Hi,
What does everyone think about bulding a site for a fixed fee? -- i mean as opposed to working off of an estimate. Do other people find that clients prefer that? Is it a bad idea? If so, how can one explain to clients the advantages and reassure them that costs will not explode? Or do people here often build sites at fixed cost?
I think most people will come out with a fixed cost, but then in their terms and conditions state that if any changes need doing after the final user requirements have been agreed on then charges will apply.
I'm only just starting to learn the basics of using @media for different viewport sizes, would you say that's an additional skill/cost which should be agreed for by the client, or would you class that as an optional extra?
Obviously when you're creating a website, you want it to look good on an array of screens not just for their sake but obviously for yours since you will be the one putting it in your portfolio.
Hmmmm. I have to say I'm a bit surprised by the answers coming back here. Boiler plate designs + set costs? Is this really how people on this site go about their business. The situations I confront most often -- and I am new at this -- where a client comes to me with a design that is highly customized, with more or less special requirements, that really don't fit within any fixed framework based, say, on the number of pages. The number of pages a site has really doesn't seem to be much of an indicator of the time required, as it really depends what is going on those pages: is the site CMS or not, what kind of data framework needs to exist underneath, are the pages static or not, and so on and so on... I usually can only estimate the number of hours a site will take based on the amount of time other sites have taken.... Hence my hesitance to operate at a fixed price that could either end up being too high or too low... Other thoughts?
@ethanmiller I'm not arguing FOR a fixed cost, just saying that IF you offer it then you have to know up-front what you are actually offering.
Overall, I would absolutely be in favour of discussing with the client their precise requirements and coming up with a custom price for that specific project.
@Paulie_D, cool, ok. I guess my question was more along the lines, then, of how do you come up with a fixed price, when you are in fact quite unsure how long something will take? Is it just really a rather messy mixture of a rough estimate combined with what a client is willing/able to pay? I.e. negotiation around a rough estimate? The problem I face is that I am still not sure how long a site will take to build. Sometimes things that I think will be very time consuming turn out to be quite easy, and vice versa. Also I frequently encounter a situation in which I quote a price and then a client comes back and says, oh well, I have some friend who said they had a whole site built for $x -- where x is like 1/3 of what I've quoted.
I have just read that article @ethanmiller, that does help me just as much as you as I'm just starting to try and get my name out there for some freelance work, and when it comes to pricing, I am awful.
I charged £100 to my friend for this website which has been coded from scratch and integrated with WordPress so he can make changes.
Many people I have spoke to said I was stupid for only charging for £100, but as many others said and I say, it was my first ever website that has actually made it online, I have made some money from it, and also gained confidence and learnt some cool new stuff such as how WordPress works, setting up databases, using FileZilla.
There seems to be more advantages than disadvantages, I would never have learned those things if I gave him such a high starting price which he then could have went elsewhere for.
However, this fixed-price thing basically turned out bad as I have spent so many hours working on it, re-designing mock-ups and also adding/editing stuff in the back end. All because I didn't have a set plan which I laid out in front of him, all of these things are learning curves so I'll make sure it doesn't happen again with my next client.
@Watson90, that does seem a bit low to me. How many hours did it take more or less? I think you are right that pricing is also dependent on how much you want to build a site, and what the client is willing/able to pay.
What I am saying is, IF I were to offer a fixed price range, each price would state quote clearly what would be included.
Let's just say that my lowest offering is...er $250.
You might get a few static pages all based on the same HTML framework (perhaps 1 column with a menu).
I'd throw in some SEO work / Google Analytics and if you don't have one, I'd offer to include a few logo designs.
The HTML would take almost no time (I'm not offering content don't forget) the work would be in discussing color choices and layout and any additional design work.
Extra options (chargeable) might be sliding panels / banners / twitter feeds etc.
How one prices these is down to the individual.
Sure, people will come back and say, "My friend's site was 1/3 of your cost" but then are they comparing apples & oranges?
