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Welcome to the scary topic for most freelancers. Pricing.
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How much do you charge?
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Being confused about pricing in the beginning, is alright.
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I was quite confused when I started off as well.
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I remember my very first landing page project that I did,
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I charged $200 and it was quite a lot of work actually. It was landing page design
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and build. I wrote the copy and content for the landing page.
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It was marketing project too, I did Facebook ads, and I built, I've designed Facebook banners and advertisements
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as well. And did everything for $200.
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Then I upgraded to hourly rate and it was $20 per hour.
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And that was already a decent upgrade for me. Because at that rate, I was able to support myself fully
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by freelancing. Freelancing basically full time.
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Then I upgraded to $30 per hour, which was my rate for quite some time.
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Then I doubled to $60 per hour. And now, I mainly charge flat rate and about, on average,
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$5000 for a design and build a website. Upgrading from 30 to $60 per hour was one of the most
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emotionally challenging things to do for me.
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I felt so guilty, especially when I had to tell my existing clients, that I was going to double
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their rate that they were already working with me for some time.
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Rationally, I knew that it made sense, but emotionally I was sweating from anxiety. Later then, I realized
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that I was running 2 false beliefs in my head.
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First, I was projecting my own money issues onto clients, instead of seeing it from their perspective,
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I was looking at it from my own. Comparing it to my own money spending habits. Feeling guilty, because
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I myself would find it difficult to pay $60 per hour for anything.
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Second, thinking that price that I charge is in direct correlation to the level of my skill.
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So, if I charge double the amount, now I should be twice as skilled. And you might think,
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"But isn't that true?
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Shouldn't higher price mean better skill?"
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Actually, not at all.
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Here's the most important truth about pricing.
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How much you charge, depends on who is buying.
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There is this amazing business coach for creative people.
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His name is Chris Do. And I was once watching his lecture on pricing and it just blew my mind.
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I realized how much I didn't know about my own pricing.
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Imagine a scenario, two potential clients approach you.
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They both want a very similar website.
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Same amount of pages, same functionality, something that is going to take same amount of time for you
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to design and develop.
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So, obviously you give them the same rate. But these clients couldn't be more different.
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First one is an independent accountant, a small guy.
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The second one is a large law firm, that makes millions of dollars per year.
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What do you think? Is a website worth the same for them?
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Absolutely not.
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A new website might bring more business for both of these clients. But more business for the accountant
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might mean extra 1000 bucks per month. And for the law firm, that might mean extra 100 000 per month.
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Same website, same amount of effort from you, but huge difference in value based on the client.
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So, whatever rate you give these 2 clients, probably it's too expensive for the accountant and ridiculously
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cheap for the law firm.
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You'll end up losing both of the prospects.
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You might think, "Well at least, law firm will be excited about getting such a cheap price". But they won't.
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Paying $5000 for a website, that might bring them extra 1,000,000 per year,
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seems unrealistic.
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It's too small of a number.
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They won't trust your work. But if you adjusted your prices,
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based on who is the client.
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Let's say, hypothetically offering 2000 for the accountant and 20K for the law firm, you might end up
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landing both of these jobs. Because prices would sound reasonable for either of them.
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Steve Jobs paid 100,000 for the NEXT logo. Are logos worth 100 K?
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For him, it was. For a small startup,
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it wouldn't be. So how much a website costs depends on 2 things.
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First, who is paying.
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And second, what's the value that they expect to gain out of it. Expected value is an important factor
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to consider as well.
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Imagine the same scenario with a big law firm, but this time they don't need a website to generate new
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business for themselves,
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they just need a website with a couple of pages and a contact information.
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Now that's, a different story.
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They're not planning to gain a lot of value out of it.
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So 20 k might sound too much to pay.
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They're probably going to pay more than the independent accountant but not as much as the 20k.
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So, to determine the right price to charge for the website, you have to first understand who is your client
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and then understand what's the value
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do they plan on gaining out of it.
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The value will depend on each project. and you can find out by asking several questions like, what's the
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goal of the website? And what do they hope to gain out of it?
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As for clients, we can divide them in 4 categories.
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A private client is somebody who is paying for the project from their own pocket.
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So, this can be independent professionals like us, freelancers, consultants, or startups that don't have
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funding.
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These guys, I would say, they max out at $2000.
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But if there is a lot of value to be gained from the website, then they can go higher.
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When it comes to hourly rates, it's a bit more confusing for the clients, to understand if something is
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cheap or expensive.
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Because if you don't know how much something's going to take, you don't know,
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if, for example, $50 per hour is expensive or cheap. If it takes 2 or 3 hours pretty cheap,
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but if it takes, you know, 100 and 200 hours, pretty expensive.
