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How important is design agreement? The answer is VERY IMPORTANT – it gives the designer and the client clear understanding on what to expect and knowing exactly how the price is structured. If you don’t have a design agreement you will be at risk of having no profit or low profit due to misaligned outcomes. A design agreement is going to cover you for all scenario, not just from the designer’s side but from the designer and the client’s point of view.
As a designer, you should be aware of where you stand so that you know your rights and the rights of your clients. Having a Design Agreement is saving yourself from being sued. Even if getting sued does not worry you A design agreement generally make the whole process smoother when a job starts getting a little difficult.
TIMELINE:
(3:31) TOPIC: Design agreements : The boring but important stuff
(3:38) So should you have a design agreement?
(9:04) Clients Rights
(9:45) Clients who disappeared long time
(13:26)What should you put in a Design Agreement?
(13:36)Two types of design agreements
(15:52) Other format of design agreement
(16:06)Job by job basis
(16:35)Timeframes
(18:25) Outcomes & Deliverables
(19:36) Progress payment requirements
(19:52) Copyright
(20:05) Stock image licensing
(21:58)What happens when everything goes bad?
(25:01) Design agreement protects the client and the designer
(25:39) Killer tip + Listener to action
(26:37) Farewell
TRANSCRIPT:
Alan:
Hello listener and thank you for joining Greg and I today for the real magic design podcast where we try to unpack our experience to help designers and business owners understand how to create amazing designs and work together to make design that is profitable. I’m Alan from Pixel Partners and here is my co-host Greg from studio one design.
Greg:
Good day Alan! how are you buddy?
Alan:
I’m fantastic mate! how about you?
Greg:
Ahhh! ( Laugh )
Really good mate, its been a great week and so today on this podcast we are talking about the boring but important stuff, design agravance. What are they? How are they used? And why are they important for both the client and the designer?
Alan:
Man, that is going to be a great topic and it is a bit boring but i think it is super important. Hey Greg! Before we get into this week topic, what have you been up to this week? Like what’s is happening in your world?
Greg:
Well, you know, I think it was last week or the week before we discussed redesigning now our product offering on our website so that is in the process in the moment and should be live this week and so what we are doing is recraining a VIP membership page and that is for our existing clients, our repeat customers, it is just a way of us offering them a bit more value and pretty much getting at a wholesale rates now, so that and testimonial page update and process, etc. What about you Al?
Alan:
Now sound pretty good mate! You know what i have been digging deep into seeing some procedures for Pixel Partners. You know we,we do a lot of high bandwidth transfers for design files and for imaging files and you know bandwidth can be a messy problem especially these days you know when you’re designing bus packs or your editing images for photographers there sending some pretty big files and particularly after they have been worked on, they can get pretty nasty as far as transferring so we have come up with some killer hacks, umm that improves the workflow in design and in photography a lot of it is around photographic editing and how to get their raw files a little bit smaller, so there we are going to launch those in the next couple of months where there will be the series of training videos. A little help of everyone not just our clients, anybody who has a digital workflow who need to transfer files a lot of this stuff is going to help. So, you know it’s all just about improving our clients and other designers and other photographers life and workflow so that their not chained to the computer, so that’s been pretty exciting!
Greg:
Yeah! That’s cool man! Yeah! you guys are really, really on top of your standard operating procedure now, don’t you?
Alan:
I don’t know if its on top of but you know it’s a living document and that is a topic for a podcast in the future.. We are always aiming to improve them because we developed a system does not mean in six months or twelve months that’s gonna be our deal,
Greg:
Yeah!
Alan:
Especially technology changing, you know its a big theme to focus on.
Greg:
Absolutely! I think we should do a whole episode on how we run our designs businesses.
Alan:
We should dig a little deeper into each of our businesses but look! That will be an interesting one leave a comment on our iTunes if you would love to hear about what we do within our businesses to dig a little deeper cause i’m sure we would be happy to lift the veil on our little secrets.
Greg:
Absolutely!
Alan:
Anything to help out.
Greg:
Alrighty Al, let’s get stuck on our topic: Design agreements, the boring but important stuff.
Alan:
Yeah! Let’s do it! Look! I want to post the first question. Okay Greg, should you have a design agreement? What are your thoughts?
