Money, Cost and Professionalism
November 27, 2013 § Leave a comment
Design Practice in Context Lecture 27/11/13
What is money?
Money is a universal exchange system. Cost can normally be defined as something that is surrendered to gain something else. It is important to appreciate that it might not have financial value to it. Profit is excess income after all costs and is equal to income minus the cost. However, the profit could be negative – so there is a potential loss. As a freelancer it is important to understand the logic behind cost in order to make sure we are gaining something for the service we provide.
Our current income needs to add to our cost. When a potential client buys you in they are buying your tie and professional rate. Professionalism is important to maintain. A starting point for a professional rate is around £25 per hour of work. Depending how quickly and efficiently you work depends on how much you can charge. Good quality communication between you and your client is also key.
Companies as a whole have to consider costs and income just as individuals do. A lot of other costs need to be taken into consideration for businesses – not just the obvious costs, but things like insurance and depreciation, repairs, loans, interest staff costs etc. It is vital to be constantly aware of these things.
Cash flow is a term to describe the continuous movement of money going in and money going out – but where is it from and where is it going to? An important factor to consider is whether income is greater or less than your outgoings. If your outgoings are greater than income then it is finite and there is a risk of bankruptcy.