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What happens with hourly rates, is that clients usually use their own experience and preconceived ideas
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about, if something is cheap or expensive, based on how much it costs per hour. And they're using their
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own cultural kind of reference, wherever they live,
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how much different services that they pay for and compare it to that.
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And my rule with hourly rates is that never go below $20 per hour. Because most of your clients,
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they will come from developed countries and in developed countries anything below $20 per hour
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comes very close to a minimum wage. And minimum wage is something that, you know, a janitor is going to
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get paid.
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You're offering highly skilled services and you shouldn't be paid as at a minimum wage.
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And if you price yourself like a janitor, then you're going to look like a janitor and you're gonna scare
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away any decent clients, because nobody wants their website to be built by a janitor. Then you have studios
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and agencies, like creative studios, design agencies, I.T. companies and all that.
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These are usually going to be small and medium-sized agencies and studios. Because large ones,
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most of the time, they have their own full-time staff and they don't engage, and they don't have a need
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to engage freelancers. When working with agencies usually hourly rate is the best way to go for 2 reasons.
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First,
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it's just simpler,
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you don't have to renegotiate every time on every new project.
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And second, because of the revisions. And projects going a little, kind of scope of the projects, basically
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getting bigger and bigger. And you needing to do a bit more work.
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Because what happens is that, when you design something and build something, right? You gonna have
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staff inside the agency give you feedback. Then you would have to do the revisions and they're going
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to send it to the client, and then clients will have their own comments and their own changes,
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their own changes that they want to me.
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And then you're gonna have to then do it another round of revisions. On a fixed rate, studio itself
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doesn't have to worry about these revisions.
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So, they're gonna pile all of it on you, but if they are paying you per hour and now they're going
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to have to be a bit more mindful, and a bit more cautious of how much revisions you are doing, because
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that's coming out of their payment, that they get from their final client.
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And usually, when they work with the final client, they don't work per hourly basis.
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Companies don't usually work on per hourly rate base, but they work per project.
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So they're going to charge a flat rate to the final client. And they need to make sure, that whatever
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it costs them doesn't go too much out of hand. And when they're paying you flat rate, then they don't
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care.
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And you can just, you know, work on it as much as they want. In terms of hourly rate,
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it really depends on what type of clients they themselves work with.
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Typically, I would say, they're going between $20 to a $70 per hour.
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They're never gonna go,
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I think, above $70 per hour.
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Then in that case for them, it's going to make sense to hire a full-time employee and squeeze as much
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as possible from them.
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Right?
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And also depends on country that they're located in, on maybe city even they're are located in, and if
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they are working with the local clients or online clients themselves. Because if they're working with
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the local clients. And you can probably easily find this out. Then that means that you're going to be
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charging more.
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Right?
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Because with the local clients the prices are usually higher. Because you have a very limited number
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of agencies and studios in the city. And you're meeting your clients and things are a bit more, sort of,
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on a higher up level, rather than online. Because, you know, big corporations they're not going to hire
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an online agency. They're going to hire somebody who is local, somebody they can meet and somebody they
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can sue if things go wrong.
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If you're negotiating with studios, don't be afraid to go lower than your usual rate, because the constant
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flow of work and cutting down on non-billable hours, totally justifies the discount that you're going
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to give them. When working with direct final clients,
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you actually have to do proposals, right?
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You have to send proposals or contracts, and negotiate, and have interviews, and things like that.
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But when working with a studio, you just do that once,
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right?
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And then every single new project that comes your way, you don't have to go through all of this process
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of negotiating and interviewing, or all that stuff. Because the agency and the studio is doing that with
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the final client themselves.
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So you get to, you get the project that is already ready to go and ready to bill. Then you have small
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and medium sized businesses.
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Usually at these are medium-sized businesses, that are making money, or startups that have funding.
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These guys would usually go probably from $2000 and up. Until maxing out maybe at $10,000, $15,000 thousand.
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And finally, you have large companies with a lot of employees, that make a lot of money.
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And these guys probably start at 15k and up. But you don't have to worry about these guys, because they
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don't really work with freelancers.
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They like to hire companies and studios, especially local ones.
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So no need to worry about them, because I've never worked with them. And I don't know freelancers
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who end up working with large companies.
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Let's recap. So we price based on who our client is. More valuable the website for them, more we charge
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for it. To understand what our clients are, we need to find out more about them, where are they based,
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what do they hope to gain out of the website.
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Do they need a website for themselves or they are an agency? And then propose the price accordingly.