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How Much Should You Charge for a Website?

Published by Chris Coyier

This question was sent in by Tom Nowell.

Tom said he was a university student and has been building websites for people lately. He says that he does it on his own time so it doesn't cost him anything, so he has no idea what to charge.

All of us have faced this problem before. It's a bit of an awkward situation. You are putting a price tag on yourself and it feels weird. Most of us are modest fellows (and gals) and tend to want to keep it cheap so we don't scare away the client. There is such a thing as "sticker shock" when clients look at an estimate for the first time and can easily walk away. So the trick is figuring out how badly you need the client and balancing it with how valuable you think you are. Eventually, you'll get to the point where you charge what you charge, take it or leave it, but most university students probably aren't quite there yet =)

Tom said it "doesn't cost him anything", and we all know what he means, but we should make very clear that is just not true. All that work you are doing costs you the most valuable thing you have: your time.

It is a little hard to talk hard numbers here since this will vary wildly from agency to agency, firm to firm, freelancer to freelancer. But let's just throw some out there just for fun. $75 / hour. That's a fair rate, I think, for a reasonably skillful freelance web designer.

Does that seem high to you? It might, since very few in-house designers make even half that. There are some important things to consider as to why the freelance rate is (and should be) so much higher.

  • You aren't an employee. That means they aren't giving you health insurance, they don't need to buy you a computer, they don't have to train you, the list goes on... Employees are expensive. You are cheap in comparison.
  • They need you. Even though employees are expensive, if they already had one that could do what they needed done, they would just have them do it. It might not be a skill issue, it could just be time.
  • No long-term commitment. An in-house designer probably works 40-hour weeks. They have some degree of job security and steady paychecks. Those are valuable things that freelancers don't get.
  • You're good! That's why they want you, right?

So let's say that $75 / hour is a BASE charge. There are things that could effect that price up or down.

  • How big is the project? If it's a huge long term project, perhaps you could bring it down a bit.
  • Is it for friend/family? Totally up to you, but most of us try to hook up our friends. You may have similar rules for non-profits and the like, but don't let altruism send you to the poorhouse.
  • Are they a long-time client or a first-time client? Personally I don't think you should charge any different here, but it's worth considering. Do you go cheap to get a first time client? That would set a bad precedent for more work later. And going high might lose them in the first place. One thing you should definitely consider is charging some percentage of the estimate up front for first-time clients.
  • Can you handle this project 100% on your own? Will you need to outsource? Are you a designer that may need to outsource some of the custom programming work? Are you a developer that is going to need to buy some design work to get started?
  • To what degree can you recycle things you've already done? If you happen to know that this project is really similar to things you done in the past and you will be able to knock it out very quickly, you may want to pass those savings along =) Or, that could just be your reward for being so efficient.
  • How fully are you going to commit to this? Tom is a University student, so he's not going to be available all day every day for his project. He's also learning as he goes (well, we all do that, but you know what I mean). If you can only commit a few hours on a Saturday to a freelance project, you probably shouldn't charge as much as you would if you could fully commit to it.

Another thing I want to pack in here is the concept of "charging by the project" instead of "charging by the hour". In my experience, clients love paying by the project, and designers hate it. Clients like knowing exactly what their bill is going to be, instead of the arbitrary nature of "hours". The problem is, you just never know exactly how a project is going to go when you start it. The client themselves might send you through rounds and rounds and rounds of changes and that "charge by the project" idea really starts to suck. In my experience, charging by the project works better for print work.

What do other people say?

Just for fun, I asked on Twitter: Do any of you freelancers have a hard hourly-rate, no matter what client?

Arjan Terol said:

Quick and dirty: $100 / (client type * job description) + time + pressure - freedom - fun factor =

Benjamin Sterling said:

I charge one hourly rate for all work, it helps keep me sane.

Alen Grakalic said:

No matter how hard I try to keep all of my clients at equal level, some are "more equal" than others, so is the hourly rate

Mike Susz said:

I don't vary my rate so much by client, but by type of work and turnaround time. rush job = +money, specialized work = +money.

Donna Donohue said:

Yes I do. No bumping up for big guys and for lil guys, well, I am in their ballpark.

Selene M Bowlby said:

Yes, $100/hr though I give a discount to close family/friends. I usually bill per project though (use hrly rate as basis)

Cerven Cotter said:

Yeah, I have a standard hourly rate, but most work is quoted per project.

