Pricing your design services is a dilemma that all web designers face. It can be very difficult to put a monetary value on your time and your experience. Whether you like this aspect of designing or not, it is something you need to do if you are a freelancer or if you operate a web design company.
Unfortunately, pricing your services is not an exact science. You need to consider a lot of factors in order to price a project correctly. And you may find that you need to price different projects in a different way so that you are compensated fairly.
In this article, I would like speak about the factors you should consider when pricing your web design services.
Hourly or Fixed
Design projects are normally charged as a fixed price or on an hourly basis. It is important to understand the pros and cons of each pricing structure.
Clients generally prefer to pay a fixed price for design work so that they know in advance the full cost of a project. The benefit of this is that both parties know up front what the cost will be i.e. a client wants a design and will pay you X amount of money.
For designers, charging on an hourly basis may be a more practical solution as it ensures you do not lose out financially if the project takes longer.
Consider a website design that you expect will take 20 hours to complete. Before you take on the project, you could quote the client a fee of $1,000 or an hourly fee of $50 per hour. If you charge a fixed price and manage to complete the website within ten hours, you have effectively earned an additional ten hours of income. But what if the project takes longer than expected? What if the website took 25 hours, 30 hours, or even 40 hours to complete? You could end up spending double the time you had expected for no additional earnings.
As you gain more experience in freelancing, you will have a better understanding of what is involved in a project. Therefore, if you are positive that you will not face any problems with a design, it may be worth charging the client a fixed price. However, things do not always go to plan and it is difficult to see the challenges that a particular design may present. That is why charging per hour is favored by many designers. A good alternative is to charge a fixed price for a project and then charge more if it takes more than an agreed number of hours to complete.
Even if you favor charging by the hour, you may be faced with the decision on whether it is worth taking on a project on a fixed price basis (e.g. a project advertised on a freelancing website or because a client wants to know the final cost up front). Be sure to evaluate each project and know the pros and cons of each charging option before you agree terms with the client.
Determine the Market Rate
Knowing the market rate for design work will help you price your own services effectively. You can do this by checking the rates of competitors on their website and through freelance marketplaces.
Understand the market that you will be targeting:
- Will you be offering your services locally or internationally?
- Are you targeting small businesses or large companies?
- Will you be taking on smaller jobs (e.g. logos, banners) or bigger projects (e.g. complete websites)?
Compare like with like to ensure that you have a realistic estimate of the market rate of your services.
Evaluate Your Own Skill Level
If you can put your ego to one side, it is worthwhile evaluating the quality of your services against competitors. This will help you determine whether you can charge more than the market rate.
- Do you have more experience than your competitors?
- Can you offer something that others cannot e.g. technical or design experience?
- Do you have a good reputation within your market?
Being aware of your own skill level will allow you to price your rates accordingly and justify these rates to clients.
Are You in Demand?
If you just starting out, you may have to drop your rates initially in order to build up a portfolio. This will help you secure projects you may have lost due to your recent entry into the market.
As demand for your services grows, you will be in a position to increase your rates. Turning down clients because you have too much work on your hands is a sure sign that you are in demand and probably not charging clients enough. So don’t be afraid to increase your rates if you have a lot of enquiries about work.
Identify Your Own Costs
Be aware of your business costs when you are pricing your services. On a project to project basis, you should incorporate the cost of any stock images or templates you need to purchase for the project. You should include any costs of hiring another developer or designer to help you with any problems you may face too.
Also take into account ongoing freelancing costs such as marketing expenses, telephone calls, insurance, and any traveling expenses that are involved visiting the client. The important thing to remember is that any expenses you incur will eat into your profits. Therefore, they should be incorporated into your pricing structure from the start.