Yeah @Paulie_D has got it in one, it's kind of a hard question as everyone has their own opinion and way of doing things.
@ethanmiller I agree it is low, but the stuff I learned whilst doing the whole thing are worth far more and will make me more money for future projects, so it's kind of the sacrifice I decided to make, the money never went far but I already work full-time as an ICT Technician, so I have guaranteed, monthly income. If i were a sole freelancer then I would have charged so much more etc.
I think I approximately spent about 15 hours in total, I designed him a website, he liked it, then didn't like it, then he wanted to sell prints of his photography, so I set him up a store, then he didn't want it etc etc. It was a long and grueling process.
I personally don't really like outcome of the design, it was initially dark tones with light grey text, but he wanted it basically inverting, but, you have to satisfy the client at the end of the day, he's happy.
@Watson90, I can see the logic of your decision. I like the site, though; it's a good clean design that looks nice at first impression and is easy to navigate.
Thanks @ethanmiller, don't get me wrong I don't totally hate the design, but I have such an obsessive manner when it comes to design, I just want it to be perfect. The initial design was a lot nice, but he said it was too dark, which was a fair point.
He at first based it on the Widescreen Theme from Graph Paper Press. And it looked really close until I was requested to change it up a little.
@ChristopherBurton, Huh? Adding your cost of living to hourly rate for selling service or product? I've never heard that one yet. Maybe you were just joking and I didn't get it :)
@jurotek No, I wasn't joking. If you set an hourly rate of $50/hr and your monthly expenses are $2500/mo but you're only producing work that covers $2000. You need to reset your hourly rate...or find another profession.
Note: Expenses doesn't cover 'gadgets' that you want (such as an iPad). It consists of your cost of living (rent/mortgage and other bills).
Ok! So you made $2,000 in a week based on 5 days 8 hour work day. But there are still 3 weeks left in a month. Wouldn't you want to get some more work for those remaining 3 weeks to cover $2,500 expenses for that month as you said, or you'll say, ef it, I just raise my hourly rate to cover that and see what happens.
I think @ChristopherBurton is saying that if you're only getting enough work that equates to $2,000/month but your debts are $2,500/month then you need to make your hourly rate higher to factor that other $500 in + anymore to make yourself a bit of profit.
I get paid from my full-time job around £1,100/month. That is enough to pay my all of bills and leaves me with about £300 to myself for football/clothes or whatever.
If i were to go fulltime freelancing then i would need to consider adjusting my hourly rate to ensure I have that amount of money still to be able to pay bills at least.
Maybe I am just completely misunderstanding what @ChristopherBurton ment by that. To me, cost of living is to maintain certain standard of living based on locality I work and live in. The wages you earn in certain profession whether working for someone or for yourself usually reflect that. Now, if I decide to live beyond my means which increases my cost of living, I just can't go and ask employer for more money or increase my hourly rate for service I provide to sustain that. That's a sure way to price myself out of competition.
That's where I agree and disagree with @ChristopherBurton. Find another profession to sustain what's beyond current and necessary cause increasing rates will not get you there. It will have an entirely opposite effect.
Agree to disagree, then. But I just have to say that I still think you're misunderstanding. And for whatever reason you're spitting out hypotheticals.
What if I live beyond my means or if I make most of my cost of living in a week. I shouldn't raise my rate for the remainder of those 3 weeks.
That's not what I'm saying at all.
If you're average income is $2k but your monthly expenses are $2.5k, you would would need to adjust your hourly rate to cover your monthly expenses. Or...you could just go on and watch your electricity get shut off, then your internet, next your phone. Sooner or later you won't have anything.
@jurotek What I would like to know is, how do you structure your hourly rate?
I don't structure my hourly rate anymore @ChristopherBurton. I work 40 hrs per week and it takes me about 72 to 80 hrs to cover all my costs.
The reason I made comment on this thread is that I had a flooring business with 9 employees while back . I sold product and provided installation services. My cost of living had nothing to do with prices I charged but it was marketplace that determined that. So basically what I am trying to say is this. If your income barely covers your cost of living, you do two things. You find different job as you suggested or you take on more work to make up for it. By raising prices above what's acceptable in marketplace will surely not accomplish that.
