What should I be charging for webdesign?

Piggy is broke

How long is a piece of string?

One of the most common questions I see on IWF and on boards.ie web design and web development forums is the age old question of what should I be charging?. In the land of the freelancer there seems to be three ways of doing things.

  1. Fixed rate to do a site
  2. Hourly Rate
  3. Make up a Quote on the project

If you’re offering a fixed rate well you should probably have a look at the hourly rate tables. Factor in the amount of work involved and see if you’re in or around your ideal wages.

As to what you should be charging in your hourly rate well you’ve a few things to consider

  1. How many weeks do I want to work a year? (52 weeks).
    I Generally go in and say 44. I have my reasoning on this.

    1. One assumes you want 20 days holidays a year correct?
      (Thats 4 weeks assuming working week is 5 days)
    2. There are 9 Public holidays in Ireland.
      Lets round it to an even 10 and that makes 2 weeks.

      • New Year’s Day (1 January)
      • St. Patrick’s Day (17 March)
      • Easter Monday
      • First Monday in May, June, August
      • Last Monday in October
      • Christmas Day (25 December)
      • St. Stephen’s Day (26 December)
  2. And you’re saying 4 and 2 is 6 … 52 – 6 = 46 working week
    Well I like to factor in sick days / and the unknown. So I throw in 2 weeks extra.
    I was knocked flat for a full week with the flu in August

And there you have it we’ve got our 44 weeks in the year. So now we know how many weeks we’ll be working in the year lets do some numbers.

I’m going to assume 5 different figures here. 20 / 30 / 40 / 50 / 100k.
I’m also going to assume a different number of billable hours and see how that affects things.

What should I charge? Facts / Figures
Ideal Salary 20,000 30,000 40,000 50,000 100,000
Weekly Requirement 455 682 909 1136 2273
Hourly rates
20 Billable Hours 22.75 34.10 45.45 56.8 113.65
30 Billable Hours 15.17 22.73 30.30 37.87 75.77
40 Billable Hours 11.37 17.05 22.73 28.40 56.83
* Figures may be rounded here

Now of course the above table has been kept rather simplistic but its a good basis for things. For example if I know I’m going to have a 2 week project to work on then this equates to 2 full 40 hour weeks work. Looking at the table I decide which is appropriate and I can bill accordingly. That might sound a bit simplistic but doing 1 hour work here and 1 hour work there for a customer means I’m either interrupting my main project or I’ve to get setup with theirs and up to speed again on what I’m doing for them. As such you get charged at the higher hourly rate as its also not guaranteed work (unless of course there is a support agreement in place)

Sample Wages in the web Industry in Ireland
Position Low End* High End*
Junior Graphic Designer €20,000 €25000
Middleweight Graphic Designer €25,000 €32,000
Senior Graphic Designer €32,500 €65,000
Creative Director €50,000 €82,000
Junior Web Designer €22,000 €30,000
Web Designer €30,000 €40,000
Senior Web Designer €40,000 €50,000
Web Developer €25,000 €55,000
* Please note these figures are rough guides only and no doubt things have taken a hit in recent times.

Back on track to what we should be charging as freelancers. We’ve failed to include various things in these salaries / hourly rates.

  1. Software Costs
    • Adobe CS4 Premium Web edition – €1,592.42
      (Dreamweaver / Photoshop / Flash / Illustrator / Fireworks)
      Of course you won’t need to buy this every year BUT it does get upgraded (upgrade costs €785.29)
    • You’ll probably need a new machine every 2 or 3 years.
      Macs are pricey but I don’t think I could use a Windows machine now.
      A Mac Book Pro will set you back €1,149 for the base model – €2,299 for the top model.
      You may want a desktop machine as well. Again the base model iMac is €1099 – €1799

      You’ll also want a backup solution / Harddrives die all the time other wear and tear on your machines

      Extended warranties on your gear (at 300 – 500 quid it adds up)

    • Subscriptions while these aren’t necessary you’ll find they creep in and can be extremely useful
      ( Basecamp / Dropbox / Freshbooks … at 10 / 20 / 30 quid a month these start to add up rather quickly)
  2. Office rent / space. You need to factor it in in some way.
    See my post on the home office setup for my reasonings.
  3. Other overheads … electricity / heat / coffee and biscuits (essentials to the proper running of any office :D ) / Travel
  4. Server / Hosting / Domains
  5. Training (we all need to allot time to it or we become stale. Whether you pay for it and do a course / take time out you’ve to think about it. Whether a subscription to Lynda or a day course on SEO / Online Marketing you have to factor it into your career development

Our simple hourly figures aren’t so simple anymore.

Of course you can just ignore these extras but if you plan on making a living out of this it all needs to be factored in at some stage.

One can think … well I’ve already got a machine and I can use Gimp for graphics and so on.
Thats fine and I’ve no doubt it works for lots of people. I couldn’t live without the above mentioned.
(I have done it in the past but my working life has gotten so much better since I invested in things)

At the end of the day only you can decide what you want to earn ultimately not to mention what the market can bear and what people are willing to spend on your work. If your work is poor and you’re still learning you should probably be hitting the lower scale and inform your clients you’re starting out. If you’re more advanced well then are you making enough or more from freelancing than you would be in a full time job. If not then are you happy would be the ultimate question ?

I’ll leave you with a few final thoughts.

I am not a student. I can’t make you a website for 50 quid and a 6 pack.
I need to earn a living or else this all just isn’t worth my while.
I am what I would like to think a highly skilled individual as such don’t belittle what I do.

The minimum wage in Ireland is €8.65
A 40 hour week at that will make that €346.
I will not give you a custom built website / Logo / CMS / Theme / Training / SEO work / Link building for that.

So do you agree with my thoughts / has this been useful at all ?
Let me know what you think

(I also know there are various calculators out there that can calculate your idea hourly rate .. thats not exactly where I was going with this post however Freelance Switch would be the prime candidate for this type of calculator)

120 thoughts on “What should I be charging for webdesign?

  1. James, fantastic post. Really well thought out and simply put.

    I think you’re leaving one factor out though. Your personal premium. This is an extra that accounts for the company your potential client will be in in your portfolio, the cost of dealing with a seasoned professional and of course the big one, the premium on your particular unique style. Clients cannot get that anywhere else.

  2. Super post!

    It’s sad to see there are so many out there who still think they can get a logo made for €50. Further still it’s kind of frustrating to see people scoffing at the budgets of say large scale government projects. There’s still a lot of ignorance out there around the industry.

  3. Great post James, and I agree with it all.

    Dave’s point can be also brought a little further and one should think about the size of the contract. IMHO it’s better to have a smaller number of bigger clients, who are willing to spend, rather than many smaller clients who spend less, but collectively they add up to an income. If you are guaranteed 4 weeks work, it can be a lot less hassle (in so many ways) than 4 x 1 weeks work.

    I look at every http://freelanceswitch.com/rates/ , which will brings me to my magic “per hour rate”, it’s a handy too.

    Paul

  4. I live in India and the article’s been really useful as far as the breakdown is concerned.
    Rates obviously do differ here. Hope someone from India writes a similar piece! Cheers

  5. @Dave :) Thanks, I understand the personal premium comment and I would factor this into your starting base figure. I hoping to purely show some figures to give people some basis as to why they are being charged X or why / how they can justify charging.

    You do pay for quality

    @Steph thanks Steph I have done work on logos in the past with little or no budget on them. I’m quite happy with the result from an hour or so. So long as the client knows what they are getting its fine. (In one case a client ended up using the 5 minute placeholder I had done as their official logo) :o. Mom and Pops type stores probably can’t afford to have me work away for a day or two on their logo.

    People don’t seem to realise though that to sit down mock up / review / discuss meet with clients and revise a logo and put together the final version with branding material and so on it can take days and weeks even in some cases. Factor in the hourly rate of one person or two or three people and the figure is suddenly jumping up quite a bit.

    @Paul I do try to get larger clients and put some form of retainers in place this certainly helps. Smaller clients always need an update here or an update there. Might be once a month might be in 3 months time so its good to have a figure for them for updates.

    @Mark I understand your reasoning. I work with a number of smaller clients however who can’t / don’t want to hold me on a retainer for work. As such I’m more than happy to bill them on an hourly basis.

    While I understand you think my article is crap you may be missing some of the point and that is in figuring out your rates. While you seem to be in a position to just charge a client whatever I would guess you have a figure you want / need to earn a year. You’ve then broken this down no doubt into your various clients and spread your rates in that way. ? I’ve just gone a bit further and broken into hourly rates which can be useful for setting your per project rates and retainer rates.

