What is Digg?82 Comments
- DonCarcharo, on 10/12/2007, -0/+24"What they don't mention in the article is that just dealing with the common web design client is worth $80/hr just in itself."
I had this customer who was an older gentleman from NYC and I built him a full-fledged e-commerce website to compliment his brick and mortar store for about $1200. I spent countless hours on this project. Not developing it, that was easy, but rather walking him through how to use Outlook to check his new email, how to launch the web browser to see his website, how to update inventory and so on. I didn't charge him a dime for any of the training or support. Not even when he called me weekly because his email was down again (eg. he hadn't launched Outlook). I was patient and helpful and did my best.
Well he calls me two days ago and says, "I'm tired of you and your business. I spent all this money and you can't even provide me with a working product. I'm going with a real web development company." and then he hung up on me. Ten minutes later some guy from an SEO company calls me and tells me he's now handling the account. I give him the login credentials and he offers me a stock tip on a bio med stock (all around scammer).
Now I'd love to say this client was an anomaly but he's not. Most clients have a steep learning curve, several have stiffed me out of thousands of dollars, a few have scammed twice for free work and one even sued every developer he worked with offering to drop the suit if we waived his bill (he did this to three web developers total). - Wuss, on 10/12/2007, -2/+26I'm going to have to wholeheartedly DISAGREE with the article. The only times hourly pricing ever applies in my experience, is when clients ask for work that can be accurately measured in short increments. Ex. updating content on a few pages might take XX amount of hours, or editing some images, etc.
When you're talking about the complete DESIGN and development of a website from beginning to end, it's near impossible (at least for me) to quote based on your best guestimation on how much "time" you'll be spending working on it. You might be able to gather your past work and average that it will take you 30 hours of work to do a website, but that's hardly ever the case that you can take such a large project and just stab at a number and be right all the time.
There's a lot of time that you just can't account for in a proposal, such as communicating with the client or disagreements in the design and development process. What then? If you're charging 80/hr as a freelancer, and log an extra 20 hours of time over the course of a month doing things not in your original hourly estimate, either you're losing $1600 worth of work, or the client is going to get billed $1600 more then expected, both options are undesirable.
While it is hard initially to understand what you should charge a client, using straight forward math should not be your ONLY tool to come to a conclusion, just as a supplement. Rely on common sense and instinct. It's good to use industry averages as a guideline, but ultimately the decision should be a personal calculation based on nuances you can't grasp using percentages and math.
What does that all mean? For example, let's say you're a freelancer with another full time job and a family. For hourly work you charge 80/hr, but you have a client with a full design/development project on your table. It's a pretty deep project that you know will take some manpower to complete on your part. Let's say you estimate a total of 50 work hours to complete this project, and the client needs this done in a time line of 1 month. Now, for anyone that works 40+ hrs a week and has a family to attend to at the same time, losing 50 waking hours in 1 month is a huge deal. If you use all the formulas and math, etc. you're getting paid 4000 for the entire project. For many, that's a good chunk of change, for others, it may not be worth the trouble and hardship taking on the job will cause. For those people where it's not worth it, make it worth it. What WILL you do the job for? If 6000 will make the deal sweeter for you, and make it worth all the sleepless nights and tired mornings and lost weekends, then that's what you should charge. Is the number completely arbitrary? Absolutely, but that's what that time is worth to YOU. I've passed up plenty of jobs because it just wasn't worth it, and I've also quoted much more on other jobs to make it worth it.
That's the first most important part of what you should charge. The second? To be blunt, what will the client pay?
When you're making content changes on an existing website, you're selling a service. When you design and development a website, you're not selling just a service, but an actual product. What determines the median price of any successful product in a free market? What people will pay for that product. If you're doing a site for some mom and pop deli down the street, what you'll quote them shouldn't be anywhere near what you would quote a medium sized business of 40 employees and revenue of 10 million a year. Is that ethically okay? Of course it it. Just as you charge for what you believe your time is worth, business's will pay for services in the amount it's worth to THEM. The mom and pop deli wants a website, and its worth 2 grand to them, but not 10 grand. The 10 million dollar medium sized business wants a website, and has a budget of 10 grand. If you can deliver a product they're happy with, and come out on the other side making 4 times more then you normally would have charged, then do it. It's called America, and there's nothing unethical about it.
There's a reason why a super talented 18 year old web designer can make the exact same site as a 10 man design boutique, but the 18 year old charges 5k while the design boutique charges 50k. It's because the design company created the facade that there's more value on their services versus the services of the 18 year old, even though the end result could very well be the same. But if everyone followed some mathematical law of web services, there would be no difference. Get good at selling your services and placing value on your services, and you can ask for more as well.
