I’m a self taught web developer that has finally resolved to start freelancing, but I’m not certain–not at all certain, to be precise–what to charge for my services.
I understand that web developers usually charge by the hour, but I wouldn’t know what to charge for an hour of my work. Being inexperienced, shall I simply charge minimum wage for every hour, and, as demand rises, raise my price?
Apologies if this has been covered before, as it seems like it would be a common topic, but my searches didn’t yield anything.
Yes, it’s a tricky question. One thing to consider is what you actually need to live on, without too many frills, to set your base rate. Whether you start from that level is up to you (probably not a good idea) but at lest you know that working for less than this is not on. I’ve found it very difficult to put a value on my work, but it’s helped to consider what value the work I do provides for the client. If a site is going to bring in hundreds of thousand of [insert currency here] for the client, you deserve a good slice of that. If the work is unlikely to make any money for the client, the job may not be worth doing—especially if the client doesn’t want to pay much. It’s not a reason to sell yourself short.
Edit:
Another way to put this is to consider the likelihood of the work you do bringing profit to the client. Try to see your work as adding value to the client rather than being a cost to the client. If the client sees everything as a cost, they have the wrong mindset, in my view, and may not be worth working with.
This mentality defies logic and won’t help you set your prices.
Say you provide a service to your client that costs $1000 and brings them $15,000 of value. Is that product worth $14,000? No, not if another vendor could have done it for $500.
The value of a service is not determined by the potential value when sold to a particular client. It’s determined by the marketplace, where comparable services are for sale at varying rates of competitiveness.
If you sell a fisherman a fishing pole for $100 they could catch $1,000 dollars worth of fish. If you sold me a fishing pole for $100, I might only catch $50 dollars of fish. But the fishing pole is still worth what it’s worth at the store, probably $50.
Only if your service is incredibly unique and one of a kind can you even consider the notion of ‘value based pricing’ - otherwise it’s a figment.
I guess it depends on minds sets. But I think that more savvy businesses understand that it’s not so much about the cost of a service but what that service brings to the business. I know of a company that was happy to pay hundreds of thousands of dollars for their new logo and rebranding, as they knew it would bring millions to the company, which it did. Sure, a brilliant designer living on a shoestring may have been able to do that rebranding for fifty bucks, but that’s a silly situation, really. Anyway, each business has to make its own call on that. I know that a big telco in Australia pays hundreds of thousands a year for a software license, but at the end of the day, that software is not hugely complex (my friend is involved in writing and selling it). But it saves the telco tens of millions a year, so it’s obviously worth it to them.
I guess my main point is to recognize—and help the client to see—that your service is not a cost to them but an investment. Obviously market forces still apply, but that mindset can help people not sell themselves short.
For a large company to do a logo/branding effort with an experienced, qualified company costs hundreds of thousands of dollars. Marketing people, who handle branding, are much more expensive than graphic designers and the branding is by far the bulk of that work. Certainly a brilliant designer who would do that for fifty dollars would be hard to find, if it exists.
But your point that they are willing to spend that money because of the potential gain makes little sense. They pay it because that’s how much it costs for the quality that they wanted. The agencies priced it there to compete with other agencies and nothing else. It’s totally arbitrary how much ‘value’ it will have - if a client can get that value for a lower price they almost always will.
Same thing. If it costs millions of dollars a year to the telco but it doesn’t cost anywhere near that to build, then a competitor will swoop in and make it cheaper. And yes the telco will be interested in it.
They want to pay the LEAST amount of money to get what THEY think they need. The value proposition is up to them, not the vendor. The vendor wants to meet those needs and propose their solution to the clients problem - not the reverse.
Spending money on professional services could be considered an investment, but since it has no resale value and is not an asset it’s safe to say that any service that meets the need (quality, functionality, everything) is desirable at the lowest price possible.
Business is business. I have never in my entire career seen a ‘value based’ proposition get a client to pay more for a similar service or product than they could get it elsewhere.
Some services produce assets that theoretically have a resale value. Anyhow, I understand what you are saying. There’s nothing new about it. I do find it sad that the world is focused on the cheapest thing available, even thought I understand the mentality. Employees are generally seen as a cost to a business, which is simply not true. They are an asset, without which the business could not exist. But as long as they are seen as a cost, they will be squeezed down to the lowest they will accept (which is usually just enough to live on) because they don’t have a lot of other options. It would be a different world if businesses rewarded their employees for the work they do and the contribution they are making to the success of the business. </pipedream>
I have the advantage of already having my living expenses covered by a job, so I think I can afford to underestimate–the first few will likely be gratis anyway for various small businesses and individuals (as I’ve found a few that could use some help) so I can build a portfolio (as I gather that is something rather important in this particular field).
I figure the best way to resolve the matter is to just jump in and start, but posting here was easy enough, so I thought I would see what the professionals had to say.
I’m far to obsessive to charge by the hour. I charge by the amount of pages. My prices are clearly laid out on my site (under begin) in my sig. It will give you an idea. I’m not cheap and I’m not anywhere near expensive either. Comfortably in the middle I like to think.
There is already various advice on how much to charge … really it’s up to what you’re comfortable charging. You mentioned you may do your first few as a way to build your portfolio so the question will be after those, what do you think you should bill?
One point I cannot stress enough to anyone starting out that isn’t sure what to charge:
Every project you work on (personal or client project) be sure to DOCUMENT EVERYTHING while you work in regards to how long it takes you for each part of the project.
While every project is going to be a bit different, there are going to be some similarities that you can use for future bidding. If you are converting a PSD design into a CSS template, how long has it taken you on average to do that? Keep a running tally and use that as a baseline for when you bid on a new project. Same for the initial design. Same for any installations (ie. if you install CMS packages, how long to get them running), custom programming, etc.
The more data you collect, the better you will understand your own workflow and understand how long projects could take you in the future. Then it’s simply a matter of determining what you feel your hourly rate is worth and bid using those calculations.
I have seen too many people start up and only do the work to get it done, they don’t keep track of how long things take and after 2 years of working on a variety of projects, STILL don’t know what to charge because they don’t know how long it actually takes … instead they guess (which will cost you money in the long run if you end up underbidding).
Yes, very good point. It’s amazing what you find when you look over how long a project actually took, and how long each component took, and it’s really handy information when quoting for similar work.
That’s a handy situation. I know someone who has a full time job and does occasional websites on the side. He’s excellent at it, but since he’s not depending on the income from these jobs, he’s happy to receive a couple of thousand dollars when in the normal run of things the job might be worth a lot more. He enjoys it as a hobby and an outlet and is happy for the extra money, but isn’t stressed about how much.