  6. Mark’s is the only sensible comment on here so far!

    The only thing that’s right about your original, James, is that you need to make a living and you don’t work for peanuts!

    You shouldn’t charge what the Client is willing to pay so much as you should charge what the Client sees is a moderate investment for the return, the value they will get from working with you.

    If you feel this modest investment is unprofitable for you, either decline to take on the work or, more likely, you haven’t helped the Client enough yet to see the full value of what they will get by working with you.

    By reading many authors on this subject, doing my own research, applying the techniques myself, and helping many people learn a better way of charging, I have identified 21 reasons why charging for your time is counter-productive for you, and 9 reasons why it is counter-productive for your clients!

    I won’t bore you with all of them, but just consider the following thoughts about time- and cost-based charging:
    * There’s an instant conflict of interests, and so it’s adversarial
    * The Client is taking all the risk
    * Frankness and openness are discouraged
    * There’s no reason for the Consultant to get better at their job
    * There’s the likelihood of a price war
    * The Consultant’s potential earnings are capped
    * Paradoxically it results in lower fees!

    Find out more at http://www.davidwinch.co.uk/dvd.htm

    You owe it to yourself and your clients to charge in a way that makes them say, “That’s a bargain. How soon can you start?” whilst at the same time you are thinking, “I’ve rarely struck such a profitable deal!”

    David

  7. I’ve now just seen your reply to Mark, James.

    Whilst you might have a figure you want to earn in a year, what happens if you reach it in six months?

    And what good will it do you or your Clients to have broken it down by client? Worse still by the hour?

    It is morally, legally and ethically right to charge different Clients different amounts for what for you is virtually identical effort. It is right because different Clients derive different value from the work you do.

    Base your charges on the value the Client “will” get out of working with you. In other words agree the Client’s investment – a fixed fee for a fixed scope project – before work starts, then get paid most, if not all of it before you start.

    David

  8. @James I don’t think your article is crap, in the sense that it is a lie or that it was poorly written. I simply reject the notion of hourly rates. I don’t have a figure that I want to earn…sky’s the limit! I don’t “spread” anything around either. You really need to learn about alternate billing methods. Value-based fees are NOT the same as what most people consider “fixed bid”. Jonathan Stark does a good job at explaining my point as well: http://jonathanstark.com/blog/2009/11/30/the-moral-dilemma-of-hourly-billing/

    In the UK, David Winch is the go-to guy on value billing http://www.davidwinch.co.uk/workshop.htm

  9. Appreciated this. Yes. Agree completely BUT… in order to “educate” and re-train, as it were, “customers” or potential customers, we in the industry who are in the graphic art/design world need to be consistent and not back down and cave when that customer you really want refuses to pay more than minimum wage.

    Also, I do NOT work on spec at this point …EVER. Period. I learned that from my father who worked as an art director, designer, and everything in between for over 60 years (he passed away in 2006 at 95 having worked until the very last 3 months of his life).

    May I also add here that a critical skill is often missing of even seasoned and terrific visual design folks – that is usability engineering chops. This is so critical that I am now developing courses in this specifically targeted at graphic designers, web designers, et al. Even simply knowing some basics about usability testing and engineering can really make a difference in getting the price you need to get to do the job properly.

    Good article and thanks for it.

    LjRose

  10. @David and @Mark … can I ask one question.

    How do you decide the fixed rate you want to charge for a project? Are you pulling a magical figure out of the air ?

    Do you estimate the amount of work involved ? If so would it be correct in saying you’re judging the number of hours you’ll have to put into the project ? For this I would assume you’d have to have some form of hourly rate no ?

    Now whether you are telling your clients this directly or just giving them a fixed figure for the work I’m kinda failing to see the difference. My post isn’t so much about telling customers an hourly rate as it is about figuring out what you should be charging for work.

    I mostly deal with fixed cost projects I quote on the work upfront and for this I have to gauge the amount of work involved. I can’t pull a magically figure out of the air. (every project is different and while lets say a brochure site will be similar there are always differences that have to be accounted for one client wants some shiny jQuery type stuff .. another just wants 5 static pages with nice banners … )

    Now I do understand the need for clients to be able to approach you and have work done and not have to worry about what I’ll charge them on an hourly rate and I would guess with larger companies they can just take you on quite easily. What about the smaller clients who don’t want that retainer type scenario / either they can’t afford it / or really don’t require that much work on a site. Well they are going to be back to me and wanting changes on their site. I should probably tell them no I’m refusing to work with them because we’re not having a mutually beneficial experience? No I tell them thats going to take me an hour or 3 or 4 to sort out and they are happy enough. 5 months later they get back to me again and so it goes.

    I offer clients a service:

    1: Fixed rate based on what I think the project will involve. (Generally I’m always quoting like this)
    2: Offer retainers and will do x work on their sites for them (Why I do this … it enables me to budget things nicely and not have to search for more work … though thankfully work just comes to me)
    3: I offer once off hourly rates on work. (for small updates … these are not the type of things that could be sped up too much .. creating banners / page updates and so on)

    While the retainer ultimately works out cheaper for the customer if they require the hours … it also saves me time (billing and headaches with chasing up invoices which this last year has been a bit of a nightmare to be honest) This saving gets passed onto my customers. My small update clients aren’t paying for hours they don’t need or want and we’re all happy ( at least I think we are )

    I really think ye are getting caught up in the hourly billing parts here and failing to see I’m trying to give designers a guideline on what they should be charging.

  11. James

    You decide the fixed rate by basing it on the full value the Client has told you they will get out of you fixing their problem, whatever that may be. There may also be an element of your personal value factored into this (as Dave mentioned in the very first comment) based on your uniqueness, your appropriateness and your approach. Part of your skill must be in helping the client understand this full value, and this does not mean just telling him. The client needs to be telling you. After all, like beauty, value is in the eye of the beholder!

    Very roughly your fee will offer between ten to one and twenty to one return on investment, but please, pricing is an ART not a science, and therefore not based on equations.

    Consequently there is little need to estimate the amount of work involved. You just need to give it a brief thought to ensure the deal will be highly profitable for you. You most certainly do not need accurate cost accounting! We are talking Price Based Costing here, not cost-based pricing.

    I totally agree you don’t need to tell your customers how you arrived at your fee. They aren’t interested, to be honest, so there’s never a need to tell them. All they are interested in is getting a good fix for their problem for an investment that yields a great return. If they do ask for a breakdown they are either trying to cherry pick, to drive you into a price war, or to find a handle to hang ‘no thanks’ on. The point Mark and I are making is that you shouldn’t be charging for your time.

    I strongly agree with your assertion that you should work on fixed SUM projects, and that you need to be able to quote up front. But please don’t think of fixed cost, think of fixed PRICE. What is stopping you (almost) pulling a figure out of the air as I describe above? Who is going to challenge you for doing so? You’re running your own business so think like a businessman. You are absolutely correct that every project is likely to be different and I am adding that that means “of different value” to each client, so it is highly reasonable to charge different prices.

    You slightly cloud the issue when you talk about which companies like retainer arrangements, and I’ll come back to those. All companies, big and small, will think about what you quote for fixing their problem. What convinces them when it comes to your fee is what value they will get out of having you fix their problem, and they’ll compare this with your proposed fee. The bigger the return, the more it becomes a no-brainer, assuming of course that they like you and trust you to deliver what you say you’ll deliver.

    Having also agreed a fixed scope for the project at the beginning, you are quite right to treat any additions to that scope as an additional project to be agreed and then prioritised alongside the project you are currently undertaking. You can’t do two projects for the same client simultaneously. Just don’t base your fees on your estimate of the time it will take.

    Back to retainers. A retainer should be for access to you, not for any amount of work to be “called off”. If their new problem can be solved in the space of a five or ten minute phone call or one exchange of e-mails, then great – it’s covered by the retainer fee. But if more work than this will be needed, again it’s a separate, separately chargeable project that needs to be agreed and scheduled.

    I can see that you’re trying to give designers a guideline, and the reason I’m getting ‘caught up’ in the hourly billing is because I believe that advising this as a charging model is giving the designers a ‘bum steer’, and that they should at least be able to consider an alternative way of charging that I believe is fairer to both sides.

    Before I knew better, I used to charge for my time. At one point I saw two companies in the same week, both needed a simple project. Knowing how long I thought it would take, I quoted both of them £2,000 – which I knew would be profitable for me – and they both said they’d have to think about it. I was then taught the techniques of Pricing By Value. The next week I went back to see both of them, and used this method. This time I quoted one of them £5,000 and the other £10,000. This time they both said, “That’s a bargain! How soon can you start?”