If you do enough freelance work, you will generally find that no two clients are the same, and some jobs you'll come out in the positive, and other jobs (such as my last job where I did SIX redesigns) you'll come out with a loss. Point is, freelancing in web design is hardly been formulaic for me. Maybe it was for the guy/gal who wrote the article, but this has just been my experience. - Th0Rr, on 10/12/2007, -1/+21for an individual freelancer thats fine, maybe a little low. if you hire a firm expect to pay $100+/hr.
- Drgn547, on 10/12/2007, -0/+17As a web designer, I charge $80/hr. If doing an update for one of my clients, I still charge $80/hr but bill it in 15 minute increments. If an update is something small like swapping a date, or changing the copyright year (or something similar) I don't charge anything, but for anything that will take a few minutes, they're charged for 15 minutes, minimum, or $20.
What they don't mention in the article is that just dealing with the common web design client is worth $80/hr just in itself. If they don't come to you wanting a site for FREE that you as a designer can "use in your portfolio" or come to you with NO INFORMATION and expect you to magically KNOW who they are, what they do and what they want, then it's a miracle. - DonCarcharo, on 10/12/2007, -1/+13I've been around since 1999 and for the last three years I've been charging $50 an hour, though most of my services are flat rate (eg. web design PSD w/ HTML/CSS template) and then page rate for static development. I find that this is probably on the lower end even for design oriented one man shops like myself. Or at least that's what my customers tell me.
Now I do work with about six or seven ad agencies / web design studios as a behind the scenes subcontractor. Most of those guys double or triple my prices depending on the project. Interestingly it's been my experience that, as a general rule, the higher the rate the easier the clients are to deal with. It's always the clients who pay the least (or sometimes never at all) who require the most revisions and support. - megaton, on 10/12/2007, -1/+12That's a pretty decent rate. I charge between $40-160/hr depending on the project complexity, most falling at around $100/hr. (Simple maintenance runs $40/hr, site design and integration at about $100/hr, and complex web apps at around $160/hr.)
To give you a baseline: I've been in the business as a freelancer for the last 13 years. Someone less experienced would (should?) likely charge less. - tomarocco, on 10/12/2007, -0/+7Annual salary + $10K??? In the programming world, consultants (a.k.a. freelancers...a.k.a. contractors) charge 2 to 3 times their annual salary / 2080. For one, you have to pay your own benefits and taxes and retirement and insurance, etc., in addition to your operating/capital expenses (hosting, equipment, etc.). Then you have to factor in the fact that you will not be billing out 2080 hours a year...you would be very lucky to actually bill 3/4 of that...usually less at the end of the year. Then you have to take care of your own accounting and taxes...all kinds of stuff. Someone's got to pay for all that...and that someone is the person receiving benefit from your services...all of that has to be wrapped up in what you charge.
What are you worth to you? Do you want a professional business, or are you doing this just so you don't have to take on the responsibility of a real job? There's no shortage of slackers doing bong hits all day getting by on small-time web projects (and many times burning through clients ripping them off), but they aren't building a future for themselves or anyone else. If this is all you want more power to you, but you will be 40 before you know it...it sneaks up on you faster than you think. Unless you are going to marry well, you might as well build a solid business out of your efforts.
I've done the sell-myself-short routine far too many times: "If I do this on the cheap for this client I'll have a good reference and get more business...I'm building karma and goodwill." That is 100% false. You cannot beat the law of attraction: If you work cheap you will attract cheap clients. If you charge a premium price for your services and your time is valuable to you, you will attract clients who value your time and are more than happy to pay what you ask for. That's how it works...it might not be something that is apparent overnight, but you cannot change the way it works...it's the law of attraction. You must be willing to turn away cheap business if you want to get top dollar for your work, even if it means toughing it out for a while. Something takes place inside of you subconsciously when you practice this: you are more receptive to better clients and you project energy that attracts those clients to you. - bradleyland, on 10/12/2007, -0/+7I like some of these points, but I'm surprised to see him use a 40 hour work week for the basis of his hourly wage. Billing a full 40 hours a week is extremely difficult for a freelance developer/designer. The overhead of running your business takes a lot of time. I figure on more of a 30 hour work week.
- spliffy, on 10/12/2007, -0/+6thanks, for the long post. it had 10x the insight and logic then the linked story did.
- trudylee, on 10/12/2007, -1/+7This guide teaches how to rip yourself off. Unless you're not capable of creating good websites, charged based on its value.
Never charge hourly. Not only will there be a chance that your clients be suspicious of your reported hours, you're not getting paid as much as you can. If you set a standard, such as $2000 for a website of a certain quality with certain features, you don't have to worry about your reported hours. You are basically selling your website based on what it's worth. It also makes the contract smaller.
If you are a wiz and can make a $2000 website in an hour, then charge $2000. If you're a beginner and it takes you 200 hours to create a $2000 website, then charge $2000 even though you're getting paid $10/hour.... because that's probably what you're worth.
