelancers are working 52 weeks a year, to defend that $50 per hour offer. No freelancer I know works 52 weeks a year. It is nearly impossible to time your jobs back to back in that manner, unless you are famous. And if you’re famous, there is no way in hell you would take $50 per hour.

After a 30% tax cut, $50 per hour turns into $35 per hour (this is real guys, not imaginary, taxes are non negotiable!) — plus the overhead expenses a freelancer faces, and you are looking at less and less compensation per hour.
I’m telling you right now, that at $50 per hour, based on the very real structures I have just outlined, you will be getting paid wages that are far lower than you are worth, and hard life decisions will have to be made. You will most likely not achieve a work/life balance.

So, based on these realities, $50 per hour for a talented creative is inappropriate in 2014.
Do not take this offer, unless you are unaware of your own value.

The company does not value your talent at this rate.
You may end up not being able to pay your rent if you take this offer.


$40/hour:
Unacceptable. I keep hearing these offers being thrown around town to talented creatives. Walk away quickly, they cannot afford talent.

$45/hour:
This is probably a really small shop, but they still likely bill you out at around $150/hour to their clients. Don’t fall into this trap. Don’t listen to their justifications, it’s not enough.

$55/hour:
Not ideal. This is likely a friend who needs a favor. Do it as a favor, or just do it for free, it’s not worth invoicing for anyway. You will resent the work much less if you do it for free, based on your love of the person/project.

$60/hour:
Short term, limit this to a week. Your business needs more cash flow than this and cannot sustain itself on this rate.

$65/hour: Value is beginning to be recognized, only take this work if there are more than 80 billable hours in the project. This is a tipping point for many agencies, since most may have sourced you from a middle man creative placement agency. They don’t want to pay more because that middle man is taking a cut. Move on if so, there are plenty of clients who WILL pay you, and you don’t need a staffing agency taking 25% of your check from you.

$70/hour:
Same as above, you are worth more.

$75/hour:
This is a common offer, though if you have been placed by a recruiting agency, you won’t see this value. But you are more valuable than this.

$85/hour:
If this is a contract at more than 80 billable hours, you can run your business off this, but it won’t grow that much.

$90/hour:
Your contributions are valued, and your business can sustain itself at this rate. So long as you are continually working.

$100/hour:
You are a valued member of the creative team, and your work is sought out.

$105/hour:
You can thrive and grow your business as a freelancer, cultivate value-based work relationships, and can have a better work/life balance. If your work is relationship-based, your clients will want you to thrive and grow just like they are. A love-based industry requires fair compensation.

$110/hour:
You are highly valued, these offers exist all over town, it’s just a matter of finding them.

$115/hour:
Yes this happens.

$120/hour:
Yes this happens.

$130/hour: Yes this happens.

$150/hour: Yes this happens, though it is getting closer to a respected studio rate, meaning you are paying a small team of creatives, instead of a single freelancer.


OK. Everybody alright?

Am I to expect bricks thrown through my studio window? If we are transparent, I think we can all make better work, get sharper, and move forward.


Here’s the reason this post exists: I’d like creatives to thrive, to be compensated fairly, and to grow through transparency.

If you love what you do, and are good at it, and are making cultural impact, you should know that you are valuable. Being compensated for the value you offer is fair, appropriate, and also a moving target. Each town has its own pay ceiling. I’m interested in us all loving what we do, and being able to pay our bills while doing it.

If you’re an employer, don’t hire talent until you can afford it. If you unfairly compensate, we are all talking to one another about it.
Happy working, guys!

To 2015, and beyond.