Respectfully saying, I think your response speaks for itself. We're talking about an entirely different industry. And where in my statements above have I said anything about raising hourly rates to an extent that are absurd? You know, it's not like I'm advocating for setting your rates to $500/hr. But It appears to me that you think we should all be setting our hourly rates very similarly with little margin and that's just not competitive.
I am not sure what is really at the bottom of this conversation, but it seems a bit aimless. I think you are both right. Of course, all people consider not only their base cost of living but also their desired cost of living in determining their rate -- insofar as they can. And of course if they set a rate that is too high, nobody may buy. This is just the situation represented in old supply-demand curve. Market prices are not fixed; they are dynamic.
My 2 cents is: it's a combination of both. I mentioned in another thread that I've actually lost projects for not charging enough. So there is certainly something to be said about ensuring you are close to market value. Otherwise what you'll encounter are clients that want to "play with the big boys" and want a price to match their idea of quality. The trick then is to make sure you add enough value so that you maximize that investment and deliver a far superior product.
I have my costs and what it takes to live in mind, but my goal is to far exceed that in the end of the year.
To swing back around to what @ethanmiller was saying (and I'm curious how other people view this as well) - how long have you been designing? I don't mean this with any disrespect, I just notice you've mentioned things like you frequently encounter "x" situation. It's just been my experience that after a year or two, I for the most part can estimate the majority of my projects by how long it'll take within an hour or two. Sometimes it goes over and sometimes it goes under, in which case I just continue to do more "value adds" with whatever hours remain. I would imagine you get to the point where customized or not, you pretty much know what it's going to take to build after talking to the client and understanding what they want.
@JoshWhite, I've not been designing very long, and that is undoubtedly a factor leading to uncertainty about my estimates. Still I've built a four sites now, some of them quite big projects. Also I'm not sure that your ability to predict with such accuracy is so commonplace among veterans. The article I linked above for instance admits the following:
Sometimes, as much logic as you try and throw at estimating a project, you end >up >with the feeling that you just don't know. You just don't know how long it's >going >to take. You just can't forsee what kind of roadblocks you are going to >come >across. You just don't know how well these new clients are going to >communicate >with you.
At this point you'll need to do a little reflection on previous projects and then >perhaps, pull a rabbit out of a hat. Uhm, let's say $8,500, that sounds about right. >That might read as unprofessional, but I'll bet you a dollar the majority of >agencies do a little rabbit-pulling in their estimates. It's not unprofessional at all; >In fact, I think it's the definition of professionalism. Professionals are people >educated, trained, and skilled in a field of work. That's what we are, and a part of >those skills are making good estimations at what to charge for our services.
I'm comfortable following this kind of a process, but am very curious about how other people manage this process. It would seem ideal to me to set up a scenario with a client where you can create some flexibility precisely because in my experience some things that appear to be easy, sometimes turn out hard, and vice versa. But in my experience so far two things happen with clients in initial negotiations. One, they want a fixed price, and two, they come back with some counter-estimate from some fictive alternative source (a friend had a friend who had a website built for them) that is radically cheap. I find it hard to have confidence in my estimates in this scenario. Perhaps you are right, and that is just a question of experience, but still perhaps some wise words of advice from a more experienced developer would be in order?
"two, they come back with some counter-estimate from some fictive alternative source (a friend had a friend who had a website built for them) that is radically cheap."
There's nothing wrong with negotiations but that doesn't mean it's acceptable for potential clients to lowball you. The type of clients you mentioned (above paragraph) are the ones I usually ignore emails from. It's a waste of time and if they want something "cheap", they can find it on Craigslist.
I don't charge on any rate other than the value of the project.
Say Microsoft wants you to undertake a website build for them that is no different from ma & pa's toy shop in functionality or requirements.
Do you charge the same amount? Or do you look at the respective value - i.e their potential for a return on investment.