(Thanks for all the responses. There were more than printed here, I just kinda picked and chose a few.)

It's all a lot to think about, but above all, just remember that you skill and time ARE worth money and you should charge appropriately. You're own enthusiasm and quality of work will suffer if you don't.

Comments

  1. oliver
    Permalink to comment#

    Chris thank you for answering this question and thank you Tom Nowell for asking it. Although in my opinion this question is fairly common answers for it arent always that common or easy to understand.

    I myself am a uni student and do freelance work on the side and putting a price on my valued time and skill has always been unbelievably hard especially when there is so much competition these days (you really dont want to feel like your giving your services away but at the same time you need to earn some money) Good repuatation also helps, somtimes its worth doing the jobs that seem too cheap just to get some really good rep as this helps with other jobs.

    The easiest way i have found so far to charge for work is to base the price on :
    - complexity of design (if xhtml and css coding)
    - complexity of project ( if somthing php bassed)
    - time frame its required to be completed ( smaller deadline = high price tag)

    Its probably not the best method to use but i belive its a good starting base unless your charging per hour.

    This was a really interesting read and has answered the exact question i have gone over in my mind time after time.

    Oliver

  2. Permalink to comment#

    I’m so glad you posted this. It’s great to get some input, and some validation that I have not been charging nearly enough. The problem I have is summed up beautifully in your last line “…enthusiasm and quality of work will suffer…” That is so true- sometimes things get dicey, and my inner brain wants to say “What do I care? I’m only making $xx on this project anyway.” I have been trying to charge per project, and guesstimate how many hours something will take me- but my hourly rate is really low, and it ALWAYS ends up taking more time than I thought. I try to learn from each project and adjust my pricing and time estimates accordingly.

  3. I’m sorry to say, but $100/hour is in my opinion much too expensive.

    You say that ‘you are cheaper than an employee’. Do you pay a web developer $17.600 a month? (Going from 22 working days at 8 hours).

    Does that make sense to you? Do you need to make that per month? Without taking financial risk.

    I think it’s an example of the structural overpricing of development resources. Of course you can ask what you want, but overpricing hurts project feasibility. Especially cause freelancers often don’t want to take risk. Which is even more annoying for the entrepreneurs who want to make something happen.

    (BTW I also have always fought consultants and other MBA’s with their ridiculous charges).

    I truly believe that overpricing hurts entrepreneurship and therefor yourself.

    And I also ‘eat that dogfood’ (see the mission statement on my company’s site)

    http://www.exvo.com/US/en-US/why-exvo

    • me
      Permalink to comment#

      I know this is VERY old. Still, anyone happening upon this comment: obviously Danny didn’t read the part about not being a full-time employee (insurance, 401k, PTO, other benefits). No you don’t pay a developer 18k/month. But a Freelance developer is probably not working a full 40 hours, and the cost of taxes, technology, travel, and insurance and everything else is not factored in.

  4. Permalink to comment#

    I find the best strategy is to charge a flat $1,000 plus $200 per page.

  5. Chris,
    Thanks for the great insight. I spent a fair amount of time recently really trying to pin down “rates” and what to charge for a few projects I am lining up. This article really helps look at different aspects of the quote process.
    thanks again.

    ~ Aaron I

  6. I think it’s a better strategy to charge on a per-project basis rather than per hour. My rates on a typical project start at $1500 and go up from there based on scope. If it’s just maintenance (on stuff I’ve done or been handed some others work) I charge by the hour.

    But for new projects, it makes more sense from a business perspective to charge by project. Think of this scenario: Someone wants a new blog and design. You’re a pro at setting up WP and coming up with a new design and could crank it out in a day and a half. At $75/hr that’s $900. Same project, but you quote $2000 (they know your rates start at $1500 but you’ve added to the bottom line for mark-up, etc).

    Assuming you’re in the States and run a LLC, you should be squirreling away at least 40% for taxes. So that eats away your take-home rather quickly.

    Anyway, that’s just my 2 cents. I’ve read a lot on-line regarding how to price web projects and there’s really good arguments for both points of view!