    I strongly suggest you find out more about these techniques, and try them. If they don’t work for you and your clients, OK, go back to the way you were charging.

    Do check out my website or contact me if you’d like to know more.

    I hope this helps.

    David

  12. Thanks Niall … it is something I’ve wanted to write for a while now. I generally responded to questions on the likes of boards and the answer always seems to be. How long is a piece of string. Then we go about giving the same details over and over.

    Let me know how the quote on the next project goes over

  13. James, thanks for your kind words.

    I’m sure you’ll find your further research interesting. If you’re not aware of them already, I’d suggest Value Based Fees by Alan Weiss and Pricing on Purpose by Ron Baker. Alan Weiss has an excellent website http://www.contrarianconsulting.com and Ron Baker also runs the Verasage Institute so check out their website http://www.verasage.com where you’ll also see inputs from Ed Kless.

    Mark has already mentioned Jonathan Stark, and Boston Lawyer Jay Shepherd is a great advocate – in both senses of the word – and together with Ron Baker is part of the faculty of the Solo Practise University. http://www.gruntledemployees.com is one of Jay’s sites and contains links to his others.

    A lot of this is written for business consultants, accountants and lawyers, but it really is mostly generic. Jonathan Stark is a software developer, but his stuff is generic too.

    Niall, glad to hear you’ll be giving these techniques a try. Just be aware that it’s about more than just how you set your prices. It’s a whole way of conducting sales conversations that lead up to proposing prices based on the value of the solution.

    There’s a bit more on my own website, and I’ll be announcing the date of my next UK Workshop soon, plus there’s my DVD of the Workshop for sale on my site.

    Good luck.

    David

  14. @Barry … I’ve taken a bit of slack from people on that point. I said it probably because it rhymed :P but also because for 200 quid a student is more than likely willing to spend a lot of time on the project. They are potentially learning the ins and outs of webdesign. (At least I know I would have been back then but that was 10 years ago now :o )

    I’m not trying to put students down we all started somewhere. Some students work I’ve seen is out of this world! Some “professionals” work I’ve seen is complete and utter crap. My point really is that I’ve come up against the “this student will do the site for 200 quid why should I pay you” type attitude as probably have a lot of web designers out there. You potentially have different needs as a student. You’re still potentially under the care of your parents / or on a grant (lots I knew were working part time). A week spent working on a site for 200 quid.

    Going this route we could all decide to outsource to the far reaches of the earth where wages are way lower. A lot of people I know do this very successfully but it’ll mean that ultimately a web designer can’t earn a normal wage in Ireland.

    Ah .. I’ve not had me coffee yet :D

  15. Interesting post and very interesting comments underneath, I would probably agree with the pricing per job situation for most of my work. I guess sometimes I have jobs come in with very tight deadlines, I put the head down and work through the night, get the job done in 3/4 of the time I quoted for but is it not right that I charge what I quoted originally?

    One problem I have with quotations is quoting on new jobs that need something I haven’t worked on before, sometimes I find it hard to estimate how long it will take to do something if I’ve no idea where to start etc.

    I am interested in outsourcing a number of projects to the lower wage areas, unfortunately I haven’t found someone reasonable and easy to work with, yet. I wouldn’t be too worried about earning a normal wage in Ireland as most of the projects that come back from outside of Ireland will need tidying up, customizing further etc. I have worked in a number of companies who have gone the outsourcing route but they have outsourced entire projects rather than the time consuming easier parts of the project and I have seen it fail time and time again.

  16. @Gary You will always quote (or hopefully quote) with an extra margin of some degree that’ll really depend on the person / company

    There are the unknown factors you have to account for and it can work in two ways you can end up billing and have done less hours or you can bill having done a lot more hours than you quoted for. This would of course depend on the agreement you’ve got with the client. (I’m not so much talking hourly rates here as your own project estimates)

    I do find putting the head down and working through the night at times great. Its very rewarding. I would question however if you quoted the correct amount of time ? There are less distractions late at night. Less people to chat to. Less support emails to answer and so on. So in some ways I’d be forced to question your original time quote no ? (or does nighttime have magical powers) more than likely I’d guess you’ve factored in other things for during the day work.

  17. James,

    You’ve gotten a nice discussion going on this critically important issue. All professionals face this. Your mathematical and economics work are impressive. But despite your fine arithmetic, you’re facing two big problems:

    (1) clients don’t care about all that, and

    (2) you’re limiting your earning power.

    Clients don’t care about your costs and desired income because they’re buying a new website, not the hours you spend. They only care about the finished product, not how you got there. And they’re going to decide to pay your price if they think it’s worth it to them, not because of the number of hours you’ve spent or how much you spent on software and rent.

    You’re limiting your earning power because you’re charging for your time rather than for your talent. You obviously do good work, and I’m certain that your skill and experience enables you to work faster than someone with less talent. Which means you take fewer hours to do that work than the lesser talent does. Why should you make less as a result?

    Establish the value of your work and set your prices based on that value to your clients. It’s not easy, but it will reward you better than billing by the hour. To see how we set prices at our US employment-law firm, see my post on The Client Revolution, “How do you set your prices?”

    Thanks for getting the discussion going, and keep up the good work. (And thanks to David Winch, whose great comments got my attention.)

    Jay

  18. Sorry for the late reply Jay (having a mad few days with work) also haven’t had my coffee yet so hopefully this makes sense :D

    People really seem to be focusing on the hourly rate factor here and its not entirely what I was after when I posted this. As I said a very common post on forums i what should I be charging for webdesign. This is generally from people new to the field who aren’t established and who are either doing this as a nixer or trying to get into it full time. They need to have some basis on which to setup their charges.

    Figuring out time that a task will take and figuring out an hourly rate for the project will at least help to some extent. As they become more established and get a name for themselves they can attach their own premium to the rate.

    In an ideal world I would only have large clients with large budgets. This is however not the case. Webdesign while not a cut throat industry is heavily saturated with people. People are charging from the small to the very large. One has to get in the work first before you can get choosy with what you take on and what you ignore. If you use the figures here as a basis and find that you’re not able to obtain them then its time to think either you’re doing something wrong and you should go back to full time employment for someone else until you’ve got more experience and a better reputation.

    I also think that as an actual “Company” you potentially have a lot more power. People are hiring the company to do the work not an individual even if said project only has you working on it.

    In answer to point 1)
    Clients don’t care about all that –

    Its Probably true to some extent

    I come across a mix of those who do and those who don’t. I should maybe think about dropping the ones who care about all that but it won’t be happening any time soon.

    In answer to point 2)
    I’m limiting my earning power –

    I agree with this you also make a very valid point about me being able to do work in less hours. As a result my rate hopefully reflects my experience.

    You could however take this further and say that by doing the work myself I’m limiting my earning power.

    Technically I could outsource everything I do and become a project manager this would ultimately lead to me being able to take on more and more work .. ultimately .. hire more project managers and increase earning power. Ultimately this would make more sense than me actually doing the work.

    For this I would have to hire “freelancers” and for this I would need to estimate in my head the amount of time jobs would take them and what I would be willing to pay them. If they were setting their price too high I would end up looking else where. Their prices would have priced them out of consideration by me. While their work might speak for itself they won’t be getting the work from me.

    Not ideal for the freelancers no. While I wouldn’t be picking the cheapest people I would be looking at their portfolio of work and factoring in their prices.

    Lets step back from the ideal world where I can set what ever rates I want.

    My wife works in translation. She’s just become a freelancer translator for French now Freelance translation is a lot more cut throat so to speak. you charge per word and by the hour. Its the way its done as a freelancer. As a company you have more leverage. If she increased her rates too high she wouldn’t get the work. While the quality of the work speaks for itself ultimately there is a cut off point above which people won’t pay. So in this case the whole basing of prices on Value to client doesn’t hold true. If she was working on marketing jingles / buzz type stuff she would have more say in her rates as this is a different sort of translation and requires a lot more thought / style and effort. Hence its more rewarding but again quite difficult to get established in that form of translation.

    So using the above tables for her in this case makes sense as well as researching what others are charging for this sort of work.

    James

  19. James

    Let’s just focus on you and your wife for a moment; your business lives that is!

    Put yourself in the position of the client for the moment. They want their ‘problem’ fixed. Why? Because having it ‘broken’ is painful, and having it fixed isn’t, or at least will be less so.

    There is a value to them in achieving the ‘fix’.

    There is no value to them in the way it is fixed, except that they want it fixed within a ‘reasonable’ time, and they want the solution to keep on maintaining the ‘fixed’ state. If the heart surgeon tells you that you need a triple by-pass, do you ask what size scalpel blade he’ll use, or what grade of ‘catgut’ for the internal stitches? Of course you don’t. You just want to breathe more easily and have more strength.