Also, by charging based on value, you can make a lot of money from addons. For example, you can charge your client $100 for installing some Google Maps gadget on the website. You probably didn't make that gadget and it only takes you five minutes to install it, but you get to be paid for knowing how to install that gadget and even for just knowing it exists.
Hourly charges are usually for laborious work such as support, additional consultation time, etc.
When outsourcing, never tell your client what you paid. Instead, just charge them what you think it's worth.
Hosting is a great way to make money. Maybe it only cost $5/month for shared hosting, but charge them $15/month. When you get enough clients who pay for hosting, get your own dedicated server and now you can tell your customers how great your hosting is compared to shared hosting. It's important you do this because some websites may one day get an enormous amount of traffic. On shared servers, they turn off your website (which happened once to me).
Having an office, I would say, is necessary to charge expensive websites. This way, the client will know that you're legitimate and they'll feel confident that you're not just another college student doing a static HTML website. I only have an office to meet up with my clients. I work at home.
Don't forget to invest in professional business cards, brochures, and prints. I never have a laptop with me when meeting with a client unless I'm going to show them the website. I write everything down on paper, print screenshots, etc. Some people say you should do this so your client doesn't run away with your work and pay a college student to complete it, but that has never happened to me. I just do it because it's professional.
Make money wherever you can and price it according to its value. Almost every client I had said I'm expensive, but I sell them on the features they can have on their website. If you keep doing cheap projects, you'll never improve. Even when I started off doing $400 websites, I never charged by the hour. Sure, I was probably only making about $10-$20/hour back then, but that's really how much I was worth. As I improved, I now charge at least $2000/project. - danarel, on 10/12/2007, -0/+5i never do hourly. i do all flat rate, per job quotes, my clients get a pdf of all my charges and what they are paying for, i break down each process so they know what they are spending their money on, and this way, i know the job is worth me even opening photoshop for.
- raindogmx, on 10/12/2007, -0/+5Ha! that's what I earn in 4 work hours ($50) doing web apps and it's considered a very decent salary for my country (mx). Well, I used to... :'(
- succubuskiller, on 10/12/2007, -0/+5Good comment. I agree completely. When you try to do a sale on a complete website it is much harder to sell a client on an estimate of the hours and your rate, they want to know the cost to them directly. I do charge by the hour for updates or technical support(such as Outlook, Windows etc). I think it is a good skill when you meet/speak with your client to get a good estimate of what they will pay.
Brief example:
I just had client turn my company down, and I partially knew it was going to happen. I knew because I picked up on some triggers. First they said they hired an offshore firm to build a whole e-commerce site and they put about $400 down. But they have been working on it for 6 months and still it is not near ready to be done. I checked up on the firm they were with and found out that the $400 was 50% down meaning the site was being "done" for about $800. They noted on the phone that it was already taking more than 6 months to do this simple site and they wanted in 2 weeks because it was taking so long, and so forth. I quoted them 3-4x what the other firm charged but the sign was there they wanted it done: cheap, fast, & high quality which does not work.
Notes I learned which I think are helpful:
1. You should not under quote your time by too much to get more business from these types of people. This is because they will suck you dry wanting changes here, not liking the design and having you start from scratch, and so on. And when you tell them it will cost more because it is something different then what you quoted, they get up in arms. One of my first clients was like that and I learned a lot from it.
2. It is up to you being the designer/programmer/etc to come up with good estimates for your time before quoting a project. I started to keep better track of new projects by entering every task I do related to the project. This will also help you figure out where your hours are going and where you may need to hire new people to expand and areas where you can improve possibly.
3. Never give a firm quote on the spot, try to balance that question because you do not know the full extent what they want without going into full detail. Give them a very rough range for the sites you have done to pre-qualify them as a client. This way they do not assume you are 10$/hour rag doll and saves you time later. Plus you want some personal time to analyze what is going on, and if you give them a quote on the spot they will most likely stick to it if you give them a higher one. - smhill, on 10/12/2007, -0/+4@DonCarcharo
"I spent countless hours on this project. Not developing it, that was easy, but rather walking him through how to use Outlook to check his new email, how to launch the web browser to see his website, how to update inventory and so on. I didn't charge him a dime for any of the training or support."
That does sound like a ***** experience.
But be aware, that training/support/documentation are acceptable billable expenses. Next time, determine, outline and include those costs in bid/price. You have every to expect to be paid for all your time working on a project. Especially if that time is outside the normal scope. (like setting up Outlook and such...)
It's a tough lesson, but we have all been there. - smhill, on 10/12/2007, -0/+4@tomarocco
"I've done the sell-myself-short routine far too many times: "If I do this on the cheap for this client I'll have a good reference and get more business...I'm building karma and goodwill." That is 100% false. "
Very true, however often down the road (never initially), I will offer really good clients a bit of a reduced rate to get more of their business and have a longer relationship. Sort of a VIP rate. Every once in a while you will get that golden client (usually the ones that are developers themselves or at least business/tech savvy) that are just a dream to work for. I have this one that I have worked for on and off pretty regularly over the years, that is just sweet. They trust my choices, and give me very little direction, but are very clear what they want up front, they leave the design and functional choices to my expertise, because that is what they want, to have some they trust make those calls. We don't written contracts anymore and only talk ballpark figures up front, I just bill them straight up hourly. They themselves are developers, so we see eye to eye on just about everything.