Ma & pa might make £5000 in the first year of their site, Microsoft might make £5000 a minute.
One of those will gladly pay more than the other (a lot more) to achieve a higher value and return.
Sure you should include your hourly estimate and base quotes off of that, but you also must consider the value of the project and what the customer is expecting to pay for that value.
You also have to look at the service requirements. I.E - which will be more demanding of your time and require more advice, assistance and in depth discussion. That activity needs to be considered too and quoted fairly.
As others have mentioned, some customers expect to pay more - because of the value they're expecting in return.
I'm not suggesting that you charge bigger companies bigger money, but price your work fairly and recognise that they're not buying your time or even the site, they're buying the value of the project.
In my line of work I have a fixed cost of what I charge for all my sites. Just the other day I was asked to do a site, redesign of their old one, web 2.0 goodness. And right out of the blue I said that I may do it for $2000, that is with all that they are wanting. But it is subject to change, I gave them an estimate, and I am unsure of what the final design/development would be.
Any extra work outside of the contract, I charge hourly, normally $50-$65.
I feel like the "Rabbit Hat" pricing trick is a little inaccurate because there are all kinds of things that we almost absolutely know going into it. For example, setting up the server, installing the CMS, migrating the content, the basic page design, etc are things that are pretty much known quantities.
I definitely agree that you charge bigger companies more, but it's not a set value for me. I don't tack on an extra 20% or whatever it is - I'll add another 10 hours or so for project management, and another several hours in the design phase knowing that I'll have to work with more than 1 person. Having worked in a big company before, there are all kinds of additional layers you go through.
And by bigger I mean the difference between a small business and maybe something with 20-30 employees. I haven't yet worked with a company as large as Microsoft, but I imagine you would have a vastly different pricing structure.
I've found that knowing how to price a project almost always directly correlates with how you communicate with the client. In other words, if you do enough on the front end to fully understand the project, whose involved, what the goals are, what style it needs to be, number of pages, how the pages will work, etc you can price it very effectively. Guessing happens when you don't know what you're walking into.
The reason I do it this way instead of a floating cost is most medium sized businesses want a solid bid they can count on paying. They don't want to guess what it will be. They need to budget out all the costs and having an unknown cost can be stressful (even if the cost would be slightly lower). I also found that it created a little tension where some clients actively thought about the clock because they were worried about incurring more costs.
The key is always communication. Let's say you have in your proposal that you will work out a design. A lot of times the design period is within a pretty safe range of hours to complete. Sometimes it's over and sometimes it's under, so it's kind of a wash. But if you complete a design, and they come back and want it totally different, you've got to be open and simply tell them that's absolutely fine, but just be aware that we are incurring additional costs because that phase was already done and already approved. Most business owners will appreciate knowing the lay of the land and if they really want it different they will agree.
Get really good at communicating and you won't have many issues.
@ChristopherBurton & @JoshWhite - I also agree with charging bigger companies more, but only because they expect to pay more and there is inherently greater value in the outcome of their project.
However, don't fall into the trap of just adding a markup because a company is larger, similarly, don't just give a discount because a company is smaller. If they were referred to you via a smaller client (say one of their customers or suppliers) with an expectation of fair pricing and you quadruple your usual rate, you'll look like a tool.
I run a small recording studio when I'm not doing my full-time web-dev job. So I have to go out and quote projects much the same as I do when doing development work.
What I've found, in all cases in all forms of work, is that you often start out charging very little to get experience like @Watson90 did. Then you end up realizing that you need to up your rates, not only because you are a better developer/designer, but also to weed out the "bad" clients (who often take off and go to the next guy who does a website for $50).
Hi, What does everyone think about bulding a site for a fixed fee? -- i mean as opposed to working off of an estimate. Do other people find that clients prefer that? Is it a bad idea? If so, how can one explain to clients the advantages and reassure them that costs will not explode? Or do people here often build sites at fixed cost?
I think most people will come out with a fixed cost, but then in their terms and conditions state that if any changes need doing after the final user requirements have been agreed on then charges will apply.