    Working out how long a job will take you, the consultant, is not looking at things from the client’s perspective. Why does the client what a new website, or a document translated? What will it mean to his business when it’s done? How long will it go on making a difference? What will be the cumulative effect of that difference over the long term? Asking the client these questions, and more, will allow you to understand the full value – to the client – of having a new website or translation.

    In practice, clients often don’t know the answers to these questions. It may even make them uncomfortable to be asked them, but that doesn’t mean they shouldn’t know the answers. As business owners, of course they should, and if you’re not talking to someone with that much vested interest in the business, you ought to be.

    Until they understand the difference it will make, the value it will bring, how can you? You didn’t set out to make them feel uncomfortable, but you’re doing them a big favour by getting them to think about the answers.

    Once THEY can articulate the full value of ‘fixing the problem’, your suggestion of a modest investment to realise that return will be very appealing.

    David

  20. Focusing on my wife .. (cus I like to do that :D )

    From your comments there I take it you have no experience in the realm of translation ?

    Freelance translators tend to work for other companies and the plain and simple fact is … you charge by the hour and by the word. This is not going to change unless you scale up employ people / find others to work with then you can get direct work from clients and will be able to dictate to some extent higher prices.

    Most of the bigger companies get to pick and choose from vast pools of translators who have set their rates. The majority of the time again translators will be charging between 5 and 15 cents a word. (this will change on a per language basis I believe Japanese is quite high) Quality probably comes into play a lot there as well.

    The tools available to the translation companies allow them to figure out word counts quite easily and to estimate job times on proofing and so on. Then trust comes into play and with some jobs taking longer than others you’ll have to charge these companies more for the likes of edits and proofing.

    This is one area where value based fees are BS :) If my wife did that with erm 7 years experience as a translator / team lead / language lead / project manager / quality manager and so on she would be laughed at. She’d also not have any work I’m afraid to say.

  21. I agree totally with this. The problem is that I am a student, so people think its cheaper to go with me. Quite a few people turned me down, because I expect they didnt think I was worth what I charge, or because I charge higher than most students.

    I need to earn a living too.

  22. @Sean … I might suggest you drop the I’m a student bit from your website. Though that’s up to you. The work you’ve done speaks for itself so they don’t need to know you’re a student :D

    It just probably puts you into the ah sure he’s just a student bracket throw him a few quid and he’ll be grand.

  23. I totally agree, €200 for a few hours work during a lecture is excellent for a student. If I don’t have a website on I can go to my parents for a few quid.

    People do expect you to work for peanuts though and always look for the cheap option!

    They think because you don’t have an office and a few staff you should nearly pay them, even though I have computers and software up to the standard of a designer.

    Great post though and great the buzz around it – I’m off to do a bit of website work during a med informatics lecture :)

  24. Thanks :) @Ronan I think one problem with both professions is the entry requirements in some ways. To throw up a website it isn’t rocket science … to click a button on a Camera again not rocket science.

    One requires a computer one requires a camera (+computer).. and both professions have wannabes so to speak … of course its only by practice that you get better.

    In the photography forum over on boards I’m always seeing the how much to charge type posts as well. So yeah I guess a lot of what I’ve said holds true for it as well. You’ll calculate your billable hours in the week ideally having 40 hours billable, taking into account post processing of the shots which when I’ve played with it is very time consuming so I can only imagine when you’ve got 200+ shots from a wedding you’ve to sort through professionally EEK. Again you’ll have to factor in computer costs / lenses / lights / props and all the rest. Might be a good blog post for you to do “How to price a photography job?” ? :D

    @Barry Thanks again barry yeah I’m amazed by the response to the post hopefully its a good guide for people starting off freelancing. One problem when I was starting was I needed the work and hence dropped my rates. Also you’ll hit the I’m building up a portfolio so its a chicken an egg type situation, where you need the work but don’t have enough to show potential clients. Thankfully these days most of my work is through referrals an word of mouth.

  25. @James Yeah I think I might, I only include it out of habit. When starting out, and unsure of my work, I tended to put in student as sort of excuse for crappy work. No point looking for excuses now, if its not good enough, its my fault.

  26. Excellent post James and some very interesting comments too. I think another big problem facing freelancers is convincing people they need to pay money to get a good website. The other big hurdle is getting paid at the end of the day even though they have agreed a price and you have completed the work.

    I don’t know what it’s like in other countries but in Ireland from my experience, people put very little value on what’s involved in building a website. We have the cowboys out there to thank for this by telling them they can get a website for as little as €50.

    They have associated the local whizz kids who are good on computers with someone who is qualified to build them good websites. They want them cheap and fast and they want quality too. The problem is in most cases you can give them something mediocre and shoddy and they will think it’s ‘brilliant’.

    Imagine hiring a commis-chef to carry out open heart surgery on you because he happens to be good at dicing chicken breast with a knife. That’s what it’s like. I’ve been there before when I was much younger and much less experienced. I think we all have. My first commercial site was a complete disaster in terms of visuals and functionality, but I still got paid for it and was very grateful to receive a few Euro as a student. We all have to start somewhere.

    I may be straying off the point of this post a bit here but this is something I feel very strongly about. How do we convince people that they are not paying extortionate prices for good websites ? They are paying for a site that follows the rules of good design, usability, accessibility, performance and graceful degradation to name but a few. They are also paying for 5 years of my post graduate experience developing websites.

  27. Matt. You ask “How do we convince people that they are not paying extortionate prices for good websites?”

    I rather hoped I’d addressed this in my post earlier this morning.

    The first step, apart of course from making sure they’ve got a budget and that you’re talking to the person who makes the decision to spend it, is for them to understand what it’ll mean, what difference it’ll make to have the new website. If you can’t get that far, walk away. If it’ll be unprofitable for you, walk away. Hang on in there and you’ll receive peanuts because of the low value of the result in the client’s mind.

    And you also say “The other big hurdle is getting paid at the end of the day.” Ask for a fee based on value, and ask for a large chunk of it before you start. You might even offer a small discount for paying in full before kick-off. Why should you take all the risk and they make no commitment? Convincing them you are the best person to do the job has to done by other means than low fees and over-generous payment terms, but I’m sure you can do that.

    And realise that as a freelance, you’re a businessman, so think like one. The client doesn’t care about “following the rules of good design, usability, accessibility, performance and graceful degradation” and your “5 years of post graduate experience” except that they want a site that does the job excellently and keeps on doing it. They want to pay for the result, and recognise that you know how to deliver it. If they knew how to do it for themselves they probably would!

    Oh, and James is right. I don’t know much about the translation market. Just trying to be inclusive!

  28. That is a very timely topic for me as I’ve just gone freelance myself and had some of the same thoughts. I think a lot of people don’t realise that they won’t be working all the time and unless you are extremely lucky or well connected the work simply isn’t going to come to you without any effort so you need to add that into the equation as well because anytime you are trying to find work means you’re not earning.

  29. Great read and very helpful. All the time, people assume they know the freelance life style. But that FREE comes at a price. A price we have to work off through finding and connecting with clients. And pricing has always been somewhat of a struggle.

  30. Pingback: James
  31. Looks like I’m (or was last year!) a medium end Web Designer from your wages table! Nice to know!

    Your tax affairs should clarify a lot of this and tell you what you’re doing right or wrong. A good accountant who understands your industry is essential.

    “Perceived Value” is always important too…charge too little and you’ll get shit clients, too much and you’ll get none.

  32. @Matt @David Henry @Chris @ Robert @Leon

    Thanks guys for the comments :)

    I think that the perceived value of the website is one of the major issues here ( Directly / Indirectly David Winch / Mark and Jay have been hitting on this) While my verdict is still out on their approach to things what they say does make a lot of sense.

    A customer who doesn’t value their website isn’t willing to spend much on it.

    Letting the customer know the value of their site will hopefully help with this and allow you to increase you rates or have you favoured above your competitiors even if your rates are higher)

    It’s about how you sell yourself but …. more importantly its going to be about past records with other customers … being able to show the success that others had and having the recommendations of those customers as to the quality of your work. An impressive portfolio won’t hurt either :P

    And that gets kinda back to my initial point of setting your rates. If you’re starting out and have nothing to show you won’t be able to do charge much and maybe won’t get the custom in. You’ll have to ask yourself what can I live on and set your rates hopefully appropriately. I know when I was starting I did a few sites for next to nothing in order to build my portfolio and client base. This hurt me greatly initially as the cheap guy and the majority of clients I seemed to attract were low budget ones.

