I managed to lose the first two paragraphs of my last post. Here they are.
Gunnar
When anyone (say, a graphic designer) does work in exchange for money, she is gambling. If she does the work for exactly the fair price (however we want to define "fair,") she loses. There is always the chance that the client won't pay or that there is some legal problem. . . so she has to charge a little extra to cover those contingencies.
Not all time is billable, We are making a gamble every time we write a proposal. If every fourth proposal is accepted, each job needs to pay for its own proposal and three others (plus the "fair" price.) We have to charge a little extra to cover the unsuccessful proposals.
> On Apr 15, 2015, at 8:17 PM, Gunnar Swanson <[log in to unmask]> wrote:
>
>> On Apr 15, 2015, at 6:36 PM, Ken Friedman <[log in to unmask]> wrote:
>>
>> A contract in which publishers pay designers if and only if projects reach predicted sales goals while designers pay publishers for any losses or costs if sales do not reach predicted goals is a case of perverse incentives. This model gives designers a chance to participate in the market economy in much the same way that ordinary investors took part in the Global Financial Crisis.
>
>
> It is not uncommon to have people request spec work. Speculative work is a gamble with much worse odds than the one in my first paragraph. If I do work based on the promise to pay if my work is the best and I am competing against four other designers, the price would need to be five times normal to make sense. (If that's not obvious, see http://www.underconsideration.com/speakup/archives/001804.html)
>
> If a publisher accepts legal liability for a book I write, the publisher is making a bet and needs to get paid for that. If I accept the legal liability, I need to be paid more or my business will not be viable. (That's what the insurance business is--making book on such risks.) A gambler who always bets on straight odds will eventually go broke. It's why casinos and bookies take a little extra. It's called the vig. (That's short for vigorish.)
>
> If I gamble that a project will make a certain amount and I don't get paid unless it does, I need to cover that bet by being paid more--the risk plus a vig. If I gamble that a project will make a certain amount and I have to pay if it doesn't, I need to cover that bet by being paid more--the risk plus the vig. If I have to do extra work to be prepared to make such a bet, I need to get paid more--the cost of that preparation plus a profit.
>
> If someone agrees to pay me the amount that the previous paragraph adds up to, that client is, essentially, buying a big, fairly expensive insurance policy. They are taking a side bet that the project will fail. (Insurance is always, essentially, betting against yourself.)
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> If, on the other hand, they can get me to take the risk for free, the end result is that I will be out of business.
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>
> Gunnar
>
> Gunnar Swanson
> East Carolina University
> graphic design program
>
> http://www.ecu.edu/cs-cfac/soad/graphic/index.cfm
> [log in to unmask]
>
> Gunnar Swanson Design Office
> 1901 East 6th Street
> Greenville NC 27858
> USA
>
> http://www.gunnarswanson.com
> [log in to unmask]
> +1 252 258-7006
>
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