You also have to know EXACTLY what you are offering at that fixed cost and what would be included.
It would be an idea to have a range of fixed rates depending on the complexity of each site.
A decent portfolio / price list would make it easier to manage clients' expectations.
I know this isn't the best website to show this on in terms of design etc but you can get the idea of what @Paulie_D is trying to say;
http://www.cheapwebdesign.co.uk/web-design-packages.php
Yep...that's what I mean and I would lay odds that those 'cheap' options are all running of basic templates.
Although I still laugh at any company offering a free 'flash' banner....soooo last century. :)
Sliding banners, complex JS and clever effects should all cost more.
I'm only just starting to learn the basics of using @media for different viewport sizes, would you say that's an additional skill/cost which should be agreed for by the client, or would you class that as an optional extra?
Obviously when you're creating a website, you want it to look good on an array of screens not just for their sake but obviously for yours since you will be the one putting it in your portfolio.
Hmm...I'd add it as a option (at a extra cost).
Not every client wants (or needs) a tablet or smartphone site.
Also, not every site needs to go in your portfolio...only the good looking ones that show off what you can do.
Hmmmm. I have to say I'm a bit surprised by the answers coming back here. Boiler plate designs + set costs? Is this really how people on this site go about their business. The situations I confront most often -- and I am new at this -- where a client comes to me with a design that is highly customized, with more or less special requirements, that really don't fit within any fixed framework based, say, on the number of pages. The number of pages a site has really doesn't seem to be much of an indicator of the time required, as it really depends what is going on those pages: is the site CMS or not, what kind of data framework needs to exist underneath, are the pages static or not, and so on and so on... I usually can only estimate the number of hours a site will take based on the amount of time other sites have taken.... Hence my hesitance to operate at a fixed price that could either end up being too high or too low... Other thoughts?
This seems relevant: http://css-tricks.com/estimating-projects/
@ethanmiller I'm not arguing FOR a fixed cost, just saying that IF you offer it then you have to know up-front what you are actually offering.
Overall, I would absolutely be in favour of discussing with the client their precise requirements and coming up with a custom price for that specific project.
@Paulie_D, cool, ok. I guess my question was more along the lines, then, of how do you come up with a fixed price, when you are in fact quite unsure how long something will take? Is it just really a rather messy mixture of a rough estimate combined with what a client is willing/able to pay? I.e. negotiation around a rough estimate? The problem I face is that I am still not sure how long a site will take to build. Sometimes things that I think will be very time consuming turn out to be quite easy, and vice versa. Also I frequently encounter a situation in which I quote a price and then a client comes back and says, oh well, I have some friend who said they had a whole site built for $x -- where x is like 1/3 of what I've quoted.
I have just read that article @ethanmiller, that does help me just as much as you as I'm just starting to try and get my name out there for some freelance work, and when it comes to pricing, I am awful.
I charged £100 to my friend for this website which has been coded from scratch and integrated with WordPress so he can make changes.
Many people I have spoke to said I was stupid for only charging for £100, but as many others said and I say, it was my first ever website that has actually made it online, I have made some money from it, and also gained confidence and learnt some cool new stuff such as how WordPress works, setting up databases, using FileZilla.
There seems to be more advantages than disadvantages, I would never have learned those things if I gave him such a high starting price which he then could have went elsewhere for.
However, this fixed-price thing basically turned out bad as I have spent so many hours working on it, re-designing mock-ups and also adding/editing stuff in the back end. All because I didn't have a set plan which I laid out in front of him, all of these things are learning curves so I'll make sure it doesn't happen again with my next client.
@Watson90, that does seem a bit low to me. How many hours did it take more or less? I think you are right that pricing is also dependent on how much you want to build a site, and what the client is willing/able to pay.
What I am saying is, IF I were to offer a fixed price range, each price would state quote clearly what would be included.
Let's just say that my lowest offering is...er $250.
You might get a few static pages all based on the same HTML framework (perhaps 1 column with a menu).