    As @Leon says the perceived value has a lot to play as well with it … you charge peanuts then people will take you for a monkey. You charge too much and you just won’t get enough business in …

  33. One observation I’d like to share is that I (and I suspect many of you) get web app dev prospects who are unable to articulate value because of the “speculative” nature of the venture (i.e. Twitter). You can go so far as to probe “What would you consider outstanding first year revenues to be?” only to be responded to with a shrug, or you can have a wide-eyed prospect who thinks their idea is so amazing that they answer “$1 million”. You could argue that it would be negligent to charge $100,000 for their million dollar idea, knowing that it’s a crap shoot, and the client could try to hold you accountable for their ultimate lack of success. Also, any suggestions as to how to avoid “performance based payment” discussions would be helpful to the group.

  34. Your example of twitter is interesting …
    Has it made any money yet ? :) (what year is it on .. and when will the VC fizzle out)

    I think part of the issue here is you’re assuming of course we’re dealing with people with large budgets to begin with. for who 5k and 10k 50k 100k is a drop in the ocean when they hear about the potential returns they could be making. Unfortunately for me this isn’t the case. I work with SME/B’s for the most part for who that 2 to 5k is a hell of a lot of money (especially given the climate over the last year or so) so they are looking to get the best value possible with the least investment.

    Now they can potentially go with any of the designers on this thread and we’re possibly all charging different amounts. In terms of a brochure site they want something
    1: Cool looking
    2: They can potentially update themselves
    3: Thats not going to break the budget
    We can all probably give them that to varying degrees. So they can deal with a student, a company, a sole trader … and so on. They can also compare the prices we’re all charging and go **** no we’re not paying that.

    Now if they have someone with a basic modicum of computer knowledge they should be able to get a domain / hosting / and wordpress installed. Then to install a theme on top of that.. isn’t rocket science, especially given the amount of generically cool templates that are available out there. (they are not however custom built templates / dev work which I’m selling) And hopefully it wouldn’t look as professional as we would be able to put together.

    On a different note increasingly in the industry I’m seeing people with ideas searching for free dev / design work in return for a % in the company or profits.

  35. This is exactly what I needed coming into my second full year of operation in the Freelance world. Got to revise my prices after coming in competitively to get my portfolio established.

  36. Well, that’s what you need to charge in order to break even, but more realistically, as someone said, things are worth as much as others are willing to pay for them, and that’s much more difficult to find out.

  37. Thanks for all the comments guys :)

    @Albert and in the various comments we’ve mention adding in margins … the value you attribute to your work … and so on. Is it not a good basis on which to charge ?

    Breaking even = getting the minimum as a sole trader you can live on no ?

  38. @Chris depends on the situation … my first thoughts are … now if you do this cheap for us there’s the potential to get more work :D we’ve all heard it before :P

    Having decent chunks of work from a client means you’re not going to have to spend time marketing yourself … and you’re not going to have to chase up invoices / billing / quoting on other projects assuming you build up a good relationship with the client. Has the client asked you to ? If not then I would assume they are happy with the current situation ?

  39. Hey James, yea totally agree with the promise of potential for more work :) I have a situation right now where I’ve been asked if my rates are negotiable so I’m just trying to figure out what to do. I’ve worked with them before (I wasn’t freelancing at the time so my rates were lower) so I know they are good guys to work with, just trying to balance up the cost things because my day rate is what it is for a reason, I need to earn this to make a living.

  40. @Chris – I have tried it before and it has never ever worked out. Generally your “just this once” price will be the expected rate for future projects.

    @Albert – I completely agree with you. If you have a client that has budgeted 10k for their project and you quote them 4k they won’t appreciate the savings… they will go to someone else because of a perceived higher value. And obviously if they have 4k budgeted and you quote them 10k, they wouldn’t accept your bid either.

    As far as finding out what their expected budget is I normally just ask them “what is your budget for this?”. As a general rule I try very very hard to not be the first person to say a number. Unless I say “just so that we’re all on the same page, if you think that this is going to be a few hundred dollars then I will have to refer you to the local high school that I work closely with. There will be students who can probably handle this for that budget”. This approach works pretty well for me, but I am interested in hearing how other people find out a potential client’s budget.

  41. The figures are spot on! A really good way to look at pricing.
    Albert – Clients often have a budget in mind so discuss what they need and if it can all be done within their price mark … if not then offer a solution that meets some of their needs but is at a price more agreeable for them. A phased solution can sometimes be useful …

  42. Paul,

    I picked this one up from my home theater vendor, who said early in our conversation, “our typical job is $80,000.” That statement is intended to both imply credibility/quality, and hint to the customer that they should be prepared to spend big or look elsewhere. I ended up spending only $20,000 with them :)

    Mark

  43. Nice article and pretty much spot on with how I have handled my freelance side over the last 10 years.

    I’ve done all kinds of pricey models over the years, and nearly every time I get screwed on the value based pricey model. The lump sum contracts have either resulted in too much time spent on my side, way too much time spent on my side, clients who didn’t pay, or clients who are a huge pain in the ass.

    I’ve discovered that giving them an hourly fee and continously updating them on what it is costing as been a) highly profitable for me, b) cost/budget conscious for the client, c) a PLEASURABLE experience for everyone. I do vary my hourly fee based on the client and the work involved.

    The hourly model works for Lawyers and the last time I checked my buddy Jeff wasn’t hurting for money.

  44. I live in Italy and the situation is a little bit harder. The people prefer to spend 600 euros for a Iphone and you can hear them say (in italian obviously :-) :”For my site I wouldn’t to pay more than 300 euros” and then follow with two hundreds of requests!
    However, if you’re not a great company, as said Albert, the client make the price (with some limitations)!
    Thanks for this great post.

  45. Nice one.
    I fully agree – I did exactly the same calculation myself, with similar findings.
    Whilst I acknowledge that most of the time there is effort involved in justifying my quotes, I do wonder then if i need to target a different market, where professionalism and professional rates are required and valued.

  46. I’ve already said pretty much all I wanted to say on this subject, but Rickdelux’s line about lawyers needs a further comment.

    The hourly model might be widely used by lawyers, and widely accepted by clients who feel they’ve been presented with Hobson’s Choice. But it is used because lawyers generally don’t know and seem not to have looked for better ways, at least not this side of the pond. And how many of their clients have you heard saying “That’s a bargain” or “I must get my lawyer on the case asap because it’ll be the most cost effective course of action”?

    Follow the link in Jay Shepherd’s post from the 15th (above) and see how enlightened US law firms are gaining considerably from the value-based model, and their clients even more so.

  47. And I’m back … sorry for delay in any response from me was traveling the last 5 days without net access in Morocco :)

    Just wanted to say thanks for all the comments / opinions / thoughts on it all its been great :)

  48. Hope you enjoyed your “blackout”. Great post.

    Another one to think about might be the joint venture request. Where everyone wins except you :-)

  49. Personally I like the hourly charge based on experience. I have come across lots of clients that just keep changing the goal post after you have given a quote.

    The benefit of the hourly rate is:
    1. As you build your portfolio you get a good idea how long a project will take based on your recorded time with previous projects.
    2. You can give a good on the spot price within 10% of the final project.

    It must also be made very clear to clients that changes could incur additional charges. For example I have one client change the header image 18 times (among other things). The project that should have taken 3 weeks ended up taking 4 months.

    How would you account for the loss of time with fixed pricing per project!!

  50. I love these kinds of posts, especially early in the morning, when it gets my brain awake and thinking.

    I agree 100 percent with the sentiment here James. I also agree with Mark regarding “value pricing” (I think I used a hybrid of the two, as you can tell from my comment here: http://jonathanstark.com/blog/2009/11/30/the-moral-dilemma-of-hourly-billing/

    I say, charge what you’re comfortable charging, and deliver an excellent product to the customer within the agreed time frame. Nothing else matters. It really doesn’t.

  51. In an ideal world with ideal clients working on ideal jobs, value based pricing is AWESOME! In reality clients change their mind about this that and another. A 1 week project stretches to 2 months and a simple color change has gone through 5 revisions. The client has taken 5X the amount of time you thought they would have because of unnecessary meetings, phone calls, and last minute changes. While I know that within value based pricing there are terms and policies to write within your estimate that can help you avoid this snafu; but in the end almost every project is like this to an extent. So why default into the fine print on every job as opposed to making the client understand from the beginning that TIME= MONEY. If you think that you are selling yourself short charging hourly you can always raise your rate. Seriously though, always.

