Putting a price on your time and experience is something that all freelancers struggle with, not only the web designer’s kind. Setting up a price is less like a science and more like an art. To choose your real value you have to estimate your experience and time. 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 from a web design company.
Basically there isn’t any fixed formula for pricing your service. Every designer needs to develop his or her own method for pricing, and even then, you probably won’t be able to follow the same formula on every project. Because each job will be different, it’s difficult to develop a method that will work well every time. But we can give you some suggestions that help you to understand what to do with pricing problems.
Determine your cost
Start with your fixed costs such as rent, internet costs, and insurance as these are usually the easiest to total. Next add in any variable costs such as long distance phone calls, and travel expenses by giving a fair estimate of your yearly costs. Set an accurate breakeven point. Finally add in any one time costs such as computer purchases and software upgrades. After completing these steps, you should have a fairly accurate figure of what your costs are for the year.
But some designers will offer the client one submittal and two drafts, and with anything more than that, they’ll provide an additional estimate. If the scope of the project changes during the process, your contract should clearly state that you will give the client a specific estimate for that as well.
Estimate time for project
Most designers and developers are typically optimistic about the amount of time it will require them to complete a project. They don’t take into consideration potential technical issues, downtime, and client misunderstandings or change requests.
So, it’s a good idea to estimate the number of hours it’ll take you to complete the project, multiply that by your hourly rate. With an hourly rate, the designer is always covered, even if the project takes longer. This is sometimes seen as a drawbackby the client, as they don’t know how much time and money they will end up spending.
If your hourly rate is being questioned, it doesn’t hurt to mention, that the client is not being charged for benefits, medical, sick leave, vacation pay, payroll taxes, etc. Instead, he’s only charged for the time actually spent working on their project. When keeping in mind these additional costs associated with having an in-house designer, the client may decide that your rate isn’t that high at all.
Know the market rate
Do you know what your competitors are asking or getting for similar work?This is especially a common price strategy if there are a lot of similar products or services on offer in a competitive market (regarding graphic or web designers). If you are too expensive or too cheap you will lose out.
If you don’t know the market rate, you will need to do some practical market research i.e. check out prices on their website or with retailers, check with ‘people in the know’ or middlemen such as recruitment agencies or freelancers websites such as Elance or PeoplePerHour.
Value based pricing
Most designers hugely underestimate what they create for their clients. Value-based pricing is based on what your value creation actually could be.
Instead of ‘just quoting for the requested job’, Colorgraphicz goes a step deeper, and really providesclients with a potential solution that will create huge financial value to them. You as a designer can quote more as you provide them with that (financially very interesting) solution.
Know your 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.
Discount your loyal clients
Sometime you should be little flexible with your pricing, particularly when it comes to offering discounts to loyal customers.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.
Sign a contract
It is in your interest, and your clients’ interests, to sign a contract before you work together. Colorgraphicz demonstrates a potential contract that should have details like this:
• 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.