Welcome to the scary topic for most freelancers. Pricing. 1
How much do you charge? 2
Being confused about pricing in the beginning, is alright. 3
I was quite confused when I started off as well. 4
I remember my very first landing page project that I did, 5
I charged $200 and it was quite a lot of work actually. It was landing page design 6
and build. I wrote the copy and content for the landing page. 7
It was marketing project too, I did Facebook ads, and I built, I've designed Facebook banners and advertisements 8
as well. And did everything for $200. 9
Then I upgraded to hourly rate and it was $20 per hour. 10
And that was already a decent upgrade for me. Because at that rate, I was able to support myself fully 11
by freelancing. Freelancing basically full time. 12
Then I upgraded to $30 per hour, which was my rate for quite some time. 13
Then I doubled to $60 per hour. And now, I mainly charge flat rate and about, on average, 14
$5000 for a design and build a website. Upgrading from 30 to $60 per hour was one of the most 15
emotionally challenging things to do for me. 16
I felt so guilty, especially when I had to tell my existing clients, that I was going to double 17
their rate that they were already working with me for some time. 18
Rationally, I knew that it made sense, but emotionally I was sweating from anxiety. Later then, I realized 19
that I was running 2 false beliefs in my head. 20
First, I was projecting my own money issues onto clients, instead of seeing it from their perspective, 21
I was looking at it from my own. Comparing it to my own money spending habits. Feeling guilty, because 22
I myself would find it difficult to pay $60 per hour for anything. 23
Second, thinking that price that I charge is in direct correlation to the level of my skill. 24
So, if I charge double the amount, now I should be twice as skilled. And you might think, 25
"But isn't that true? 26
Shouldn't higher price mean better skill?" 27
Actually, not at all. 28
Here's the most important truth about pricing. 29
How much you charge, depends on who is buying. 30
There is this amazing business coach for creative people. 31
His name is Chris Do. And I was once watching his lecture on pricing and it just blew my mind. 32
I realized how much I didn't know about my own pricing. 33
Imagine a scenario, two potential clients approach you. 34
They both want a very similar website. 35
Same amount of pages, same functionality, something that is going to take same amount of time for you 36
to design and develop. 37
So, obviously you give them the same rate. But these clients couldn't be more different. 38
First one is an independent accountant, a small guy. 39
The second one is a large law firm, that makes millions of dollars per year. 40
What do you think? Is a website worth the same for them? 41
Absolutely not. 42
A new website might bring more business for both of these clients. But more business for the accountant 43
might mean extra 1000 bucks per month. And for the law firm, that might mean extra 100 000 per month. 44
Same website, same amount of effort from you, but huge difference in value based on the client. 45
So, whatever rate you give these 2 clients, probably it's too expensive for the accountant and ridiculously 46
cheap for the law firm. 47
You'll end up losing both of the prospects. 48
You might think, "Well at least, law firm will be excited about getting such a cheap price". But they won't. 49
Paying $5000 for a website, that might bring them extra 1,000,000 per year, 50
seems unrealistic. 51
It's too small of a number. 52
They won't trust your work. But if you adjusted your prices, 53
based on who is the client. 54
Let's say, hypothetically offering 2000 for the accountant and 20K for the law firm, you might end up 55
landing both of these jobs. Because prices would sound reasonable for either of them. 56
Steve Jobs paid 100,000 for the NEXT logo. Are logos worth 100 K? 57
For him, it was. For a small startup, 58
it wouldn't be. So how much a website costs depends on 2 things. 59
First, who is paying. 60
And second, what's the value that they expect to gain out of it. Expected value is an important factor 61
to consider as well. 62
Imagine the same scenario with a big law firm, but this time they don't need a website to generate new 63
business for themselves, 64
they just need a website with a couple of pages and a contact information. 65
Now that's, a different story. 66
They're not planning to gain a lot of value out of it. 67
So 20 k might sound too much to pay. 68
They're probably going to pay more than the independent accountant but not as much as the 20k. 69
So, to determine the right price to charge for the website, you have to first understand who is your client 70
and then understand what's the value 71
do they plan on gaining out of it. 72
The value will depend on each project. and you can find out by asking several questions like, what's the 73
goal of the website? And what do they hope to gain out of it? 74
As for clients, we can divide them in 4 categories. 75
A private client is somebody who is paying for the project from their own pocket. 76
So, this can be independent professionals like us, freelancers, consultants, or startups that don't have 77
funding. 78
These guys, I would say, they max out at $2000. 79
But if there is a lot of value to be gained from the website, then they can go higher. 80
When it comes to hourly rates, it's a bit more confusing for the clients, to understand if something is 81
cheap or expensive. 82
Because if you don't know how much something's going to take, you don't know, 83
if, for example, $50 per hour is expensive or cheap. If it takes 2 or 3 hours pretty cheap, 84
but if it takes, you know, 100 and 200 hours, pretty expensive. 85
What happens with hourly rates, is that clients usually use their own experience and preconceived ideas 86