  52. When I read comments like Justin’s, I start to wonder if people aren’t jumping to ‘getting the deal’ too readily.

    If you don’t have the information to agree a fixed scope for the project, and this is a result of the client not knowing quite what they want, then why not go for an initial project to set the fixed scope for the ultimate project?

    This initial project won’t be doing any of the final ‘problem solving’ but it will be getting the client to think and make decisions before you embark on the lengthy ‘big one’. The value of the initial project will be in getting the final project completed sooner and thus the client company reaping the benefits of that sooner.

    Sure, the client may say they can’t make their mind up until you’ve shown them the ideas working, so this could be a ‘pre-initial’ project, again with a value to the client in terms of getting the final project delivering benefit quicker and with less fuss.

  53. Probably the key to successful pricing is diferentiation. Yes, you can hire a high-schooler to develop a basic website for $100, but that will not be the same as a professionally developed one. Also, it’s possible to set up a plain vanilla WP install in a couple of hours – and that’s a website too. The thing is getting the customer to see that he gets what he pays for. It might be trickier for artwork, as it is a matter of taste.

  54. First I should introduce my self, as I’m almost a rookie amongst you people. My Name is Shikeb Ali, and I work as a Web Designer for Jang Group aka Geo TV (Pakistan largest media group).

    Now about the wages, according to the above mentioned table Ireland’s junior graphic designer is earning 12 times higher than me. So its a disaster for good designers when you are not paid enough. Pakistan facing the “Brain Drain” situation just because of this low wages as European Countries are paying them according to their work ability.

    Freelancing is good in asian countries as freelancer get paid in Dollers or Euros, for example in Pakistan if someone get paid $100, it will turn in Rs. 86,000 which is way above a common designers monthly salary here.

  55. Hi Shikeb … I’m well aware of the differences in wages between countries ( well not well aware as I don’t have exact figures but I realise there is a huge difference)

    One issue you’ll have to take into account though is the cost of living in Ireland is probably 10 times as high ( though this is just me guessing) – and probably one of the factors in Ireland being in such economic strife at the moment.

    Its one of the reasons though a lot of companies in Ireland outsource to the likes of India (I’ll use India as the example as I’m constantly getting contacted by “off shore” development companies emailing / calling me from there)

  56. Good article! Outside of the discussion of hourly vs. other, I would like to vent about my personal observations regarding many freelancers I’ve met who do charge hourly.

    I know I am going to get a lot of flack for this, but any freelancer web designer/developer who charges more than $15-20 an hour who A) doesn’t have a 4-year degree, B) doesn’t have at least 3-5 years experience already, and C) who can’t do at least a little of everything (design, front-end, back-end, DB, programming, server admin) is somewhat greedy.

    Most every freelancer I bump into, most of which are pretty decent (which is far different from phenomenal), usually charge between $30-50/hr…sometimes when they start out, and sometimes more! I honestly met a guy who charged $90/hr. This is an inaccurate estimate, but give or take, $30/hr could potentially be almost $62k a year at 40hrs a week into 52 weeks. What entry-level person in his/her 20’s in this economy seriously thinks that’s ok to demand? Charging that much once you’ve gained solid tenure is reasonable, and charging more once you’re a seasoned expert with clients begging for you will be an eventuality. But wanting to make an hourly rate that can equate to $60-100k a year for a freelancer who is less than 5+ years into it (and, no, those so-called nine years of experience you think you have because you knew what HTML was all along and tinkered with Angelfire in 1999 don’t count – I am tired of seeing web designers exaggerate how long they’ve been doing it) is just freaking laughable. But it’s what I keep seeing.

    I worked at two companies after four years of college and made about $30k before taxes at each (this article says this is the low end for a developer, about €20,000 = $33k, which is understandable for entry). That’s realistic. Years down the road I can eventually climb to what this article says is the high end for a developer, about €55,000. Start low. Climb. Just like in ever other profession.

  57. Hi James, I agree with you about the cost of the living in Ireland but still life is much better there as compare to here.

    Yeah, right here in Pakistan most of the companies so called “Software houses”, are working on project basis, they grab projects from freelancing websites, work on it and in the result they get paid 15times above the local cost of the project.

    Myself thinking about doing freelancing as it give you much more work exposure (+ $$) than working for a single domain.

    p.s: thanks for replying :)

  58. @WallMountedHDD love the name :D one issue I’ve come up against with the entry level charging for webdesign is … you get taken for a joke … it sounds like madness but in my experience you charge low .. people don’t value your work so much :(

    Technically I’ve being designing websites since 96 when I created my first … was it a geocities website :P which had a link to lycos / altavista / excite and a few news sites … ah the good old days … when doing that made me go .. OMG this is so cool :D

    @Shikeb I think the reason most people turn to freelancing is the fact you can potentially earn a lot more money … only problem is you have to start chasing down payment … marketing yourself … doing accounts … making quotes … competing against all the others until you have a name for yourself. So you no longer (for the most part have that hopefully simple enough 9 – 5 type job) and you’ll probably end up working 50 – 60+ hour weeks … (obviously showing some ignorance here I’m not sure what the working week is like in Pakistan)

  59. Thanks for a really informative post. I’ve read a few posts on this kind of topic and none of them were as useful and informative as yours. I’m nearing the end of a graphic design course, and although I’m not currently considering working as a freelance designer this page will definitely be bookmarked for future reference :)

  60. Very well put James.

    I get the same question from a lot people starting in design.
    Your post helps them understand more realistically what they actually need to charge to break even.

    I think from a client perspective the issue is we have people have dabbled in Photoshop and then give some sort of WYSIWYG editor a go to make a site. Suddenly they declare themselves web designers.
    Because all the coding is never seen the client doesn’t really know what they are paying for. They will never know if someone made their site using tables.

    I think part of a good web designers job is to educate the client on what they actually deliver and the difference between a professional interested in helping the client and someone just having a go.

  61. Fantastic post, James, very well written! It is sad when people expect a logo for $99 in the U.S. as well, but the reason they expect it is because there are people out there either undercutting the industry or treating a logo project like a production project and charging based on quantity, not quality. That trickles down to the web projects, brochures, flyers, etc. and encourages tire-kicking. The most infuriating part I can’t explain or figure out to combat is the people who charge so little get all the jobs, and by the time they come to one of us to fix the bad design, the customer is up in arms over what the real pricing is to make the fix.

    It’s becoming far more apparent in the U.S. most of our profession absolutely requires referrals and word-of-mouth advertising to survive against these odds. As professionals, we have to continue to not only set ourselves apart from our competition based on our strengths, but also support one another and continue to educate our clients through our writings, blogs, and our accomplishments the exacting differences between the hobbyists and the professionals.

  62. It is so sad that the internet is eating her development skills alive. I believe that software is not for free and it is bad that my competition comes from India and other places in the low-earnings world, there where the local carpenter or painter is protected by law. I don’t mind competition, I do mind that I have many costs by law (Germany) and that my competition has not (or lower). In other words: if you are good at something, don’t do it for free.

  63. @Jo glad to be of help .. I also saw rate calculators everywhere but they generally didn’t lay it out hopefully as simply as this.

    @Damien similar to my above comment its a good kinda basis to get you thinking and maybe even give someone starting out the confidence to say well this is my rate .. and this is why .. if I’m not getting it .. something is wrong.

    @Dave .. I won’t go down the tables discussion route … I will say though you can sometimes get too caught up in perfect design and I’m guilty of throwing in the odd table for layout as quick hacks within pages (not layout so much though for a form or something .. and while I know I shouldn’t … it can just prove to be a lot faster and in those type of cases its only from other designers you’re really going to hit any grief)

    @Lisa Thanks Lisa :) I’ve never used the likes of 99designs or similar for work though I’m not sure what 99 quid would get you on those sites these days … not that much I think. I’m interested to see how the new istockphoto logo purchasing goes as well … seems a bit mad to me but … oh well

    Recently commented on a post on IWF regarding a logo design which I thought was complete muck. The response was are there easier to use tools thank photoshop *sighs* … obviously people sometimes don’t have a budget but they are expecting to be masters of design as well ? …

  64. Hi James,
    I totally agree that understanding the amount of time that is required to complete a project is necessary for coming to a reasonable quote. We also make sure that we have a pretty concrete contract so we don’t get caught up in the 20 revisions as part of the included price deal.
    It’s great that value is part of pricing, but in this industry, it is reasonable to think that time = value to some extent. To un-tech-savvy people, a website is a website, and no amount of explaining the difference between clean code and messy code is going to make them see the value of a better designer (haven’t we all tried that to some extent?). Some people can’t get past the up front cost. They think the value (the return profits, visitors, etc) exists whether they pay $500 or $5000 for a site. Real designers know different, but getting everyone on the same page is tough. And while it sounds great to say that clients who don’t understand aren’t the right client for you, in a highly competitive market, this may not be reasonable.