Even though I charge them a little less, really I still come out way ahead as there no overhead or a bunch of time spent with meetings and such. I charge less, but make more. But that is exception, not the rule.
"If you work cheap you will attract cheap clients."
Everyone who wants to go into business for themselves, should get that tattooed some place very visible so they will always remember that fact. A client who is looking to save a buck will always be the most problematic. Constant input, constant changes, continual attempts to get that little bit of extra out of you. A massive time suck. Complete headache every time. - aaronvegh, on 10/12/2007, -0/+4Yes! The linked article was like an opinion from another world. Charge 10% on subcontractors' work? Calculate an hourly rate based on a brainlessly-simple 40 hour workweek? This pricing strategy is a map for going out of business. Wuss, you got it right: charge what you're willing to give, and what the client is willing to pay. Thanks for being the only one here who actually seems to be doing this for a living. :-)
- misterjangles, on 10/12/2007, -0/+4I try to give fixed quotes too, but the larger the project, the more prep work you have to do. For some large projects, I could spend a week working out all my terms, only to have the client say "no thanks" and then I've wasted all that time. Also, no matter how many times you say it and write it on the contract, when the project is done and the app doesn't have something the client expected - you're gonna have a problem.
I currently have a 2-step bidding approach for larger projects where I 1st throw out a ballpark estimate, with the final price to be determined after we create a spec document. The spec document is the first deliverable and basically i let the client know - we can design to fit your budget, or we can adjust the budget to fit the design. It becomes a give-n-take with all the features, but at least I'm getting paid for the planning.
Even still, it's always tough. The client always wants the most for their money (can't blame 'em). - Drgn547, on 10/12/2007, -0/+4For a basic shopping cart I would say no less than $2,500 (about 30 hours of work.) There are still a lot of variables there...would you be coding the shopping cart yourself? There will be a huge difference in the hours put in, and price, depending on if you're coding it yourself (more control) or using a pre-fabbed software package, like X-cart (or the like.) Other things to consider are the payment gateway, SSL Certificates, etc.
- michaelpinto, on 10/12/2007, -0/+3That depends - how good or qualified is the designer?
- DonCarcharo, on 10/12/2007, -0/+3"I am completely baffled by the number of people getting "scammed" out of payment and such. Do you not create and sign contracts?"
I started my company in 1999. Although I'm essentially a freelancer I am an official Subclass S corp. I have a collection agency I work with and a lawyer. Every project I do has a written contract, a digitally signed terms of agreement and requires a 50% deposit (sometimes payments are broken up into 3rds for larger projects).
Despite all this I've been scammed a lot. I've had one client who was wanted by the FBI for an intricate scam where he stole hundreds of thousands of dollars by setting up a fake company which charged customers for listings in a printed directory and website. In this case I built the website and was never paid. Every check he sent me bounced and he always had an excuse. By time I pulled out he already owed me $2500. I later learned he had three such companies, three web designers and three graphic designers, none of which ever got paid. The FBI still hasn't captured him.
Now that's not a typical customer but typical ones aren't much better. I've had clients pay with credit cards and then do chargebacks. I've had one client who never sent a final payment so I turned off his site. By this time he'd already downloaded his "proof" copy of his site, grabbed a new domain and was back in business. And this is just the tip of the iceberg. But more common than scammers are people who just don't pay or can't afford to pay their full bill. Most times they owe you $100 or $400. They have good intentions but just can't pay.
Now to answer your question, unfortunately all of those safeguards I have in place do little to protect me. Try going to court over $2K. It'll cost you more getting there and then afterward you won't collect. Try suing someone you can't find or doesn't exist (I've had both). And try getting a collection agency to actually collect on an invoice under $500. Yes these measures we take protect us but once you've been in that position you realize they only go so far. The worst thing any web designer could do is to be so naive to think that a contract equates guarantee of payment. - Mith, on 10/12/2007, -2/+5Sorry, I should have been more specific... this is for freelance web designers, those who are a 1 man show. Of course this pricing guide wouldn't fit for a large company with multiple employees. It was intended for people who freelance design, not own a large design company.
- DonCarcharo, on 10/12/2007, -0/+3I agree. I've worked at least solid 40 hours weeks for the last seven years but not all of that is billable time. Between accounting, advertising / promotion, new business development, meetings, and so on I'm lucky to get 20 hours of billable time.
- bradleyland, on 10/12/2007, -0/+3I didn't say I work a 30 hour week, I said I *bill* a 30 hour week. I don't bill like an attorney who catalogs every minute spent on the phone. Billing for meetings is also tough.