I'd throw in some SEO work / Google Analytics and if you don't have one, I'd offer to include a few logo designs.
The HTML would take almost no time (I'm not offering content don't forget) the work would be in discussing color choices and layout and any additional design work.
Extra options (chargeable) might be sliding panels / banners / twitter feeds etc.
How one prices these is down to the individual.
Sure, people will come back and say, "My friend's site was 1/3 of your cost" but then are they comparing apples & oranges?
Yeah @Paulie_D has got it in one, it's kind of a hard question as everyone has their own opinion and way of doing things.
@ethanmiller I agree it is low, but the stuff I learned whilst doing the whole thing are worth far more and will make me more money for future projects, so it's kind of the sacrifice I decided to make, the money never went far but I already work full-time as an ICT Technician, so I have guaranteed, monthly income. If i were a sole freelancer then I would have charged so much more etc.
I think I approximately spent about 15 hours in total, I designed him a website, he liked it, then didn't like it, then he wanted to sell prints of his photography, so I set him up a store, then he didn't want it etc etc. It was a long and grueling process.
I personally don't really like outcome of the design, it was initially dark tones with light grey text, but he wanted it basically inverting, but, you have to satisfy the client at the end of the day, he's happy.
@Watson90, I can see the logic of your decision. I like the site, though; it's a good clean design that looks nice at first impression and is easy to navigate.
Thanks @ethanmiller, don't get me wrong I don't totally hate the design, but I have such an obsessive manner when it comes to design, I just want it to be perfect. The initial design was a lot nice, but he said it was too dark, which was a fair point.
He at first based it on the Widescreen Theme from Graph Paper Press. And it looked really close until I was requested to change it up a little.
Use your hourly rate for the time it costs you to create the site and add a profit at the end.
@ChristopherBurton I think that's the simplest answer I've seen but it just seems to make sense.
It really is just so hard to put a price tag on yourself especially when starting out in a bit of freelance work.
@Watson90 You also need to factor in your cost of living and other expenses for your hourly rate.
@ChristopherBurton, Huh? Adding your cost of living to hourly rate for selling service or product? I've never heard that one yet. Maybe you were just joking and I didn't get it :)
@jurotek No, I wasn't joking. If you set an hourly rate of $50/hr and your monthly expenses are $2500/mo but you're only producing work that covers $2000. You need to reset your hourly rate...or find another profession.
Note: Expenses doesn't cover 'gadgets' that you want (such as an iPad). It consists of your cost of living (rent/mortgage and other bills).
Ok! So you made $2,000 in a week based on 5 days 8 hour work day. But there are still 3 weeks left in a month. Wouldn't you want to get some more work for those remaining 3 weeks to cover $2,500 expenses for that month as you said, or you'll say, ef it, I just raise my hourly rate to cover that and see what happens.
@jurotek What are you talking about? You're completely misunderstanding.
I think @ChristopherBurton is saying that if you're only getting enough work that equates to $2,000/month but your debts are $2,500/month then you need to make your hourly rate higher to factor that other $500 in + anymore to make yourself a bit of profit.
I get paid from my full-time job around £1,100/month. That is enough to pay my all of bills and leaves me with about £300 to myself for football/clothes or whatever.
If i were to go fulltime freelancing then i would need to consider adjusting my hourly rate to ensure I have that amount of money still to be able to pay bills at least.
Maybe I am just completely misunderstanding what @ChristopherBurton ment by that. To me, cost of living is to maintain certain standard of living based on locality I work and live in. The wages you earn in certain profession whether working for someone or for yourself usually reflect that. Now, if I decide to live beyond my means which increases my cost of living, I just can't go and ask employer for more money or increase my hourly rate for service I provide to sustain that. That's a sure way to price myself out of competition.
That's where I agree and disagree with @ChristopherBurton. Find another profession to sustain what's beyond current and necessary cause increasing rates will not get you there. It will have an entirely opposite effect.