  65. Aphabetix

    Understanding very approximately the amount of time that is required to complete a project enables your rough calculation of profitability (hopefully ‘very’!), but is not a great basis for establishing the price you charge.

    I agree, once you have agreed a price, based on the value the customers understands the project will deliver, it is very useful to have a signed written agreement of the fixed scope as well as the fixed price for the project.

    However, the notion that time equals value is quite erroneous, and should be kicked into touch by all concerned. I am not saying that a more skilful coder will not produce a more valuable result, nor am I saying that they are unlikely to take more time to do so. But I am saying that a more valuable result is more valuable – Sounds stupidly simple, because it is, but not everyone seems to grasp this!

    If you are a skilled coder who produces ‘clean code’ you also need the skill to help your customers understand why a cleanly coded site is more valuable to them than a messily coded one. Notice that I didn’t say “tell them it’s more valuable.” You have no value to the customer as a ‘better designer’. It is your ‘better designs’ that are valuable!

    If you can’t get customers to see the difference in return (aka value) between a ‘clean code’ and a ‘messy code’ site, how can you ask different prices for them? ‘Real designers’ may ‘know different’ but that’s not the point. It’s not until they can help the customer to ‘know different’ that the different prices will seem reasonable to the customer. “Oh, the customers don’t understand!” is not an acceptable excuse. If you want to sell your ‘better’ services at ‘better’ prices, you have to help them understand, and it may well be ‘tough’! If you don’t, they’ll reasonably say that anything over $500 (to use your example) is too expensive.

  66. Hey, thats a very nice post. Very useful. But, i have a doubt to ask. May be too simple , What is the difference between Junior Graphic Designer ,Middleweight Graphic Designer ,Senior Graphic Designer,
    Creative Director ,Junior Web Designer, Web Designer, Senior Web Designer and Web Developer. Do any one have skillset or experience related to each designation ?

    Thanks once again.

  67. Hey cooljaz124, … erm normally its related to level of experience junior … 1 – 2 years … middleweight more .. and senior more experience yet again. Generally it’ll depend on your company … whether you hop from job to job and elevate yourself that way. Also probably based on just how good you are.

    Designer’s generally design web layout …. may work in conjunction with a graphic designer .. and you integrate your designs with the developer .. or vice versa …

    You may be all of the above but depending on the scale of an organisation they may just want dedicated people working on each area.

    Really though you’d want to look them up specifically

    James

  68. Thanks for writing this insightful post. I agree with all of the points you made, especially the student example. I never understood why people think they can get a quality website on the cheap with all the bells and whistles of enterprise level sites.

  69. Awesome comic clip, Alan.

    So how is everybody going to stop this happening?

    Telling the client at the outset that you’ll review and bill every week and they can request whatever changes they like doesn’t look to me as though it’s going to work!

    Fixed-scope is needed so that you can say “If it’s outside the scope, it’s a separate, separately chargeable project” when you should. But you can only have a fixed scope when the client fully understands their own issue.

    You maybe need a preliminary, chargeable project to help them arrive at that understanding so you can (fixed) scope the main project.

  70. David, would it be advisable (from the Value Pricing perspective) to charge time & materials for such a “discovery” project? If not, how can one determine a fixed price for such a project?

  71. Mark

    You could charge time and materials – plus margin – for the ‘discovery’ project, but this will put you in a pretty weak position for using value-based pricing for the main project later.

    It wouldn’t be easy IMHO to arrive at a value-based price for the discovery project in isolation. I think in value terms it’s all part of the main project. You’re wanting to ring-fence its scope to prevent ‘scope creep’.

    Nevertheless you’ll need a price so that you can get paid for the initial work up-front, so just choose any fee that seems reasonable and is profitable, maybe between 10% and 25% of what you feel the overall price should be. You will already have agreed the value of the project, you’re just investigating the detailed scope of the main project.

    When presenting the value-based price for the main project you can point out that part of it has already been paid, so you just need 50% of the remainder in order to get started.

  72. David,

    If I understand you correctly, I am to take a reasonable guess as to the value of the project, say $50,000. Then charge $5,000-$12,500 for the discovery. Then, when the scope has been wrangled to *my* satisfaction, collect 50% of the remainder ($22,500-$18,750) to commence implementation, and the other 50% at some future date?

    I’m okay with all that. What the client may not be okay with is paying before the job is “done”, and the associated ambiguity with which “done” is defined, especially in technology projects.

    Thanks,
    Mark

  73. Mark

    You don’t “take a reasonable guess at value”! You let the client tell you the value of having their problem fixed, but you probably help them to think all inside and around their problem so they see the full value.

    Yes, you should charge for the “discovery” project. Get paid at least half in advance for this and the rest before or as you finish, then get paid half the remainder of your fee before you start the main development project.

    Remember you are ‘discovering’ scope here, not value. I the same way as earlier comments talked about the need to separate project management from fee setting, there is a need to differentiate scope and value.

    I think the client WILL be happy to pay up-front IF trust is established AND value is clear AND Return on Investment is compelling AND timescales are acceptable.

    I think any client would be rightly unhappy if “done” wasn’t unambiguously defined. And so ought any developer. Scope isn’t to be “wrangled” for either party. Scope is deliverables and acceptance criteria – Objectives and Metrics in Alan Weiss speak.

    I do think there may be a reluctance on the part of some developers to sell properly. I sense that some developers think that selling is something they don’t want to do, but someone somewhere has to establish trust, and help the client understand value.

    Fine if you don’t want to sell but in that case you have to employ the services of a salesperson to do it for you. If you don’t do this you’ll quite likely want to start developing as a means of building trust, and presenting interim solutions as a way of getting the client to think about scope.

    Developers doing this in the past and present has ‘queered the pitch’ for the future. Clients believe that all developers are barely more than incompetent until proved otherwise, and that all technology projects come out over time and over budget. This has to change and you have to start now!

    Selling isn’t difficult. For heaven’s sake, I was a hardware designer and programmer myself once! If I can do it, most others can. You need to work with someone who can explain the ‘why’, give you models and worked examples for the ‘how’, and work with you until you’re confident to do it on your own. If you can’t find anyone else, I’ll teach you!

    David

    P.S. I presume you’re original “reasonable guess” of the value of the project to the client was actually around $500,000 so that $50,000 looked compelling!

  74. Your training and skill level has a bearing on your ability to do the work. However, this has no bearing on the amount you should charge except that if you can’t do the work within the desired time-frame you’ll not be able to charge anything.

    The price to charge should be relative to the value the client tells you they will derive from you doing whatever you do.

  75. Sorry but I feel that Hourly billing is the bet option for you and the client.

    The biggest part of billing is not hourly or set price but honesty. If I tell a customer he is looking at 30 hours work and it only takes me 25 then he only gets billed for 25. At the start of the job I will give him an estimated price that we can both agree on.

    Customers can really drag a project out with delays in content or constantly changing there mind and having you do the work over and over. By letting a customer know from the start that the more they add the more it will cost. This is not just in web design its in every walk of life.

    You agree a price for a set project, you get half way in and then it starts “O… I thought we agreed to add that” or “Can you just add this little thing” before you know it the client had get a much bigger project then was first agreed on.

  76. Oh Dear!

    How long you actually spend doing the work doesn’t matter to the client as long as it’s within their elapsed time requirement. The client wants the result – End of story.

    If the client gets the result sooner, they have the benefit of its value for longer, so it could be argued that you should be paid more if you finish sooner. Reducing your overheads is for you to take advantage of, not the client.

    Scope creep only happens if you let it. If you and the client agree a fixed scope – in writing – before work starts, it is easy to see whether or not any “Can you just …” work is within the scope and therefore within the fee.

    If the scope cannot be fully described, documented and agreed at the outset, then a preliminary project to gather the necessary information to allow this needs to happen (and get paid for) first.

    By telling the customer they can have more if they pay more in the way @jetpack101 suggests is making a rod for your own back! The clients will ask for more and then try to argue that they shouldn’t have to pay for it.

  77. David,

    Changes in projects happen almost 90% of the time. People change there minds all the time thats what makes then human.

    Most people hire a web designer because they don’t know how to go about building a website.
    I have one client who wants a website, no matter what the conversation we have with him he always sites there showing us hundreds and hundreds of sites saying he likes this and that.

    Its very hard to get someone to look at there business from the outside in. To see what his client SHOULD see. This in itself can make it very dangerous to give a fixed price.