- jrmy, on 10/12/2007, -0/+3I am completely baffled by the number of people getting "scammed" out of payment and such. Do you not create and sign contracts? It's very dangerous to do business without getting all the legal stuff out of the way. Things such as who owns the copyright, work made for hire clauses and so on need to be ironed out before any work is ever done. No only that but but sides need to agree on a schedule, requirements, how the requirements will be evaluated, payment dates, and so on. This is just basic business stuff here. Sure you will have to invest some money into a lawyer to help you write up the contracts but in the end it will save you tons of money and time. And usually the contracts can be done in a way that you can reuse them over and over and only make small changes per clients needs.
Well this scare some people off. Sure, the ones that want to scam you. Others will look upon it as proper buisness practice....
/rant - misterjangles, on 10/12/2007, -0/+3knowing when to walk away from a client is possibly one of the toughest things to learn - especially when you are getting started and/or you need the income!
@DonCacharo - i feel your pain - that is a classic scenario. it's especially hard with non-technical people because they tend to just lump everything together as "web stuff." You have to educate them that it's not the same type of service when they ask for help configuring their wireless router or outlook account or whatever. if you're doing design and you don't want that type of support work, you should never give your client impression that you offer that service. As soon as they know you can help them - you'll be the go-to guy forever and you'll catch all the crap too when something isn't working. - smhill, on 10/12/2007, -1/+4I concur with many of the statements made by wuss and tomarocco.
There are many things wrong with that article. It is pretty evident that the 'author' is simply clueless. Since there is nothing on that blog to indicate the credentials of the author, I would suggest it be ignored. There is nothing of any value to be gleaned from it.
The "complexity" formula is absurd. There is simply no rhyme or reason for something like that. As others have said, if you are bidding on a project (not consulting or open ended development). You work up a bid based on your best estimate of time/costs required. That takes time to get it right. The key to this is to very carefully keep track of your hours. That way at the end of each project you can assess your estimate and adjust future ones accordingly. As you do this you will get a realistic view of how long it takes you to tasks.
Coming up with a "menu" of prices is really pointless. There are many more important factors in effective 'pricing'. The most important thing that was completely neglected was a statement of work. It is not only helpful in determining a price by a necessity for staying on budget.
You want to put in writing very clearly what the client is going to get and when. What they can expect of you and what you require of them. Timelines are important to address. Especially if you have many clients. If are to produce something for certain milestone on a certain date, make sure you outline a window for feedback. Deadlines for when they are to provide you materials, etc... If you have multiple clients and one is slow getting you stuff or giving feedback or approvals, it can conflict with your other schedules. Don't let one client muck up deadlines for several others.
Having clear specs, also prevents confusion. The whole "per page" pricing and a la carte pricing is sheer nonsense. I have clients come back to me with things like "Wait, where are the forums?". I indicated that the contract and our discussions never included forums being integrated, to which the response what, "yea, but all web sites have forums, I assumed it was included." People are hiring you because they can't do it themselves and they don't have the knowledge. They may have assumptions out of left field. You can never be too clear. My bids generally (at least for new clients), include a wire frame of the site in the bid. Very clear, no confusion.
While the 'complexity' thing is just plain silly, I do charge different rates for different types of development. That is due to the fact that, like many of us, we have a wide range of skills, and many of those skills bill at different rates just as matter of demand within the industry. Generally it will be a single rate for a given project, and it doesn't vary all that much. But my overall 'hourly' rate will be higher for say flash games than it would be for a web application. But changing rates within project serves no purpose. The client is paying for me as a complete package. If I am charging $110/hr for a web application, and the client provides me 10 pages of hand written text for a content portion of the site, it is going to cost them $110/hr for me to type it up. Though I make that clear to them and suggest that it would be cheaper for them to find a student to do it for $10 an hour to save them some money. That may sound harsh, but there is no way I would consider working for cheap tasks when that time could be spent making my normal rate with them or another client.
There is a lot to doing this kind of work, as anyone who has been through it will attest to. You will make mistakes, go over budget and work "for free" because of errors. There is no "simple formula", on experience and time. Ignore blog spam crap from people who have no clue what they are talking about. Use common sense, talk to folks who have been doing it successfully and whose opinions you can trust.
While coming up with little formulas to determine how much you wanna make if fun, but even though it is "freelance", it is still a business. And should be treated as such. - isaaccs, on 10/12/2007, -0/+2anyone have a mirror for this?
- Mith, on 10/12/2007, -1/+3To be honest, it's very easy to have to put 40 hrs just to get all your work done, let alone overhead. Specialty creative jobs like web design rarely follow the 9-5, 40hr work day, I just used 40 hours because that's what is considered a work week. You can of course adjust it to more or less, depending on what you need.
