Where do I learn what to charge?

I have to get a price list once and for all on the services I offer!!
I am going to do a photo restoration job. How much should I charge for the printing? My printer is already in need of new cartridges which cost a heck of a lot of money! So how do I come up with a price? How about the
photo retouching?

I might have a new web design job for a doctor’s office. I have to come up with a price for them too.

It’s about time I get this all written up and ready for my next job. :frowning:

You have to decide for yourself. What do you need to live on, what are your costs, what do you feel is a fair price for your time, skills and services …

And deciding ‘once and for all’ is not really practical, as your rates will naturally change over time.

I agree with what ralph.m says, you have to work out a base hourly rate, weekly and monthly targets. You can charge different fixed prices for your services based on the client. One price doesn’t fit all you’ll find but you must work out your base rate - which is what you need to live on and operate your business. Not saying it is easy to quote clients because it often isn’t.

Things to keep in mind when working out your base rate:

  • How many hours a day do you want to work
  • How many days a week do you want to work
  • Think about holidays and sick days
  • How much you want to make per year
  • How much does it cost to run your business (costs of printer ink, computer parts etc.)

So if you want to work 20 hours a week, 48 weeks per year and you want to earn 50k then your hourly rate would be: 50000/48/20 = $52/hour

Don’t forget to factor in the cost of getting business and education into that operating line item… Whether it’s a meal to talk to a networked lead or a few hours to pitch a cold prospect, business doesn’t come free nor does up keeping your skills.

It may also be necessary to factor in that, being a freelancer, there will be periods where you don’t have clients.

I’d suggest looking at it from an opposite perspective. Your pricing is probably not going to be based around how much you ‘want to make’ or how long you want to work. It will be originally based your market value, as adjusted by your personal skills/strengths and your success as marketing yourself.

Try to learn what people are earning in your field - there will be a wide range but you’ll get an idea. Then, figure out how effectively you compete with everyone in your market and adjust your price accordingly. Once you are flush with clients (or have none) you can start thinking about how much you want, need, and wish to have but essentially this is a marketplace.

Lot’s of moving parts, but there are fairly consistent price ranges for most skills.

“I’d suggest looking at it from an opposite perspective”, exactly my point :slight_smile:

Glad to see we still agree Sagewing :wink:

The problem with formulas is that they have no bearing on what a client is or isn’t willing to pay, which is Sagewing’s point. How would you justify $52 an hour if the client thinks that’s too expensive? Telling him you’re worth that because you want to make $50k a year working 20 hours a week isn’t going to convince him to hire you.

Any work that someone’s willing to pay you for must create value. One of the things I do for a living is train sales people and telemarketers. By doing so, I create value for my company by increasing sales. Increased sales means more revenue. More revenue means the company can stay in business, pay its bills and continue to employ the people it employs. If I train them properly, they have a greater chance of succeeding, which means they won’t get discouraged and quit. So I also create value by reducing turnover, which decreases expenses.

Value isn’t always about money, but it is always about increases or decreases. If you can increase or decrease something that the doctor wants increased or decreased, then you have the potential to create value. Before you can “come up with” a price for the doctor’s site, you need to ask yourself, What value can I create? You must also have a fact-finding conversation with him to discover what he wants increased and/or decreased.

Once you know what he wants, show him how you can help him get it. That’s what will convince him to hire you.

I agree with Sagewing on this one. Your potential customers will look at what your competition is charging, and then make a judgement on where they feel your fees should be. Charging based on what you ‘need’ to earn, or what you feel is a fair price isn’t going to help you win projects, because your clients aren’t particularly interested in your needs and wants :slight_smile:

When it comes to picking your fees, there’s always going to be a bit of psychology involved, we all know that feeling when we see a ‘cheap’ service, we often assume it’s low quality, and on the flip side, more expensive services can suggest a higher ‘premium’ vendor. These things can be experimented as your business grows, but my advice would be to keep it simple at first. Pick a couple of like-for-like competitors and try to pitch your fees in a similar ballpark area, then work hard on developing fantastic sales and marketing techniques in order to position yourself above those competitors.

However, the question is what they are charging for. There’s a perfectly good reason why one web designer might charge $1000 for a site and another designer $10,000 for the same site. Are they both coding it as well, optimizing it for mobile, SEO etc? The revenue that a site generates can depend greatly on the way it’s built and managed. So as John says, the value being created is the big factor. A client who’s choice of service provider is based solely on how cheaply they can get a result may not be worth chasing. Really, unless a website is going to make money for a client (rather than cost them money) it’s not worth building. So the selling point is how much more money a good quality website solution can make for them.