Greg:
I think the answer is categorically yes and you know it is interesting its made me,just knowing that this topic was coming up. It’s made me review our own designers aggravant and I guess what it needs is revising. So, it is a good reminder to all of us to not only have one but review it and revise it when necessary, i know we recommend every few months. Again, another thing i would like to mention is you know one of the reasons that we should have one is because if things do go bad, and you don’t have one at least your open into being sued, it also gives you and the client a clear understanding of what to expect.
Alan:
You know, I think this is really important. I mean you just talked about it from a designer’s point of view but i think it’s important from a client’s point of view as well. Having clear expectations , knowing exactly how the process is going to work is super important and you know and what you said about reviewing, I got clients that i have been dealing for years so, that maybe this time to sit down and review what we agreed and make sure that those are still aligned and that there are no assumptions. From my point of view, yes! yes! yes! You should have a design agreement whether you’re a designer or the client there should be something there that is written that puts everything down in place, if you’re a designer and if you don’t want to get paid and you want headaches then don’t bother with the design agreement, right? Look! I know i’m going to ruffle some feathers here because there are plenty of designers out there that do not have a formal design agreement every time they do a job. Okay? And if you’re a client you know if you want to risk not getting what you paid for then don’t bother with the design agreement just go with the flow but you know its not always going to happen but there are going to be times where their assumptions made from both sides do not align, right? And when the alignment is not there then potential headaches are going to occur.
Greg:
Yeah! And it might happen often but when it does and I’ve got a good story of it one time when it did happen to me and it turns ugly pretty quick so, i mean you know i have been doing this for quite some time, fifteen years so many years ago before i had the design agreement i had a pain in the ass client who keep changing the direction of the design and in our design agreement now we offer unlimited revisions but as long it’s in line with the original design brief which is in writing. So, it can be a little bit vague but it usually saves us and yeah! I honestly believe that every should put that into their agreement so that this kind that we had, he completely changed the direction about five times, cost me you know a lot of time and money. So, I learned the hard way basically and that is the purpose of this podcast so that we can teach other people how to avoid mistakes we went through.
Alan:
Yeah! Hopefully.
(laughing)
Alan:
Saves some pain. Look! I agree with you now what you got to really consider is people got uuuhhh! design agreement! I got to write it, I got to publish it, I got to get people to sign it. People get uncomfortable getting a client to sign a design agreement and then client are like uuhhh! what am I signing? And they don’t necessarily understand what’s in there but what you really need to think of is “What is the cost to you if one or two jobs every now and then go bad?” Alright? Because if you have to refund a job, if you have to do the job two or three times over. You know, you not only lose the margin out of that job alright but then you also run a lost and when you run a lost you’ve got to do a lot of work to get that money back as a designer and from the client’s point of view, we’ve mentioned this previous podcast about getting paid the right amount. From a client’s point of view the last thing you need is your designer to be running a lost. Now imagine, from your point of view if you had to replace a product three, four, five, six times over because you already specifications were not clear and somebody was misusing the product. It goes the same for the designer, that hurts their business intern they’re not going to be able to deliver the best thing for you. I mean, ultimately for my point of view if you don’t have a design agreement you are at the risk of having no profit or low profit due to misaligned outcomes. You know and the hard part is that most designers are awesome people. Right, they really really want to deliver for the client unfortunately there are some client that would take advantage of that or they just don’t understand the process but if it is clearly documented and everybody is on the same page at the same time.
Greg:
Yeah, absolutely Al.
Alan:
Look! generally okay? Most clients are fair and reasonable you know there is always going to be that one that is going to be a headache and that is the one that is going to cost you the money so a design agreement is going to cover you for all scenarios, not some not all your sided like not just the designer side but from the designer and client’s point of view, right? And if you’re a client the design agreement should clearly explain what you can expect to be delivered, I mean the last thing. Look! I worked for a design and print company many years ago and it didn’t clearly explain what would happen if they needed access to old files for example. You know, I’ve seen this with a lot of agencies where clients can’t get access to their old files without paying a fee so all that stuff should be laid out. I mean, the client really need to know their rights going into this relationship you know not just from deliverables point of view but you know what happens if something takes longer than expected or less than expected? I mean, if a job takes half the time that the client expects, is it reasonable for the client to pay half? You know, not necessarily, there may just have been more assets for more, more resources allocated from the design company’s point of view. What happens if it takes longer? You know, if it is taking because the designer cannot achieve the brief? Is it taking longer because the clients keep moving the goal posts? You know, all these things need to be laid out. And also to what happens and Greg I’m sure you’ve seen this when clients just don’t finish the job, they disappear I mean I don’t know if you experienced but I actually had a client, a photographic client that disappeared for ten years and almost to the day, 10 years later contacted me and asked for prints of that job and I had no problems with that and now I did have a design agreement in place however I did not have anything in there that specified what would happen over this time frame. Now, a lot has happened in ten years the cost of production has gone up, the product that I offered was no longer available now thankfully he was one of those fair and reasonable people we sat down and we talked about it and I was able to deliver him a wonderful product which he was very happy with. But he did have to pay with a bridge between you know what he was required ten years ago and what I had to deliver today and we were all happy but you can see how there was a risk you know having a time sensitive design agreements is probably important. You know, Greg what would happen if you started a web site and somebody disappeared for four years and came back? Ss that covered in your design agreement?