about, if something is cheap or expensive, based on how much it costs per hour. And they're using their 87
own cultural kind of reference, wherever they live, 88
how much different services that they pay for and compare it to that. 89
And my rule with hourly rates is that never go below $20 per hour. Because most of your clients, 90
they will come from developed countries and in developed countries anything below $20 per hour 91
comes very close to a minimum wage. And minimum wage is something that, you know, a janitor is going to 92
get paid. 93
You're offering highly skilled services and you shouldn't be paid as at a minimum wage. 94
And if you price yourself like a janitor, then you're going to look like a janitor and you're gonna scare 95
away any decent clients, because nobody wants their website to be built by a janitor. Then you have studios 96
and agencies, like creative studios, design agencies, I.T. companies and all that. 97
These are usually going to be small and medium-sized agencies and studios. Because large ones, 98
most of the time, they have their own full-time staff and they don't engage, and they don't have a need 99
to engage freelancers. When working with agencies usually hourly rate is the best way to go for 2 reasons. 100
First, 101
it's just simpler, 102
you don't have to renegotiate every time on every new project. 103
And second, because of the revisions. And projects going a little, kind of scope of the projects, basically 104
getting bigger and bigger. And you needing to do a bit more work. 105
Because what happens is that, when you design something and build something, right? You gonna have 106
staff inside the agency give you feedback. Then you would have to do the revisions and they're going 107
to send it to the client, and then clients will have their own comments and their own changes, 108
their own changes that they want to me. 109
And then you're gonna have to then do it another round of revisions. On a fixed rate, studio itself 110
doesn't have to worry about these revisions. 111
So, they're gonna pile all of it on you, but if they are paying you per hour and now they're going 112
to have to be a bit more mindful, and a bit more cautious of how much revisions you are doing, because 113
that's coming out of their payment, that they get from their final client. 114
And usually, when they work with the final client, they don't work per hourly basis. 115
Companies don't usually work on per hourly rate base, but they work per project. 116
So they're going to charge a flat rate to the final client. And they need to make sure, that whatever 117
it costs them doesn't go too much out of hand. And when they're paying you flat rate, then they don't 118
care. 119
And you can just, you know, work on it as much as they want. In terms of hourly rate, 120
it really depends on what type of clients they themselves work with. 121
Typically, I would say, they're going between $20 to a $70 per hour. 122
They're never gonna go, 123
I think, above $70 per hour. 124
Then in that case for them, it's going to make sense to hire a full-time employee and squeeze as much 125
as possible from them. 126
Right? 127
And also depends on country that they're located in, on maybe city even they're are located in, and if 128
they are working with the local clients or online clients themselves. Because if they're working with 129
the local clients. And you can probably easily find this out. Then that means that you're going to be 130
charging more. 131
Right? 132
Because with the local clients the prices are usually higher. Because you have a very limited number 133
of agencies and studios in the city. And you're meeting your clients and things are a bit more, sort of, 134
on a higher up level, rather than online. Because, you know, big corporations they're not going to hire 135
an online agency. They're going to hire somebody who is local, somebody they can meet and somebody they 136
can sue if things go wrong. 137
If you're negotiating with studios, don't be afraid to go lower than your usual rate, because the constant 138
flow of work and cutting down on non-billable hours, totally justifies the discount that you're going 139
to give them. When working with direct final clients, 140
you actually have to do proposals, right? 141
You have to send proposals or contracts, and negotiate, and have interviews, and things like that. 142
But when working with a studio, you just do that once, 143
right? 144
And then every single new project that comes your way, you don't have to go through all of this process 145
of negotiating and interviewing, or all that stuff. Because the agency and the studio is doing that with 146
the final client themselves. 147
So you get to, you get the project that is already ready to go and ready to bill. Then you have small 148
and medium sized businesses. 149
Usually at these are medium-sized businesses, that are making money, or startups that have funding. 150
These guys would usually go probably from $2000 and up. Until maxing out maybe at $10,000, $15,000 thousand. 151
And finally, you have large companies with a lot of employees, that make a lot of money. 152
And these guys probably start at 15k and up. But you don't have to worry about these guys, because they 153
don't really work with freelancers. 154
They like to hire companies and studios, especially local ones. 155
So no need to worry about them, because I've never worked with them. And I don't know freelancers 156
who end up working with large companies. 157
Let's recap. So we price based on who our client is. More valuable the website for them, more we charge 158
for it. To understand what our clients are, we need to find out more about them, where are they based, 159
what do they hope to gain out of the website. 160
Do they need a website for themselves or they are an agency? And then propose the price accordingly.