That said, there is still a minimum rate at which you should work. There’s no point beating the competition but not making enough to live on.

I don’t really see the distinction. Each vendor has their own strengths and weakness, but it’s not that hard to have an apples to apples comparison. I have a designer who is really good at complex UI requirements. I have another that is really good at concept work and getting that perfect ‘fit’ design. Very different, but they both bill the same rate.

The big variances between rates for professional services are usually based on experience, which correlates to their skill level. After that, there are the effects of specialization, etc. Lot’s of moving parts, yes, but I could easily give you a ball park range for what a good designer with a strong portfolio, great communication skills, and 10 years of experience will probably get.

For sure the selling point should be the real value that your service provides. Of course, in professional services I think if you are ‘selling’ then you are doing it wrong. But let’s not confuse this with pricing lest we get sucked into the [really very old] concept of ‘value based pricing’ which is a myth.

The amount of money that a good website solution can make for me has nothing to do with the market rate for those skills. Say I have a great business concept that will make me $1,000,000 but it needs a great web design first. And let’s say that a really good designer would charge maybe $10k for the job. Would it make sense to say that I should pay more because that site is so valuable to me? I don’t think so.

I know people who are day traders and can make $2500/day using a cheap PC, but that doesn’t mean they should pay more for their PC :slight_smile:

Sure, I’m probably talking about something different. I’m thinking in terms time taken: they may charge the same rate, but one person’s role may take a lot longer than another’s, so the price would end up being different. So I may quote higher for a web project, because I’d be offering to do more—as I can’t stand cutting corners just to make a job cheaper.

I know people who are day traders and can make $2500/day using a cheap PC, but that doesn’t mean they should pay more for their PC :slight_smile:

Ha ha, unless they get a Mac. :smiley: Again, I think I’m seeing this from a different point of view. Someone may need a car/van for running a business. Basically a vehicle like this gets you from A to B. You can get a car from as little as $1000 or as much as $100,000 etc. Cost is not the only factor, as you know that the really cheap car is likely to be less reliable and not necessarily as good for the business etc. Likewise with websites, there can be a good reason why one designer charges a lot more for a site than another … even if they have the same hourly rate.

Sure, but that is the case with anything so you just need to be mindful of it when comparing rates.

I have one attorney who charges $325/hr and she’s really fast. I have another that is $250/hr with (different specialty) but is actually pretty slow. Still, I could say that good attorneys in the Denver area average from about $225 to about $400 depending on their experience and specialty.

I know restaurants that are cheaper, but give tiny portions. And I know some that are the reverse. But, that doesn’t really change the fact that an entree at a middle-tier restaurant will usually be 9 to 16 dollars around here.

Market rules!

Indeed it does. Sometimes I find it a bit sad, as I see quality going down rapidly in a lot of service areas these days. I’m the kind of person who doesn’t spend a lot but likes to pay for good quality when it’s needed, and it’s getting harder to find good quality service these days—be it at restaurants, or with builders, repair services or whatever. Seems it’s just not economical for a lot of businesses to offer more expensive services. O well!

Practical advice + Common sense = the right answer.

Glad we can all agree.

Also take into account the value of the service to them. If a client called and said "my website was hacked, it’s not working I am losing $15,000 a day. "

I would charge at least $30,000 to fix it. That’s 2 days pay to him…I don’t care if it took me 10mins to fix it.

<Insert the ‘here we go with the value-based-pricing nonsense’ here>

Sounds like you’ve been smoking too many blunts. That kind of value pricing/extortion only works if you are somehow the only person in the world able to fix that particular problem. I’m pretty sure there are a good few hundred thousand developers out there who could fix that hacked site, and most would just charge, at worst, double their hourly rate.

Two important questions:

1.) Do you have any prior professional experience such as; full-time position?
3.) Have you completed any form of college education?

I actually used that example because it happened to me a few years ago. In value based pricing you do have to be willing to lose some jobs. That’s life though. I’ve been much happier getting the few that pay great and leaving behind the poor paying ones. Talk about liberation. Stay with that hourly mess. Didn’t work for me. ps, I can never smoke too many.