Greg:
So, it’s not covered but what we do is we get paid up front so it’s not a big a deal in that instance, now I think theres one thing that you touched on when you had an issue with this client of ten years is that you communicated with the client and usually a design agreement is a guide for when things go bad but most the time you don’t need to refer to it because most people are reasonable and communication is key in business in general
Alan:
Yeah, definitely but hey you just brought up a point. That wedding client I got paid in advance so that they actually paid for the product but the problem was ten years later that product no longer existed and it’s equivalent cost me nearly triple of what it would have cost me ten years ago.
Greg:
But did you have to go and produce the product, then?
Alan:
I had to produce the product.
Greg:
Yes! So i guess yeah! From my point of view with a design you know, I guess you could say that you know that wages, etc. would be increased so a price of producing it down the track would cost more.
Alan:
Yeah! Now, think about it, you are on a flow with the design, right? So, your design energies is peaking while you are working on the job, you take a four year break you’re not going to pick it up from where you left off. You almost have to go back from the beginning, you have to review the entire brief you have to re-engage that communication with the client so you know just because you’re not producing something physical as a designer doesn’t mean that you can just let the time lapse you know so maybe for some designers out there, there should be a time frame in your design brief and in your design agreement that say “Okay, if this job is not completed by then there may be some additional charges if you don’t respond to our request then that could have an impact on your job and how long it takes.” Look! you know.
Greg:
I’m taking notes!
(laughing)
Alan:
So am I. Now, look this stuff comes up because it, you know it happened you know and thankfully for both you and I it hasn’t happen and hurt us dramatically. I have taken a few hits because I haven’t detailed my design agreements or photography agreements as well as I probably should have but “How detailed can you go?” I mean, go as detailed as you possibly can. You know, try and cover all your bases and like you said earlier review it regularly. Add things!
Greg:
And be fair to the clients, as well.
Alan:
Hey! these design agreements are to benefit both parties. I guess, that’s probably a really good leading to the next question which is “What should be in a design agreement?” “How should it look?”
Greg:
So, okay! In our business we have two types of design agreements: So, one is for the client where we provide design and the other one is for our internal designers. So, we don’t employee anybody directly, we have them as external contractors and therefore the agreements that we had with them reflects the agreement that we have with our clients. So, all based around intellectual property rights.
Alan:
Yeah nice! Look and you’re talking about from a point of view of what you need to supply your client and what your team is supplying to you.
Now my team are all full time employees, so as per their contract we own all the IP and then we pass that on to to the client. Now, clients you need to be sure that you understand what you are getting, right? Copyright, stock image licensing, intellectual property. Because I’ve seen instances where agencies only give limited usage of designs so a company can only use it for twelve months or for the duration of the campaign and at the end of the campaign they then have to pay extra if they want to use it further. So, that’s not as common for small designers and small businesses but it is something that you need to be aware of, “who owns that design when it’s finished?” “do you have the right tool to source files or just the finished PDF, the free PDF?” There so many things that need to be covered and designers you need to protect yourselves, you don’t not want to acclaim assuming that they’re getting particular thing that you may not want to hand over and clients you need to be sure you are getting what you need for the future of your business. In PixelPartners we have a slightly different agreement with our client because we are working for agencies, we’re working for other professionals a little bit like your internal designers Greg so, we actually hand over all the source files as were working on the job not at the end of the job, right? And at the end we packaged it neatly and it is there for our clients to utilized but they have it all the way through,you know? And that’s part of our agreement now just before we jump back into more of what should be in it. You made an interesting point you got a couple of different types designer agreements i think there can be a couple of different formats as well so you can have over writing, terms and conditions, you can have specific client terms and conditions so a client that you might have an ongoing relationship like the VIP clients that you’re talking about and you can also have terms with regards to expectations on each job, right? That may not be a physical document that is signed. For example, when somebody sends us a design brief, we have a look at the design brief and when we reply to that confirming that we’ve received it there’s a line in that email that says “You can reasonably expects your first proof in two to four business days.” Right? So, that’s it. Although it is not a design agreement in the formal sense of signing a piece of paper we are giving that acknowledgment of a time frame.