Agree to disagree, then. But I just have to say that I still think you're misunderstanding. And for whatever reason you're spitting out hypotheticals.
What if I live beyond my means or if I make most of my cost of living in a week. I shouldn't raise my rate for the remainder of those 3 weeks.That's not what I'm saying at all.
If you're average income is $2k but your monthly expenses are $2.5k, you would would need to adjust your hourly rate to cover your monthly expenses. Or...you could just go on and watch your electricity get shut off, then your internet, next your phone. Sooner or later you won't have anything.
@jurotek What I would like to know is, how do you structure your hourly rate?
I don't structure my hourly rate anymore @ChristopherBurton. I work 40 hrs per week and it takes me about 72 to 80 hrs to cover all my costs.
The reason I made comment on this thread is that I had a flooring business with 9 employees while back . I sold product and provided installation services. My cost of living had nothing to do with prices I charged but it was marketplace that determined that. So basically what I am trying to say is this. If your income barely covers your cost of living, you do two things. You find different job as you suggested or you take on more work to make up for it. By raising prices above what's acceptable in marketplace will surely not accomplish that.
Respectfully saying, I think your response speaks for itself. We're talking about an entirely different industry. And where in my statements above have I said anything about raising hourly rates to an extent that are absurd? You know, it's not like I'm advocating for setting your rates to $500/hr. But It appears to me that you think we should all be setting our hourly rates very similarly with little margin and that's just not competitive.
I am not sure what is really at the bottom of this conversation, but it seems a bit aimless. I think you are both right. Of course, all people consider not only their base cost of living but also their desired cost of living in determining their rate -- insofar as they can. And of course if they set a rate that is too high, nobody may buy. This is just the situation represented in old supply-demand curve. Market prices are not fixed; they are dynamic.
My 2 cents is: it's a combination of both. I mentioned in another thread that I've actually lost projects for not charging enough. So there is certainly something to be said about ensuring you are close to market value. Otherwise what you'll encounter are clients that want to "play with the big boys" and want a price to match their idea of quality. The trick then is to make sure you add enough value so that you maximize that investment and deliver a far superior product.
I have my costs and what it takes to live in mind, but my goal is to far exceed that in the end of the year.
To swing back around to what @ethanmiller was saying (and I'm curious how other people view this as well) - how long have you been designing? I don't mean this with any disrespect, I just notice you've mentioned things like you frequently encounter "x" situation. It's just been my experience that after a year or two, I for the most part can estimate the majority of my projects by how long it'll take within an hour or two. Sometimes it goes over and sometimes it goes under, in which case I just continue to do more "value adds" with whatever hours remain. I would imagine you get to the point where customized or not, you pretty much know what it's going to take to build after talking to the client and understanding what they want.
@JoshWhite, I've not been designing very long, and that is undoubtedly a factor leading to uncertainty about my estimates. Still I've built a four sites now, some of them quite big projects. Also I'm not sure that your ability to predict with such accuracy is so commonplace among veterans. The article I linked above for instance admits the following:
I'm comfortable following this kind of a process, but am very curious about how other people manage this process. It would seem ideal to me to set up a scenario with a client where you can create some flexibility precisely because in my experience some things that appear to be easy, sometimes turn out hard, and vice versa. But in my experience so far two things happen with clients in initial negotiations. One, they want a fixed price, and two, they come back with some counter-estimate from some fictive alternative source (a friend had a friend who had a website built for them) that is radically cheap. I find it hard to have confidence in my estimates in this scenario. Perhaps you are right, and that is just a question of experience, but still perhaps some wise words of advice from a more experienced developer would be in order?
@ethanmiller
"two, they come back with some counter-estimate from some fictive alternative source (a friend had a friend who had a website built for them) that is radically cheap."
There's nothing wrong with negotiations but that doesn't mean it's acceptable for potential clients to lowball you. The type of clients you mentioned (above paragraph) are the ones I usually ignore emails from. It's a waste of time and if they want something "cheap", they can find it on Craigslist.
I don't charge on any rate other than the value of the project.