  78. jetpack101

    You are undoubtedly correct in saying that “Most people hire a web designer because they don’t know how to go about building a website.”

    And people do change their minds all the time, but it’s not doing your business any good to allow them to make huge changes, many times, after you have started work on their design. Obviously I only know the small amount you have shared but the client you mention seems not to know what they want. Before you start work on their web design, you need to know that the client DOES know what they want. They may need your help to do this!

    Again, I cannot disagree with you when you say, “It’s very hard to get someone to look at their business from the outside in,” except to insert the word ‘sometimes’ into your statement, but my contention is that you must get them to do so.

    I don’t know you personally of course, but I suspect that many web designers and developers of other software have a tendency to want to get on with the designing too soon, in a similar way that it is a common mistake in sales conversations to quote too early.

    In a case such as you illustrate, it strikes me that it would be hugely beneficial to both parties to engage in a (paid) preliminary project to help the client become clear on what they want the project to achieve. You may also ask them for thoughts on other sites that they like. Then, both agreeing an understanding of where you want to get to, you can set up a fixed-fee project to actually design the site. This would be on the understanding that any work outside the scope is a separate, separately chargeable, project whose relative priority would also have to be agreed.

    But, as you say, they have called you in because they don’t know how to do it themselves, so they must let you get on with doing what you know how to do.

    You can do without clients who aren’t clear on what they want to get out of a project, or who take ‘constructive collaboration’ to the extreme of ‘annoying interference’. Either you help them to become clear on what they want – charge them if this takes more than an hour or so – and clearly set their expectations of the level of input required from them during the project, or you politely decline their work. The Pareto principle works here too. 20% of your clients probably cause you 80% of the grief, so removing them will free up your time to find and work with more of the good ones.

    David

  79. Pingback: James
  80. Hello,
    Thanks you for this open information , I am self learner and it help me to set my price . I am very appreciate your post and I know more or less say a price with self confidence.

    I was willing to get a internship in order to have a routine and learn from it but I am able to build website or offer a WordPress service installation with customisation . I think I am going there and not take this intern ship for 200€ week . Guy it’s say it’s really job instead a internship .well a job for 200€ week where I could without to be greedy or selfish make 200€ per day . It’s no clear for me!

    As you wrote , their is passion and skills and we deserve what we deserve ( philosophy :-).

    I love to read the 100 posts but another time .

    Thanks you for sharing ( it’s my first post in a blog :-)

    Aurevoir

  81. Grappling with the same issue here. In my experience as a webdesign freelancer, I have not yet seen any standard patterns with the pricing. In fact, I have been flexible to adapt and make changes in my quote depending on the clients requirement. You have pointed out good aspects of pricing. Enjoyed reading your post.

  82. These posts have been great. All have been valued; in particular James, David and Mark.

    I have compiled my thoughts (although roughly drafted at this point) on the best approach from my time spent reading this post and equally as important the comments there after. Also taking into account the lessons my previous experiences in sales and creating digital media projects has taught me.

    First of all there was a comment of honesty from jetpack101. I am with you and never want to put a person in a position where they are being hard done by at all. jetpack101 all of the below is not aimed at you.

    @ jetpack101
    You can charge per hour if you want, I would advise working a buffer into your hourly fee (to account for when you don’t have business as it is not guaranteed – note; in effect this is what Perceived value does, just over all hours rather than singularly, along with adding what you feel the client needs to pay to feel like its not a cheap fix they are purchasing from you). If a client is accustomed to paying higher amounts to assure value all their lives, you are unlikely to sway them from this, if they believe in this way and are willing, you are not doing them a wrong. If you stuck with the lower quote they will most likely choose another. If you want please thereafter go back and return the additional to the client and state that. If anything he would assure all of his contacts for similar needs go to you.

    To note; the project you build is a one off piece, it is unique to the client and they can not go out and pick one up off a shelf, and guarantee your quality and uniqueness. You have to believe this in you, once you do the client will too, but only once you do! All digital development is the same as producing a piece of work from an architect, a sculptor or similar, it is just in a digital form (some work produced will be interactive, some will be visual/static).

    It is the fact that the tools to produce Digital work are so widely available and the progress rate is so much faster than other physical forms of development that the market is flooded. Because of this fact that the market is flooded with varying quality levels (some with recognised qualifications, some not) and also that consumers see value in “price”, determines why we have to charge higher. This takes the quality out of the cesspool and into the clear water.

    If you then finish in 25 hrs instead of 30 hrs, yes charge them for 25 hrs as you charge per hour, but please assure your buffer is incorporated into your hourly fee (like I mentioned above).

    Also If you had previously developed something that is transferable onto other projects. You could charge a new client for the whole time it took you to build it previously, or a Library fee for using your previously developed functionality along with an adjustment fee to suit the clients needs (this could be used in your marketing, the bigger your Library, the more qualified you are and the more cost effective you are for your clients). In general this community is instilled with honesty but I agree with what you insinuated “there is always a bad bunch charging for what they shouldn’t”).
    When pricing how are you going stand out against someone that is not at the same level as you but charges the same? You are not a simple assembler slotting things together, but again you have to believe this before the client will (how can you expect them too otherwise).

    For the clients that cannot be swayed (by what really matters), but need to be kept to put bread on the table. We can all quote from varying techniques to build what the client wants. Built from scratch, or use pre- built systems such as WP etc… to save time (if it is time you are billing for).

    In my world of which all that are genuine are welcome: If the customer pays the price they get zero restrictions built from scratch (also using pre-built functionality that may be relevant). If the price lowers, either the Minimal Viable Product or the techniques to achieve it changes. If the client won’t be swayed WP or other is used, utilising either a standard free/purchased template or customised template. Literally having a grading system for each quote.
    1 – bespoke build
    2 – Off the shelf build with customised design
    3 – off the shelf build with standard theme design

    This allows you to meet the client where they can reach for NOW. It allows an honest working relationship to grow. Then as the clients budget increases from the Business success the initial website allowed for online, a new one can be built. Old systems can be sold off to a company that requires similar features but trades a different service or product (this being the clients profit, if sold reduces the cost of the new build)..

    What I would do!
    Hourly & Proposed Value billing (Taking into account, relevant income buffers):

    _I suggest you work out the hours breakdown involved to work out how long it will take you to complete the project.
    _If the scope is unclear, determine the MVP for the business to function online. Further advanced functionality can be re-quoted. If budgets are a concern this is a great way to test the water with a client and grow the working relationship.
    _Use the hourly rate breakdown over the accumulated hours, the figure will give you your “on fire limbo stick fee” (the minimum you will accept).
    _Ask the relevant questions to determine the value the client will get from working with you:
    *You can then for example determine that the new site will allow for a reduction in existing costs of third party systems used to make existing sales (allowing X % of new profit from existing customers – This example is from a restaurant that doesn’t want to pay the justeat or eatcity charges with each and every order). Thats one, and whatever others ways you can determine working with you will bring profit to the business.
    *A little business analysis on the company/client may allow you to see what processes could be improved in the online model of the business. Simply state in order to best see how we can increase your online business model i need to carry out some business analysis on your offline version. With this you should have all you need. This is not just to understand what you can charge but to understand how you can make their online business model a success!
    *The YOU value: Your design and approaches are that innovative they will bleed in and work the most out of social media. As new approaches are coming out, you will bring this if applicable to the clients attention (in effect ensuring they always stay on the top of their digital game).
    *Other value gained could be: deadlines achieved on or before time, quality of end result – 100% meeting their MVP objectives, customer support, quality of working relationship etc..).

    I say the above with the mission statement that you don’t just supply a website to allow for the MVP functions to occur. You provide an investment that the clients needs for their business to be a success. The client is not left out on their own (although yes your ongoing services cost a fee, they feel good as they have a onestop shop at hand, the client will always feel assured that the online business is not just relying on him/her, of which he/she knows little about in reality)

    If presented right you practically become a family member of the business, an associate of the business that the owner can always turn to, and want to refer people they care about onto
    _From your conversation you should have enough to realise the value, and what that value is worth to the client (it’s your relationship that assures the client that he/she will obtain it from working with you). As you have informed them of the values they gain (not told).
    _You would then weigh yourself up (quotes) with your competitors on the same level as you, as yes if the values are sold right you will get the business, but you have to be within the realm of your competitors.
    _If you don’t yet know who these people are (which will help you gauge your price), you should make a point of it. Nike sure know what Adidas are doing, as should you in your market.

    I hope this helps, any realisations have been developed with a combination of common sense and experience related outcomes. Also the posts from all of you, we all help come to the best realisations (:’P of which there are many, but few that are most effective).

    Best,

    Jason

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