Greg:
Yeah! Nice. It looks like i need to throw in a few extra features in our agreement.
Alan:
Isn’t that great that we are learning as we do this, too Greg?
Greg:
You got it mate! You got it! Well, there surely a lot to put into it a design agreement,you know, as you outlined and a few points from ourselves as well. Do you think there is anything else we need to add in this topic?
Alan:
As long you can….here is probably my short list…….right?
Work at how you are going to deliver your terms or your design agreement, you know? Some people will build a lot of that information into their product description, so if they are buying a specific fixed price product, here is what you can expect, and by buying this product you are agreeing to that.
You can have a formal contract so if you were working on a fairly substantial job that has a lot of components you might have a formal contract that defines all those elements, or it could be as simple as job by job, so a good example is, you know we do a lot of printing in our agency and we have a terms and conditions of print, which does specify all the things they need to check prior to approving and paying for the job and what happens if they don’t so a lot of people will approve a job but won’t pay for it. Now, if I haven’t paid for it the job does not go to print, right? So all these kind of things need to be considered when you’re working out how you’re going to do your design agreement and i think its just important to have a few basics you got to consider, your time frame, i think that is very important, misaligned expectations or reasonable expectations of when proofs is going to be delivered if there is a time critical deadline for that job, you know they might have an event on and if they don’t have all the designs two weeks before the event then they can’t print them and it won’t be ready on time and that would be useless after the event, what the outcomes and deliverables are from both sides, legally indemnification. Look, designers I know quite often we don’t think about this….but, you know if a design takes longer than expected and you’ve got a design agreement saying your going to deliver on you know the fifth of june and you don’t deliver to the fifth of december and then that, that website is launched, let’s say it’s an Ecommerce site and it’s turning over a hundred thousand dollars a year. There are some companies that can turn around and say well you didn’t deliver on time, so you owe us the money we would have made over that period, you know, what about if there was a mistake on a piece of packaging and there is a hundred thousand pieces that they made you know who is responsible for that? Make sure that you are covered but there’s an understanding of what happens if something like that happens.
Greg:
Absolutely and on top of the agreement it should also be in your process as well to make sure that, you know…its, you know in your process that you give your client the liability of approving the design if you’ll act so, you need that be in your writing as well
Alan:
Yeah! Definitely! Payment, you know “Are there progress payments required? Is it paying in advance? You know, make sure those items are clear because you don’t neither of you want to have misaligned expectations on payment you can be waiting for a payment the client know that they’re going to pay and no design agreement you may not get paid on time.
Copyrights and stock images you know, so anything that’s used in that design who owns that after the job is paid for and complete and making sure everything clear and clients please, check you stock image licensing make sure that the stock image that has been purchase has been purchased with the right license for what you are going to use it for because there will come a time where a lot of these stock libraries are going to cash in their investment of all these people using licenses, stock images that are not licensed correctly.
Greg:
You mentioned that,we were approached recently from one of the stock images imaging companies that we, we use and they said “Look, we changed our licensing agreement recently and we are still now using these designs for t-shirt prints” which we were and he said “Well, you need the enhanced license for that” and we weren’t aware of that at all , and when we first signed for this company which was around six or seven years ago, the laws, sorry! their rules were different from what they are today , so the bottom line is that we can’t use those images for T-shirt designs unless we have the enhanced license, that is just too expensive and our clients wouldn’t pay for that so we’ve had to jump ship and go to another company, so yeah it’s really important to make sure we understand the rules and regulations of those stock images.