- Stephiems, on 10/12/2007, -0/+2I agree with this. The clients who are unwilling to pay almost ALWAYS turn out to be the worst ones. Never ever fall for the line, "I know exactly what I want, I don't want anything extra." They will always change it 100 times because they aren't designers, and don't realize that their idea might not end up working out as well as it did in their head. People who don't pay also tend to be the ones that go "Ok, let me show my wife/neighbor/brother/sister and see what they say" and end up coming back saying, "They thought it needed to be a bit more this or that". If they are willing to pay a lot of money, it normally means they value designers, know you will do your job, and are willing to trust in you enough to pay you more.
- misterjangles, on 10/12/2007, -0/+2I think ultimately if you want to grow you have to learn how to bill for these overhead hours, either by incorporating (hiding) them in with your actual design hours, adding "consultation and administration" to your bill, or just up your rate so it evens out.
if you think of the job as if you had to pay an employee to do the work - you start to realize that you can't ever grow beyond a one-man-shop if you give away too many hours for free all the time. if you want to stay a freelancer (nothing wrong with that, btw) then you can work as many extra hours as you want, but when you also have to pay people, you have to be able to pass along the expense to your client and hopefully still make something for your time as well. - inactive, on 10/12/2007, -0/+2Yeah but some customers can't decide what they want through an entire process.
I just do everything hourly with no flat rate or job quotes, for this reason.
I'm horrible at estimating time on projects anymore because of the customer whim factor.
Too many times I'm x amount of time into a project and it's time to restart, requote, change everything around all at the bequest of the client.
Of course they have the right to do that but what's the point of having a set job price when you can just charge your time.
I will allow them to prepay for blocks of time but when that time is up it's up. - leanbackvids, on 10/12/2007, -1/+3As previously stated, most design firms will charge $100-200+ per hour for their services. It doesn't matter how long it takes you to design/develop, because what matters is the value of the product. I can bust out a site in less that 8 hours, but I'd be stupid to charge only $400 ($50/hr). A quality site is easly worth $1,000+ to most clients. If you're setting up a CMS, it is worth at least double that.
Having done freelance develop for 10+ years, I've found the best process is to provide both a single figure quote and an hourly rate for overruns. I make sure the client signs off on a specific list of deliverables and I provide a flat fee for delivering those item. For example, $2,000 for the site design/development and a maximum of 100 hours. If the client increases the project's scope or if I go over my estimated 100 hours, I then charge $75-100/hour. Also, any change request are billed at a minimum of 1 hour. This encourages the client to aggregate their requests rather than nit-picking me with one-off emails.
My favorite quote to sum all this up...
"If you ***** on your own leg, everyone else is going to think you smell like *****."
If you want to work hourly, get a job at McDonalds. Charge what you're worth. - smhill, on 10/12/2007, -0/+2@uptown
"What do you all price an e-commerce sites at that requires site design, basic shopping-cart functionality, credit card check-out, and a small collection of products? I have a bid out there for one of these right now, and just curious where that should fall."
Basically you gotta just write it all out and determine how long it will take you and go from there. And as a warning, there is almost no such thing as a "basic e-commerce" site. If you are dealing with money changing hands, you gotta do right and carefully. Even if you use a "turn-key" open-source cart system, you will have to customize it, which can be a nightmare. If you over customize you are taking on a huge responsibility for support or at the very least documentation. Commerce sites are not like static web site or other brochure site.
Not saying they are difficult, but they can be time consuming and you need to take an extra level of care. Make sure you account for everything and be very clear in your contract where your responsibilities an liabilities are. - trudylee, on 10/12/2007, -1/+3Because my clients pay for my results, not for my labor. All of the companies I outsource some of my projects to charge based on value and not hourly. Even the custodian who vacuums my office monthly charges a flat rate based on number of factors.
After every project, I mail my clients a survey. Every single client was satisfied with my service. Nobody mentioned anything about hourly charges (except for one who thought my customer support hourly prices are too high). Several clients come back to me frequently for new projects, and we always do it based on value. You have to keep in mind that these are creative services. You cannot compare apples to oranges. - SweetyCheeks, on 10/12/2007, -0/+2Site dead?? - Okay... here's the "Cut & Paste" of the article:
Taken from: http://tutorialaday.com/effective-web-design-pricing/
4 Steps To Effective Web Design Pricing
Perhaps one of the hardest skills to learn when freelancing in web design is how to fairly and effectively price your services. A project quote can either sell a client, or turn them away. Here are some guidelines on how to develop a web design pricing guide. A lot of people have different methods for coming up with their prices, but this is just to get you started. This guide only deals with charging per project. There are other ways of charging clients, but per project is the easiest and perhaps the most widespread method of pricing.
1. Determining Your Hourly Wage
This is by far the most important part of developing a pricing guide. You will always start with your hourly wage, so it’s critical to get it right from the start. It’s pretty simple to come up with your hourly wage. The formula looks a little something like this.