    Thanks,
    Jeff

  7. I agree with Doug C. that approach makes the most sense to me.

  8. Permalink to comment#

    $100 an hour is higher than I charge – but not by too much. The reason why you’re saving money for your client is that they pay you for what you need – not 40 hours a week for the entire year. If you do an 80 hour project and make $8000, sure it’s more than they would pay an employee for 2 weeks of work, but you’re done for probably the year, while an employee keeps getting paid, and insurance, and taxes.

    I bill per project based on an estimation of time. I also charge a different rate for design time as I do for production time. Sometimes the client is an agency so I get delivered a psd with everything laid out. Basically I don’t have to think. I also want to reward an agency with lower rates because they’ll have a higher chance of being a repeat customer, and you can’t beat doing the work for them. They interface with the true client, they deliver all the images, layouts, etc. If I charge a company based on $80 an hour, I’ll charge an agency based on $40, and I’ll usually bill them straight up for time when the project is complete.

  9. Permalink to comment#

    Interesting post… I believe in having an hourly price for miscellaneous stuff and providing clients with a full project quote on the projects that are pretty standard (blog design, site design, etc)

    I have been doing web design/development for about 5 years and my hourly rate is right around $70/hour…

  10. Permalink to comment#

    Great post…this is something I struggle with all the time. I want to make good money, but at the same time want to give the client a good deal. The key is to find a happy medium.

  11. Great post – pricing really is a difficult (and touchy) subject!

    I’m one that charges per-project (I only charge hourly for maintenance type items like updates, etc.). It’s tough when you’re starting out, but after working on similar projects after a while you’ll get a good idea of how long certain tasks take, in order to charge accordingly. For example site design vs developing a static site vs developing a WordPress driven site.

    I’ve found that you win some and you loose some with per project rates, but for the most part it evens out. And if you realize your time estimates are consistently off, just adjust your project rates every once in a while.

    What I find very helpful to be sure you’re not taken advantage of is to specify how many design concepts and revisions are included in your base price. I include 3 design concepts with 3 rounds of revisions each. Yes, I’ll often do more without additional charges, but this way I know I’m protected. Because there are people out there that will keep going… and 20 revisions later they’re still not satisfied. Stating a limit from the start helps to keep you protected.

    As far as Danny de Wit’s comments on $100/hr being too high – I have to agree with Jason’s response. When figuring out your hourly rate you have to keep in mind that not ALL of your time is billable. If you’re doing this full time, you’ll spend 40-50 hours a week working, but on average only half of that time is billable – the rest of the time is spent on administrative aspects like billing, writing proposals, marketing yourself, etc. And Jason’s all too right on the big chunk of that income that gets shipped straight off to Uncle Sam. Combined with overhead of office and computer supplies, etc. that $100/hr dwindles down very quickly.

    BTW FreelanceSwitch has great information on how to determine what your hourly rate should be.

    Of course experience and talent play a large part in this too. I’ve been doing this for over 10 years and am now running my own design business full time – you have to adjust your rates for your own level of experience and time commitment, etc. It also depends on who your primary clientele are, as well. If you primarily work for mid-large size business and corporations, they will obviously be better able to pay more for a site than someone just starting their own business from home “on the side” (which is what I did for many years before recently taking the “plunge” myself).

    Anyway – GREAT article – very good food for thought! Pricing is one of the most difficult things any freelancer/business owner has to do.

    (And thanks for mentioning my tweet, too!)

  12. Permalink to comment#

    I always send a quote for the (time I think I need * hourly rate) + standard costs like hosting and maybe some bought material like stock images and pre-baked scripts.

    Works fine for me.

  13. Permalink to comment#

    I have found a combination of both a pricing structures works best for me. After consulting with a potential client and discussing their wants and needs I summarize the project and produce a flat rate for all the work that is in the summary and anything above and beyond the scope of the project is charged hourly.

    This technique is a great deterrent for scope creep, when the client asks for those huge last minute changes you can always be obliged for the extra work but point them to the project summary making sure to let them know that because it was not accounted for in the summary you will have to charge them by the hour to do the requested changes.

    They soon change their tune and if they don’t you are still getting paid for your time.

  14. Permalink to comment#

    Cheers for including my ‘tweet’.

    Although I charge on a project by project basis, it is based around my hourly rate. My quotes are fairly comprehensive outlining what will be done for the price quoted. I then include my hourly rate if the need for extra things pop up.

    This has really worked quite well for so far.