Alan:
Look and it not just impacting you the designer, its impacting the client. You know, there is a potential there that they got product out on the shelves with images that are not licensed to sell, so you know you have to be sure in design agreement you specify who is responsibility that is, some designers will get their client to buy the stock images and that’s a way to take care of that, that way the client has to do the research for the licenses but a lot of us designers we have subscriptions to stock libraries that we use everyday, we just need to be sure we are using the right one. Look, that sort of story that you just told is an example of you know what might go bad, so you know if you have or you haven’t got a design agreement. Greg what happens when everything goes bad?
Greg:
(laugh)
Well I mean geez! You know, if you don’t have one, you and the client both don’t know where you stand, so that is really important. Clarity in business is absolutely crucial so you can lose a client, it could ruin your reputation, I mean word of mouth can spread really fast in industries that are quite niche or niche for your american clients, american listeners. (laugh)
And if you are a designer and I think we touch on this you know before, but if you’re a designer and you offer your services on freelancer.com or elance or 99 designing, etc. Then, you should carefully read their designers agreements to. Because you really need to know where you stand with them and you need to know who has the rights to your designs, so without knowing that you just has the potential to being sued and thats the purpose of this having a design agreement is to make sure everybody knows where they stand and it avoids litigation.
Alan:
Sued and litigation, they’re dirty words.
Greg:
(laugh)
Alan:
You wash your mouth out!
Alan :
On a, look! I agree but forgetting the big problem of you know of getting into legal trouble, you know there is a massive impact on losing a great client you know and losing future relationships because you know for every one client you get referrals, they talk to people, people may choose not to use you because of something they’ve heard from somebody else you know so there’s a financial impact on that you know, you can be held, yes you can be held legally accountable for losses, right but forgetting the worse case scenarios you may not get paid for the job, you know and then for some of us smaller companies taking a client to court if we don’t have a designer agreement, is just not worth it you know, we don’t have the money to pay the lawyer to try and take care of this problem you know, but not only maybe not get paid or if you did get paid upfront you may need to give a refund you may need to do the job again and you know and all of these things ones there’s that sour taste you have the potential tarnishing your good reputation as a designer for no good reason, alright because if you had it all laid out in the design brief, there would be steps clearly marked in the design brief as to what do we do if this is not going well, right?
And hey clients! you know be careful because your reputation can be tarnish as well you know, you may have misaligned expectations you’ve done nothing wrong and this designer turns and around and this client is a pain and then the next and then the next design meet up they talk whinging about this client saying “They made me do this and they made me do that at odd’s, i felt i was bending backwards for them and nothing made them happy.” And all of a sudden as a client you’re bringing designers in your local area and there either upping the price because they’re scared to work with you or they are not taking on the job, so it does go both ways, you know these design agreements I got to reinforce these it protects the designer and it protects the clients. You know it enables clear communication without misinterpretation you know if there is a problem it gives the client a recourse if things are not working out. It gives the designer a recourse if things are not working out, you know and everybody has a clear understanding of what needs to be done. I dont think I can think of a better reasons but but everybody knowing what’s going on.
Greg:
Yeah! I couldn’t agree more Al. There’s no doubt about it, every design business and designer needs a designer agreement so thateally my killer tip if you haven’t got one, go and get one and we are going to leave some resources on our post of this, on our website to just give you guys a little bit of a starting point and by all means check it out and take what you can from our resources but please go get a lawyer or you know or lets listen to right one professionally.
Alan:
Yeah, look we are not lawyers, we want to help you out so we are going to post some places where you can get templated a design agreements modified them for yourself but talk to your peers, talk to other people within your industry, you know, my tip is find out how can you protect yourself and protect your clients so that every relationship you have end with smiles, you know make sure that you document your agreements if you’re a designer and vise versa if you’re a client ask the designer “Can you please send me information on whatever is important for you as far as an outcome?” So, that reaches to the end of the podcast today, I’d like to say a farewell and thank you listener for joining us. Please go to iTunes and leave us a five star review, we would really love that. Leave us a comment we are going to do a episode in the near future where we read out the comments on iTunes so that you know we are listening and go to the realmagic.com and sign up so that we can let you know when there is a new episode out. Greg? Thank you very much and have a great day, mate!
Greg:
I also want to say Al, we want to know what you guys think in the way in what topics you want us to address, so by all means leave comments related to that as well, so thanks for listening and yeah! have a great week.
Alan:
See you later and have fun with The Real Magic. Bye!
Greg:
See ya![/vc_column_text][/vc_column][/vc_row]