(Expenses + Salary) ÷ Hours Worked Per Year = Hourly Wage
Using this formula, if you wanted to make $60,000 a year, and spent $10,000 a year on say, hosting, stock photography / videos, fonts, etc., and you worked a normal 40 hour work week (2,000 hours a year), then your hourly wage would be (10,000 + 60,000) ÷ 2,000 = $35/hr. This is what you’ll be using in our pricing guide to determine how much you’ll charge per project.
2. Develop Base Prices For Different Project Types
Now that you have figured out your hourly wage, it’s time to incorporate that into some pricing. I’d recommend setting base values for all the different types of projects you’ll be dealing with. Say you’re a basic web designer, and you offer both design and coding. You would make a list of all the basic services you offer. Your list might look something like this:
* Logo Design
* Website Design (design only in .psd format)
* Website Design (design + coding into xHTML+CSS, less than 7 pages)
* Forum Skinning (design only in .psd format)
* Blog Design (design + coding into WordPress theme)
You now have your basic services listed, now it’s time to create a base project for each project. We’ll be using another handy dandy formula, this time incorporating your hourly wage, time it will take for you to complete the project, and a complexity variable. This will be used depending on the project type, and how hard or complex it is.
I use complexity levels of 1-5 for my pricing guide, but this is something you’ll have to determine. I really like logo design, and it’s easy for me, so I assign it a 1. Blog design is the hardest for me, so I assign that a 5. The rest fall somewhere in between. You’ll take the complexity level as a decimal + 1. So logo design would be .1 + 1 = 1.1. Here’s the formula:
(Hourly Wage x Estimated Time To Complete) x Complexity Level = Base Price
As an example, we’ll take a website design with coding. I assign web design + coding a complexity of 3. So it adds up to: (35 x 15 hours) x 1.3 = $682.5. This would be an odd number to quote someone, so I would round the base price down to $650, but you can round up as well.
3. Develop Prices For Any Additional Requirements
You know how your base pricing guide down. That will suffice for some (maybe most, depending on your clientèle) of your projects, but you’ll get a lot of clients wanting something special added to their site. This could be everything from a flash presentation on their homepage, to a simple login/user system.
It’s the same process for this step to determine prices for additional elements added to the project. Most additional elements will be code based, that is a script, or a web app. Again, make a list of all the additional elements you can think off, and go through the formula again deciding how much you will charge for them. Things like:
* Online Calendar App
* User login system
* Email contact form
* Flash Presentation
* Shopping Cart
* Additional Pages
For additional requirements I assign them all a complexity level of 3, and plug them into the formula from step 2. For additional pages, I charge a flat $50 fee per page the client wants past 7.
4. Develop Prices For Outsourced Work
In the first three steps, you have developed a pricing guide that will be suitable for most of your work. However there comes a time in every freelancer career when you will have to outsource some work. Maybe the client wants a custom illustration, or a big web application developed. You could try and tackle it if you wanted, but then you run into biting off more than you can chew. Nothing is more embarrassing and detrimental to your designer-client relationships than telling a client you can code “the next big thing” for them, and half way through having to tell them you can’t do it. Know your limits, and charge accordingly. Pricing outsourced work is extremely simple:
(Quote From Contractor x 1.10) = Price
You are simply taking the quote from whoever you are outsourcing the work to, and adding 10% to it.
These steps should give you a great start in developing your own freelance pricing guide. You can change pretty much everything in this to work for your needs. These formulas are very simple, and very flexible. One of the advantages, besides the obvious, of having a pre-determined pricing guide is that you can change it on the fly. Say you’re designing for a non-profit, just take the normal price x .5 to give them a 50% discount. I hope this article helped you if you were having trouble developing a pricing plan, or just had no clue where to begin. To those who already have pricing down, how do you do it? Do you have a set pricing guide, or just come up with a number on the fly for each project? I’m interested in hearing your point of view. - mimilena, on 10/12/2007, -1/+3smhill - I recommend you read this:
http://www.sitepoint.com/blogs/2005/07/08/pricing-if-you-are-18-years-old/
"1. People buy based on value. It is up to you to be someone who communicates your value in everything you do." - mobilitatis, on 10/12/2007, -0/+2Site dead, mirror?
- wcarolyn, on 10/12/2007, -0/+1In the end, clients don't care how long or hard it is to make the website. They only care about what they'll be getting in the end. That's why you shouldn't charge hourly.
- DonCarcharo, on 10/12/2007, -0/+1"It sounds like you are taking on some shady customers and providing them with items before they pay. How does someone download a "proof" before they pay you?"
All web development is done on a testing server and the client gets the chance to approve the site before it goes live. In the case of a static site a more clever customer can just use an offline web archiving app and download the site via http. This is not a common problem by any means but it has happened.
"Now I am sure the common problem in your case is people simply not realizing how much it's actually going to cost and bailing out."