  15. Guess it depends on your market. Also depending on how many sites you do u can make time savings be recycling code. We built a custom content management system which allows us to save loads of time on the coding side of things. Most clients dont need anything custom. All we have to spend time on is the look of the site.

    Our target market is small business and we change £101+vat and then hosting but there are some addon costs. I find it difficult to work out and hourly rate for completly bespoke jobs as its hard to know when the timer should stop and start

    http://www.101poundwebsite.com

  16. Permalink to comment#

    You say that ‘you are cheaper than an employee’. Do you pay a web developer $17.600 a month? (Going from 22 working days at 8 hours).

    Does that make sense to you? Do you need to make that per month? Without taking financial risk.

    As a freelancer, you spend most of your time prospecting for new clients, sending them proposals and quotes, filling contracts, contacting them by email, phone or skype, recontacting them because they don’t get back to you, publishing new articles on your blog and releasing free stuff such as free WordPress/Joomla themes, plugins… (this takes 20% of my time and if I don’t do it I don’t get new visitors – * NO VISITORS = NO CUSTOMERS *)

    So, at the end, as a freelance web designer, you are not working 20 days per months, but only ~5 days/month on projects. So the question is how much should you earn during these five days in order to get your monthly revenue?

    Let’s say you want to earn $3000 (gross) per month (this price should include anything you will need to buy for your work: computer, phone, fax…):

    5 days x 8 hours = 40 hours

    $3000 / 40 hours = $75/hours

    This is just to give you a rough idea if you decide to charge a hard hourly rate. This calculation is pretty accurate.

    And don’t charge a low rate when starting out. Your early customers won’t follow you the day you will have to increase your rates because you can’t pay the bill at the end of the month anymore. Believe me! I made this mistake and lost many clients.

  17. Permalink to comment#

    I always quote out a new project but for updates I stick with $75/hr for graphic design and $95/hr for HTML; I will give an estimate of how many hours will be performed for an update, but I’ve found that this covers my butt and I haven’t had a loyal customer complain because they get what they ask for.

  18. Permalink to comment#

    I try to quote each portion of a job. Rather than giving a customer an open hourly rate. Customers like to see a bill of specific goods and services for the money they are spending. I think quoting it out like that is the fairest way for them. I base the quote on an hourly rate though. I’ve been stuck on some jobs that took longer than I anticipated, but it doesn’t happen often. I helps me quote better on the next job. Bill of goods or services also allows me to requote if they request something later on into the project that wasn’t on the original quote.

  19. Really insightful responses here. I find it a fascinating discussion.

    However, I still don’t get some of the rationale that is used to come up with these rates. I’m playing devil’s advocate here:

    Some of them now include:

    Not all your hours are billable

    Sure. So what? Why should I pay a higher rate per hour because of this?

    There’s organizational overhead

    Sure. Why should I pay for that?

    You don’t have to hire long term

    This is an interesting one too. Leaving the legal issues beside, why should I pay more because I don’t have to hire you long term?

    This points mainly enforce my remark that hiring a freelancer is more expensive then an employee at those rates. A lot more expensive.

    My main issue with this, is not that this isn’t true/required/smart from the perspective of the freelancer, but that’s just it: it’s all from the freelancer’s perspective.

    Shouldn’t resources be priced based simply on the market? Simply say good developers are expensive?

    Still at fi 100$ almost any project of some scale quickly becomes too expensive in relation to risk/reward, unless the freelancer takes responsibility for the result.

    Just some more thoughts.

  20. freelance designer
    Permalink to comment#

    hi chris,

    great article + discussion over here. I am working as freelancer for last few months. Web design and graphic design are my specialized areas. Recently i did a logo design project with some reputed company.

    I am in very difficult situation. I just want to know that have you ever faced this [following] kind of situation. or how will you react in following situation as freelancer.

    ” The scenario is that client asked me quote for logo design and accepted my basic offer which was suiting their budget. Basically, I got this project through my friend’s relation and so I was expected to do some extra ! in their view. I also gave some discount in terms of work which ever I found fair for me and them. It was like “if the logo package is advance – 3 concepts – 3 revisions on one design and final payment after submitting work. then i gave them some extra revisions and concepts in same charges..”
    I was ok with the deal .. but here comes the addition. They asked me for designing stuff for their stationary, info books, brochures and all.. they just kept me adding on phone on email.. no talk about quote and payment charges or else.