Sign A Contract
It is in your interests, and your clients interests, to sign a contract before you work together. Your contract should detail:
- The estimated time to complete the project and what happens if the project takes longer to complete
- How many revisions are included with your initial draft
- Whether you will be working set days per week and whether you have any holidays planned
- How payment will be made
- What happens if the client changes their mind and wants to change the design
- What conditions need to be met to cancel the project early
- Whether the client be charged an additional fee if the project requires more work than expected
- Whether the client can pay an additional fee to make their project priority and finish the design sooner
- The amount of support, if any, that is provided after the design has been completed
It is not enough to have your terms and conditions agreed verbally with the client. You should sign a contract so that the law is on your side. At the very least, you need to make it clear on your website what happens in certain situations and have the client agree to those terms through an online declaration form. This will avoid unnecessary problems arising in the future.
After Sales Support
Providing support to clients can be a big drain on time. If you are going to provide after sales support to your clients, you should agree with them beforehand how much support is provided free of charge after you have delivered the final design. For example, you may include two hours of email support after delivering a website design to help explain how important functions work. Beyond that, you could offer additional support at a set rate.
A good way to earn extra money in the future is to set up a contract for two or three days of maintenance work and support every month on an ongoing basis (perhaps under a retainer). If a few clients sign up to this, you can easily increase your passive income.
Discounts for Loyal Customers
It sometimes pays to be a little flexible with your pricing, particularly when it comes to offering discounts to loyal customers.
- Will you offer a discount for placing more than one order?
- Will you offer a discount if the project is larger and contracts you to a longer period of time?
- Will you offer a discount to returning clients?
- Will you offer a small referral fee or discount to a client if they refer you new business?
While you should not get into the habit of dropping your rates, you should give consideration to offering discounts to good customers. Remember the 80/20 rule. 20% of your customers will bring in 80% of your income; therefore it pays to give preferential rates to your best clients.
Jeff Gardner wrote a great article for Smashing Magazine five years ago in which he spoke about the Quality-Price-Ratio in Web Design.
The quality of a design and the monetary cost of producing or procuring that design have absolutely no relationship whatsoever.
Jeff noted that, from a client’s point of view, a design will fall into one of four categories:
- Bad design that’s expensive
- Bad design that’s cheap
- Good design that’s expensive
- Good design that’s cheap
This illustrates that both the quality of your designs, and the price of your services, are subjective. Your branding and your confidence in your own abilities will therefore be a big factor on how you sell yourself to clients.
Ultimately, it comes down to how well you can negotiate a price and sell yourself to the client. Do not be afraid to walk away if a client is not willing to meet your demands, as you may have to turn down a higher paying client later because you have agreed to work at a lower rate.
It is common for designers to accept as much as 50% of the final price as a deposit. Some designers deliver the final work on delivery of the final payment, while others charge clients in stages. For example, the first payment before the initial draft, another payment after the next draft, final payment upon completion etc. Paying in stages reduces the risk for both you and your clients.
Another important thing you need to consider is the method of payment. Before you do anything, discuss with the client how you will be paid. You should be aware of the costs involved in accepting payment through a service such as PayPal, and the corresponding risk of a client making a complaint through a payment service about non-delivery. This is why many designers accept payment by check or direct bank transfer instead.
To get a better understanding of how other designers charge clients, I recommend reading this fantastic series of articles by David Airey from 2008. A total of 60 designers share the method they use to charge clients and why they chose that particular method. It is a great insight into how other designers operate.
- How 20 designers charge their clients (Part 1)
- How 20 designers charge their clients (Part 2)
- How 20 designers charge their clients (Part 3)
It may be tempting to do some work for a client before payment has been made, though it is better to wait until you have been sent the initial payment before you do anything. If not, you run the risk of doing design work for a client that does not pay up.
Pricing your services is a necessary part of working as a designer. If you take all pricing factors into consideration, you should price your services correctly. Though remember that pricing your services is not an exact science, so you need to accept the fact that you may sometimes under price your services. With experience, this becomes less of an issue.
While you may need to drop your prices a little at the start to encourage clients to try a designer with few past clients, be aware that pricing your services too low might attract tire kickers that waste all your time.
We are proud of the fact that web designers from around the world use Elegant Themes designs to create websites for their clients. Therefore, we want you to get a good price for the work you do by taking into consideration all the factors raised in this article.
Do you have any pricing advice to share with fellow designers? If so, please share your tips in the comment area below .
For more tips, visit: http://www.elegantthemes.com/blog