How To Price Your Services: A Guide For Web Designer
Putting a price on your time and experience is something that all freelancers struggle with, not only the web designers kind.
Setting up a price is less like a science and more like an art. A lot of factors have to be considered for you not to eat your profits.
It seems that for design projects, it always comes down to clients wanting to go with fixed price option and designers fighting for charging them on an hourly basis.
Both options have its merits.
With fixed price, the parties know exactly what they’re going to get. This makes clarification of terms before the start of the project even more important. The scope of the project itself, the number of changes and the ongoing support, if any, has to be negotiated with the client.
Some designers will offer the client one submittal and two drafts, and with anything more than that, they’ll provide an additional estimate. If the scope of the project changes during the process, your contract should clearly state that you will give the client a specific estimate for that as well.
Most designers and developers are typically optimistic about the amount of time it will require them to complete a project. They don’t take into consideration potential technical issues, downtime, client misunderstandings or change requests.
So it’s a good idea to estimate the number of hours it’ll take you to complete the project, multiply that by your hourly rate (if you’re still struggling with setting your hourly rate, read this and then add 20-30% on top, as a fudge factor for any unforeseen costs. Usually, that covers it and everyone is happy, but sometimes this contingency part of the quote should be even bigger, depending on how well requirements are laid out and the level of ‘internet’ knowledge that the client exhibits.
With an hourly rate, the designer is always covered, if the project takes longer. Which is sometimes seen by the client as a drawback, as they don’t know how much time and money they will end up spending. If it’s a small business this can be a significant cash flow issue too.
If your hourly rate is being questioned it doesn’t hurt to mention (in a very polite and professional manner), that the client is not being charged for benefits, medical, sick leave, vacation pay, payroll taxes, etc. Instead, he’s only charged for the time actually spent working on their project. When keeping in mind these additional costs associated with having an in-house designer, the client may decide that your rate isn’t that high at all.
It is important to distinguish between an hourly wage one might expect as a full-time worker and an hourly rate that is charged as a freelancer.
The hourly rate you charge a client and the hourly wage you might expect to be paid if you worked for an agency have no connection at all. So there’s no point in comparing them.
As a freelancer, even though you are working alone, you still spend your money on most of the things that a company does – computers, software, and other tools.
Even more importantly, you have to spend a lot of the time obtaining new clients, negotiating, which sometimes transforms into providing free consultations, bookkeeping and continuing your education.
Don’t forget the time spent on job management. This includes the time spent on the phone, meeting with the client, travelling to meet with the client, reading and answering on client’s emails, etc.
Even if you’re an extremely efficient worker, only a third part of your time will be spent “on the clock”. To put it another way, for you to be paid for 8 hours of your work, you will actually need to work about 24 hours. But don’t take my word for it, track it and see for yourself.
Not-to-exceed estimate hybrid option
If you’re not happy with these options or find them unfair, you should consider introducing not-to-exceed estimate on the project. Be warned, that this option is best suited to already experienced freelancers, who have worked on dozens of projects.
As always, you start with setting the specifications of the project extremely clear with the client. Then estimate the time necessary to complete the project, based on your experience with dozens of similar projects you completed in the past. Add 10% on top of the estimated hours, multiple that by your hourly rate and then round the whole thing up to the nearest hundred. The psychology behind this is that the client sees the rounded numbers as estimates, whereas precise figures are perceived as bids.
Now you communicate these terms to your client:
I have estimated that I’ll have to work 14 days on this project and it will cost approximately $1000. I’ll keep track of my time at 50$ per hour. In case I run into any unforeseen issues, I will let you know before I exceed the estimated budget and inform why the cost is going up. From that point we can negotiate how to proceed. I can increase the estimate to complete the project or we move forward on an hourly basis. If you are determined to stay on the budget, we can redefine the scope of the project.
If the project is finished earlier, the client doesn’t pay as much as he would have had with a fixed price. And if you run into any issues that result in exceeding the budget, you still get compensated fairly, but your client will be the one who decides how to proceed.
Whatever pricing structure you choose, make sure to account for the biggest headache for all freelancers – the “project creep” – clients thinking they can just add on new things as they go. This is understandable to some extent, because clients observe the work in progress they think of new ideas and edits in process.
Once again, remember to write down the scope and size of the project with all the specifications, including the provisions for any extra work that may occur and how it will be priced.
To help you with that, you can obtain a package of design contracts an use them for the years to come. These contracts clearly spell out what the client will provide – text, images and other details. As well as what pages will be created with the description of any special features required. You can start by checking out this really useful post from Smashing Magazine for links to open source legal templates tailored for specific project scope, such as creating an icon, building a responsive website, etc.
Some designers prefer not to mention the number of hours spent on the work at all and instead focus on the date of completion. Supposedly, the clients will stuck with the ‘per hour’ cost and won’t pay attention to the real work completed. It will be more like “I paid $1000 for 8 hrs of work” instead of “I paid $1000 for a beautiful responsive website”.
I believe that it’s still a good gesture to turn in your time sheets at the end of a project. The client will know that you support total transparency with both hands. He’ll realise that he wasn’t cheated and that will probably make him happy about the deal. A client who is happy is a client who’ll refer you to others. So keep that in mind.
Pro tip: when negotiating with clients, make sure you mention that you do not offer them a “design”, you offer them a “web presence”. You’ll get some love this way.
Sometimes working for clients will seem too daunting, no matter the terms and payment structure. That’s perfectly normal. Everyone feels that from time to time. Luckily, as a designer you can sell stuff to fellow designers. They just get you. Here at Sellfy we’re making it super easy for designers like you to sell digital products to your peers and followers.
So what pricing method do you prefer? Do you have any pricing advice you wish to share? Have you tried Sellfy to sell your digital products? Let us know in the comments section below.
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