Say Microsoft wants you to undertake a website build for them that is no different from ma & pa's toy shop in functionality or requirements.
Do you charge the same amount? Or do you look at the respective value - i.e their potential for a return on investment.
Ma & pa might make £5000 in the first year of their site, Microsoft might make £5000 a minute.
One of those will gladly pay more than the other (a lot more) to achieve a higher value and return.
Sure you should include your hourly estimate and base quotes off of that, but you also must consider the value of the project and what the customer is expecting to pay for that value.
You also have to look at the service requirements. I.E - which will be more demanding of your time and require more advice, assistance and in depth discussion. That activity needs to be considered too and quoted fairly.
As others have mentioned, some customers expect to pay more - because of the value they're expecting in return.
I'm not suggesting that you charge bigger companies bigger money, but price your work fairly and recognise that they're not buying your time or even the site, they're buying the value of the project.
In my line of work I have a fixed cost of what I charge for all my sites. Just the other day I was asked to do a site, redesign of their old one, web 2.0 goodness. And right out of the blue I said that I may do it for $2000, that is with all that they are wanting. But it is subject to change, I gave them an estimate, and I am unsure of what the final design/development would be.
Any extra work outside of the contract, I charge hourly, normally $50-$65.
@andy_unleash
"I'm not suggesting that you charge bigger companies bigger money"
I would.
@gurujust1n
How can you automatically give out a number without doing research on the project?
I feel like the "Rabbit Hat" pricing trick is a little inaccurate because there are all kinds of things that we almost absolutely know going into it. For example, setting up the server, installing the CMS, migrating the content, the basic page design, etc are things that are pretty much known quantities.
I definitely agree that you charge bigger companies more, but it's not a set value for me. I don't tack on an extra 20% or whatever it is - I'll add another 10 hours or so for project management, and another several hours in the design phase knowing that I'll have to work with more than 1 person. Having worked in a big company before, there are all kinds of additional layers you go through.
And by bigger I mean the difference between a small business and maybe something with 20-30 employees. I haven't yet worked with a company as large as Microsoft, but I imagine you would have a vastly different pricing structure.
I've found that knowing how to price a project almost always directly correlates with how you communicate with the client. In other words, if you do enough on the front end to fully understand the project, whose involved, what the goals are, what style it needs to be, number of pages, how the pages will work, etc you can price it very effectively. Guessing happens when you don't know what you're walking into.
The reason I do it this way instead of a floating cost is most medium sized businesses want a solid bid they can count on paying. They don't want to guess what it will be. They need to budget out all the costs and having an unknown cost can be stressful (even if the cost would be slightly lower). I also found that it created a little tension where some clients actively thought about the clock because they were worried about incurring more costs.
The key is always communication. Let's say you have in your proposal that you will work out a design. A lot of times the design period is within a pretty safe range of hours to complete. Sometimes it's over and sometimes it's under, so it's kind of a wash. But if you complete a design, and they come back and want it totally different, you've got to be open and simply tell them that's absolutely fine, but just be aware that we are incurring additional costs because that phase was already done and already approved. Most business owners will appreciate knowing the lay of the land and if they really want it different they will agree.
Get really good at communicating and you won't have many issues.
@ChristopherBurton & @JoshWhite - I also agree with charging bigger companies more, but only because they expect to pay more and there is inherently greater value in the outcome of their project.
However, don't fall into the trap of just adding a markup because a company is larger, similarly, don't just give a discount because a company is smaller. If they were referred to you via a smaller client (say one of their customers or suppliers) with an expectation of fair pricing and you quadruple your usual rate, you'll look like a tool.
I run a small recording studio when I'm not doing my full-time web-dev job. So I have to go out and quote projects much the same as I do when doing development work.
What I've found, in all cases in all forms of work, is that you often start out charging very little to get experience like @Watson90 did. Then you end up realizing that you need to up your rates, not only because you are a better developer/designer, but also to weed out the "bad" clients (who often take off and go to the next guy who does a website for $50).