    As they paid me advance before I start working on logo I assumed that they will pay the bill whatever the final charges come out. I kept them updating about that and warned in soft words. as deadline came nearer they added stuff over and gave reply always late after reminding by me on phone.
    [ i am sorry chris, i know this is not the counseling session but i just want to share with you senior people. ]
    i worked overnite and submitted work. Then the bill. Their event worked & had great success. they achieved their goal and all, but when it comes to my payment they said that they don’t have used my work (!) as they didnt liked it and had no time to change it. so now they are paying less.. As freelancer I cant force them as I have not done any agreement. now my friend is not working for me at all, he is not picking up my phones also..

    what will you do in this situation friends?

    please reply.

  21. Permalink to comment#

    Not all your hours are billable

    Sure. So what? Why should I pay a higher rate per hour because of this?

    That’s true but as a freelancer, if you don’t charge that much you simply can’t survive.

  22. That’s true but as a freelancer, if you don’t charge that much you simply can’t survive.

    Hmm.. oddly enough that same rate holds back lots of work/projects.

    There must be a way to bring the two together in a way that works for both parties.

    For instance easily have enough work for 2 full-time designers and/or developers but at a 100$ I would never ever hire them cause the risk is enormous.

    What gives?

  23. That’s true but as a freelancer, if you don’t charge that much you simply can’t survive.

    @jeeremie – Absolutely true!

    @Danny – A business owner with designers as employees (say a design firm for example) take the same thing into consideration when setting their rates for design work for clients of their own. They just have the addition of employee fees to calculate into their overhead. That big firm w/ several design/developer employees will have more overhead than a freelancer and will often have a higher rate than a freelancer alone.

    @Freelance Designer – I’m sorry to see you went through that! Unfortunately many of us have to go through a tough case like this as a (bad) learning experience.

    One thing I’ve learned – never start any work without a written contract and 50% deposit. And never give final files to the client without payment of the balance in full.

    Now, I do this for new clients – existing clients that I have established a good relationship with, I’ll do additional work for them and bill them after the fact. But first timers that you don’t really ‘know’ yet you should stick with a base set of rules to prevent things like this happening.

    I’m not sure what you can do about it now, but for next time, if they start bringing up new items (like the stationary you mention, etc.) and they don’t bring up price… you should bring it up to them first.

    Let them know that’s beyond the original / agreed upon project and quote them an estimate for the new work. If they want the work that much they will be OK with it, and you’ll get paid for your time.

    I hate seeing when other freelancers get taken advantage of. It was not right for them to do this. :(

  24. freelance designer
    Permalink to comment#

    thanks chris,

    for this real quick answer and support. I will keep these things in my mind and keep in touch with you bro. I am regular visitor & fan of your screen casts and tutorials, thanks for sharing them too ! . I too like to share knowledge. I am following you on twitter, please follow me too !
    with best wishes

    :)

  25. freelance designer
    Permalink to comment#

    o i am sorry .. my bad.. thank you Selene .. actually i am not friendly with this forum so .. i thought it was chris ! :P

  26. From beginning to the date, i’m still unable to figure out the amount to be charged for each website. As my country is India where people & their work still costs very low. I charge as per the client’s paying efficiency. Generally, we charge 400 USD for a Dynamic Website with 500 Products on it. My company is BretDreams Website Designing & Development, Jodhpur.

    So is the amount enough or not?

  27. Permalink to comment#

    This is a great post and something all designers have to ask themselves during their careers. Of all the things that I learned from my father the one lesson that I use as my mantra is this:

    There is only one thing in your life
    that is for sale…your time. It’s a
    valuable commodity and you should be
    compensated for it accordingly.

    You need to make sure you’re getting paid for your time spent on the project. I work a full-time job and run a successful design business from home to supplement my income. That time spent working from home takes me away from my kids and is valuable time. If a client wants my services, they’ll pay my rate or they won’t…bottom line.

  28. Permalink to comment#

    The magical “what to charge?” question.

    I have always done “per project” quotes, but I am now leaning towards an hourly rate. It would really help when a client asks if you can “change this” or “see if this works here” and you can say “that will be about 3.5 hours”. It may make them re-think their revision process.