That would be pretty tough. My contract clearly outlines pricing and provides a strict timeline with milestones. Payment is 50% down, 50% upon completion and there's no overage without prior client approval. So they know the costs. The thing is some people can come up with the deposit but just can't swing the final payment.
"Finally, just think how much the contracts have saved you. I am sure you will agree it's much better to have those contracts simply for the 50% up front clause."
Absolutely. Everyone should use contracts and I didn't mean to indicate that they're useless. Just that they don't provide quite as much protection as some people think they do. - brennankeller, on 10/12/2007, -0/+1so you would recommend what? because i don't see you making the effort to write an article on how you price
- KoKoFuFU, on 10/12/2007, -0/+1As well as the hourly fee, there is another thing which is important. Does the designer strictly charge every minute they work on a project. I don't always. eg if I'm slow thorugh my own inexperience in something new, I don't think the client should pay for that
- jrmy, on 10/12/2007, -0/+1@DonCarcharo
Sure you are going to get scammed at some point even with contracts and all of that but you will be limiting your losses if the contract is big enough.
It sounds like you are taking on some shady customers and providing them with items before they pay. How does someone download a "proof" before they pay you? The code/file/etc should not exchange hands until payment is made. That should also be in the contract.
Now I am sure the common problem in your case is people simply not realizing how much it's actually going to cost and bailing out. They are probably not provided with anything past what was to be supplied by the bail out point. (You do have a clause such as this correct? You owe x amount if you cancel the contract at y time.) But this is just part of buisness and is not a scam. A contract if setup correctly and enforced by you will limit how far a scamer can go. You may still lose some but not much.
As for CC charge backs, this is just a pain in the ass I don't know of a good solution. You could state in the contract that all payments must be verified before work is turned over or something like that. I suppose you could always run a credit check on the person too. They are entering into a contract with you and you do have the right to perform such actions.
Finally, just think how much the contracts have saved you. I am sure you will agree it's much better to have those contracts simply for the 50% up front clause. This is a similar problem that contractors and such face all the time. I would be interested to see how they handle it. - Foofy, on 10/12/2007, -0/+1Keep track of how much money clients _don't_ pay. This is considered an expense, and can be used as a tax write-off.
- cloosley, on 10/12/2007, -0/+1I gave this a digg not just because of the article itself, but because of the excellent and helpful discussion in the comments (especially those by wuss, tomarroco and trudylee).
- findhostcoupons, on 03/15/2009, -0/+1Quite good advices for webmasters!
- monkeymagix, on 10/12/2007, -0/+1wow - long replies but really interesting too.
I've been working for the past 8 years in corporate IT and this posting demonstrates the two different ways of quoting for IT project - Fixed costs or Time and Materials (T&M). The main difference between these two methods is which party assumes the risk.
T&M - the client assumes the risk as the IT firms just keeps on charging even if it over runs
Fixed costs - the IT firm assumes the risk.
When I first started working most projects were T&M but over time this has changed as companies got severely burnt by most projects overrunning and them picking up the bill. Its now very rare to come across T&M project. This means that the IT firms now spend a lot of time and effort estimating their project costs and trying to factor in a margin to make it worth their while. As you all know estimating is a cross between an art and a science - and the 3 firms I've worked with have all employed something similar to the complexity calculations that the original article used. These figures are then massaged by the sales guy depending on the desire to get the project etc. But the fact remains, these calculations are used to give a ball park figure.
Anyway, big business or little business the problem still remains - IT projects are very hard to define/estimate/price. - tofuComputer, on 10/12/2007, -0/+1Great article! I'd only add a twist- This works well for me and my clients:
Hourly Rate + estimated hours + a fee cap for each service item + weekly billing
For example: $75.00/hr for front-end coding up to 65 hours (estimated, which is the agreed fee cap) = $4875.00, paid weekly depending upon how many hours are worked.
Benefits:
Designer/Coder: Client has agreed to the pricing structure and you know you can complete it within this time. Also, you get paid on a regular basis, which keeps the cash flow in a healthy state. Also, if you need to sub out some stuff, you can apply the same model and pay your sub weekly.
Client: Feels safe because they know they are getting what they paid and within budget. Also, rather than having to pay a large retainer up front, this model is more flexible financially and doesn't gouge into the company bank account.
Works well for all and all are happy! - inactive, on 10/11/2007, -0/+1Some of the best info I have heard on Digg yet. Obviously a season professional.
- dunkin, on 10/12/2007, -0/+1that's the best advice I think I've ever heard
- BigPerm53, on 10/12/2007, -0/+1Hey Josh, for your article on invoicing do you want an invite to our closed beta?
http://www.lessaccounting.com
easy expense tracking (with mileage log)
simple sales lead management
proposal sending and creation
invoicing and payment tracking
basecamp, blinksale, harvest and tickspot integration coming soon -
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