What’s the best way to pay for beer branding & packaging design?

If you’re a brewer and you want your beer to stand out, it’s now a given that you need to invest in branding and packaging design.  I’ve rattled on about the benefits of branding in several previous blogs so I won’t retread that ground again.   Instead, I’m going to look at the more thorny issue of paying for design. 

 When you are a small business it can feel like a big ask to invest in design when funds are stretched.  If you haven’t worked with designers before, it can be difficult to know what sort of deal you should strike.  More established breweries might also have trouble unpicking design payment issues several years into a working relationship.   To help you to assess the options and to avoid the more common pitfalls, here’s our overview on paying for design.

  1. a deal with your mate

You’ve just started up and your designer mate is really enthusiastic about supporting you and your new brewery venture.  He’s offered to design you a logo, some tap handles and bottle labels.  He figures you’ll work out some method of payment further down the line and he says he’s happy to do it for beer – for now.

I’ve seen many small brewers start off on this footing with a designer.  However, it is an arrangement that is a breeding ground for serious problems in the future. 

A loose ‘good will’ arrangement like this often means that nothing is written down.  If your brewery hasn’t secured the Intellectual Property rights for the design, it means the designer can stop giving you permission to use the brand or packaging designs at any point in the future.   For example, they may say that your verbal design agreement covered bottles but not cans or other merchandise.   Without an agreement you may find yourself paying an unexpected licensing fee for original elements of the artwork in future and potentially have to deal with exhausting disputes.

Our advice is to never agree to use a design (whether it is provided free, for goods in kind e.g. beer or for money) without first agreeing in writing who owns the intellectual property.   I strongly advise you always negotiate with the designer to acquire all intellectual property rights over any brand designs or packaging design from the start to avoid issues in future over usage.  This is standard practice in business across all sectors.

pexels-photo-1327214-designer.jpeg

2. Reduced Rate + Beer

If you really are strapped for cash, consider negotiating a reduced rate in the early years that is supplemented with free beer.  Some designers may be happy to work on this basis if they have a steady stream of better-paid work coming through from other channels or they really want to work in your sector of business.  Everybody needs to make a living, so bear that in mind when you ask for reductions.  This route is not appropriate for many designers who need the market rate income to make a living.  

3. Reduced Rate + Deferred Payment

Another approach could be to pay an agreed reduced rate and defer a % of payment to a point when your brewery is better able to pay.   This could help when cashflow is tight and still give the designer his or her just desserts in the longer term.   A deferred payment can be negotiated to incur a premium (standard rate + 25%) to reflect the good will the designer has shown by agreeing to this payment plan in the early days. Again if you go for this route, have it all written out clearly from the start so there are no future misunderstandings.

4. By the Hour vs Fixed rate per design

Freelance designers generally charge by the hour or will set a fixed fee for a piece of work in advance.  When funds are limited, it’s good practice to negotiate a fixed fee for each piece of work rather than paying for an unknown number of hours. The fixed fee option gives you more control over your budget.  Again, it’s not unusual for freelancers and agencies to work this way.  An experienced professional will have a good handle on how long the work should take from the get-go and should not be phased by this option.  Problems can occur when you set a fixed rate with a novice designer and they have heavily under-estimated the work required or are struggling to meet the brief. Or you, the client, keep changing the brief and extending the project. These scenarios can be better managed by talking about them upfront and have clauses or provisors for ‘worst-case’ situations in the terms agreed.

5. Monthly Retainer

As your brewery expands, it can make sense to arrange a monthly retainer fee with your freelance designer or agency.  A retainer payment can be attractive to the designer or agency as it gives them a predictable flow of income, which is very welcome when much of their workflow is uncertain.   For this type of arrangement, they may give you X hours per month and will complete all the work you give them in this time.  Often this route enables you to get more value out of your designer as they can better handle multiple projects and ad hoc requests within this arrangement.   For example, they don’t have to write a proposal and negotiate an agreement on fees for every piece of work, which brings time efficiencies.  You’re also likely to get priority in their work stack and a regular working relationship helps the designer to build a stronger understanding of your requirements.    

6. Design for % of Sales

On occasion, designers may ask for a percentage of sales in exchange for the design work they deliver.   Again, if you don’t want to pay up front, this may seem like a good way to go.  In practice though, it could potentially cost you dear in the longer term, especially if you have been generous with your % allocation.   Our advice would be to steer clear of this route as a means to better managing your costs for the future.

7. Design for Shares

Some breweries I have met have started life with a designer becoming one of the brewery founders and shareholders.   On paper, it might seem like a good idea to have one of the directors handle all the design work in exchange for his shareholding.  However, in hindsight the percentage of time it takes to deliver the design of the brand and packaging in comparison to the rest of the brewery work is much smaller.  I’ve seen a number of brewery founders become despondent at the perceived inequality of effort afforded to their shares in comparison to the designer founder.  I do appreciate that good design and brand development is an essential element in driving sales.  But when viewed commercially, it often doesn’t pay to give away shares for this work.  If you already find yourself in this position, I would suggest you find a way to buy out your designer’s shares. Recompense them fairly as they were an important help to your starting venture.  But don’t let the situation slide if it is likely to lead to future issues between founders.   

8. Design By Employee

You could also consider employing a designer on salary.  Unless you are a larger brewery, they will most likely have to multi-task on brewing or other office jobs to make it work out.  This might suit some but be careful to select someone who has sufficient design experience to professionally carry the job through to completion.  It’s a rare individual that can do all jobs well.  That’s why people most often resort to contracting this work out to full time professionals.   It is worth noting that if your designer is an employee, anything they design will automatically be your Intellectual Property.

In all of this you should be trying to build a longer-term relationship with a designer/brand agency. It should not be a service where price is the only criteria and should not be chopped & changed regularly.   Brewdog, possibly one of the best craft breweries in terms of Marketing & Brand have it all done in house so they totally control the message and how it is delivered – it’s that important to them! 

If need help making decisions about your brewery’s brand development, please get in touch with Susanne Currid for a no-obligation chat about our advisory services.