  29. @Danny:
    You should pay a freelancer more because, if you’re doing your homework before outsourcing, you’re hiring a specialist. This is an individual with a highly developed skillset in a relatively narrow field, and whose skills are needed on a project with limited duration. You’re paying more for the increased efficiency, experience, and effectiveness of an expert.

    For example: a colleague of mine was recently brought in as a consultant to a start-up that was having trouble building a particular application. They had a team of four full-time developers working on the project for FOUR MONTHS to no avail before deciding to bring in a specialist.

    My colleague was able to start the application from scratch and complete it in roughly three weeks.

    So let’s do the math:

    Assuming that each of those four developers was being paid $60K, that boils down to roughly $29/hour, not including employer expenses like Social Security and health insurance.

    $29/hour X 4 developers X 640 hours = $74,240.00

    Holy crap! Now, in comparison:

    $100/hour X 1 specialist X 120 hours = $12,000

    That would have been a bargain at six times the price!

    Personally, I charge close to the $100/hour mark, but I also rarely need more than a week or two to complete the projects I take on.

    I do feel, however, that each individual freelancer should examine their skillsets and set prices based on their own capabilities, and not the “going rate.”

  30. For about 2 years, I went back and forth on how to charge for web design. I started out with package type deals, so much for so many pages, then I messed around with various hourly prices. I never found one best answer, so what I ultimately have done is gone to a “within your budget” price type structure. If you only $500.00 for a website, than we can only give $500.00 worth. The bigger your budget, the better the site.

    It’s been working for me pretty well. I can do good work and keep the income going.

    One thing I steer clear of is setting minimum prices. I see a lot of people do that, but let’s be honest. If you set a minimum price of say $1500.00 for a basic website, and advertise that, then what happens when a customer has $1000.00? Would you really turn down a grand?

  31. @JasonLengstorf: Sure, for certain specialist qualities is makes sense. But I thought we were talking about websites (CSS, HTML) mainly. So your last remark I completely agree with.

  32. Wow. I’m amazed at the suggestions that a designer’s rate shouldn’t include compensating for overhead and actual billable hours. That is quite possibly the most offensive and ridiculous thing I have heard. So in order to make a regular 40 hour/week salary, I need to work 80 hours a week because it’s just not fair to the client to consider those things in my rate. Riiiiiiiight.

    Let’s have a reality check here: your work is valuable. Your time is valuable. Your education is valuable. What you do for your clients directly results in higher revenues for them. Other companies compensate for their overhead and time when figuring out how to price their goods and services. That’s how business works. Designers are people, too. :)

  33. @Sarah: Of course it should include compensation for overhead and for some unbillable hours. And obviously the work is valuable.

    The question is how much and what is the rationale. And how much should that differ from having an internal employee.

    I’m simply saying that at $100/hr. it might never be a good option, which hurts freelancers.

    BTW Thanks for chiming in too.

  34. @Danny:
    I consider web development a specialist position. However, I also feel that there are many people who grab a WYSIWYG tool and start calling themselves freelance designers.

    In my opinion, it is completely legitimate to pay a good designer $100/hour for a high-quality, standards-compliant, striking website that doesn’t take three-to-six months to build and implement. Paying an in-house designer, developer, and production team to work at a slower pace will probably cost more in the long run, and the quality of your project may suffer significantly. In the same vein, getting a freelancer at a discount will produce (usually) a discount website. Think Wal-Mart.

    I think it’s subjective: it’s ridiculous to pay premium rates to someone who doesn’t deliver premium work. It’s your responsibility as a client/consumer/employer to determine whose work is on par with their rates.

  35. Permalink to comment#

    I like to charge a flat fee, and just vary it depending on any extras. It’s saved me a lot of time and hassle and makes it easier for me to keep track of my income.

    There’s very little variation in how long each of my projects charge, and generally they are around the same complexity, so in the end neither I or the client is really missing out. Great discussion though.

  36. Permalink to comment#

    I haven’t heard anybody mention this solution yet, but apologies if I’m repeating an earlier comment. I solve the “flat rate versus hourly” question by including rounds of revision in the initial flat fee. If we go above and beyond those rounds, they’re charged at my hourly rate. So, say, $0000 for the initial comps, revise twice, and if they’re still not satisfied, then $000/hour thereafter for additional revisions.

  37. you might want to becareful about this discussion. someone might want to bring up Sorbanes-Oxley

  38. Permalink to comment#

    I work in designed signage and websites… pricing is harder when you don’t have a physical media to hold, and especially when you start off.

    For me I started in another small business, before I went solo, and there I was able to see how things are charged and how much profit is made.

    What I find I needed to understand is that my skills are worth quite a lot really. To me making a sign, cutting and fitting some vinyl, even designing and producing a website is actually quite easy, and actually fun… So from my point of view I saw “an easy ride” – this is what i thought the client would see…

    What I have realised is people pay for quality, if the price is too cheap they will run just as fast as if you had overpriced the job.

    If you are a designer, web developer, coder, whatever, you have to see that you have skills that other people need. There is no way someone could sit down and learn what I know to develop, produce or design some things that I would find easy.

    From my point of view, I know very little… but when I actually think about it and look back on what I have produced, I can see I have the skills.

    You are never going to be at the top of your game in this industry, because its constantly changing and there is ALWAYS a better way of doing things. With regards to the $100 hr rate, as a freelancer you have no security so yes you may be raking it in for a month or so, but after that month and the work is done the company drop you like a hot turd (until they need you again) then you have no income for a while…

    It’s about balance, and realising your self-worth in a realistic and constructive way (not the e-peen, big headed way…).

    Rob

  39. Permalink to comment#

    I haven’t read all the responses, so this might have been mentioned. The article didn’t note EQUIPMENT as a cost factor. the university student had to have the software & computer to do the work…never forget to factor that in. What’s the cost of CS3 these days? :)

  40. On the full time vs freelancer deal….

    It costs a lot to hire a full timer, likely 30-50% of a years salary if one takes into account all of the costs involved. Also, the fully burdened rate, ie the real internal cost is typically 1.5-2X the person’s salary. Thus, we have a 1-8X to 2.5X multiplier up front for a full time employee… then if we add in opportunity costs, which could range from 1.5 to perhaps as much as 8 in some situations… then look at internal utilization factors of 50-80% and all of a sudden $100/hr freelancers are a bargain compared to an internal hire. (remember, internal hires get paid for 40 hours a week, but likely only put in 20-30 hours of productive work which contributes to the bottom line)

    Back when I was a corp guy years ago… and i saw low rates, the first thing that came to mind was subpar quality. The second thing, if the quality looked to be ok, was that said individual had no idea what their overhead costs truely were, and as a result, was going to fail.. and the way things go, they’d go under just when I really needed something done. As a result, too low a rate was a guarantee we were not interested. (and yes, I was always looking for deals, and was a pita when it came to negotiations, but also knew that if I went too cheap, it would come back to bite.)

  41. Permalink to comment#

    I try not to do much freelance work anymore because I feel like clients like to take advantage of freelancers. It should never take 60 days to pay for a website that has been delivered.

    I would say if you’re going to do it, make sure you have a client sign off on the scope of the project, scope creep is a b*tch, in an agency or as a freelancer.

    As far as the rate being high, I don’t buy it. I say $70 – $100 an hour is probably fair depending on your market, your experience, and your portfolio. Why would a company hire someone and pay them $18 an hour for the next year or three when they can pay a guy $100 an hour for a month of work, you don’t have to pay their FICA, unemployment insurance, sick leave, retirement contributions, etc. A freelancer that can fetch a rate of $75 or more means they don’t need to be trained, their hand doesn’t need held, and they can be trusted to deliver.

    I work for a small agency, and we’ll gladly hire a freelancer to do a project as opposed to bring in another person full-time when we’re busy.

  42. Permalink to comment#

    I started freelancing earlier this year, and setting prices has been one of the most difficult aspects of the business plan. I have changed my prices several times and I still don’t feel like I’ve got it right. To start with, my prices were way too low – I felt guilty charging any more as a relatively inexperienced web developer, and was afraid of losing customers because I depended on them. However, that feeling of guilt is fading rapidly as I gain experience :)

    One of my early experiences was losing a job purely because I quoted too cheaply – the customer assumed that since I was the cheapest quote, I would provide the least quality service, which really wasn’t the case. It was an extremely important lesson for me – charging too little can achieve the opposite of your intention, and misrepresent the quality of your service.

    At the moment I charge a set fee for certain types of websites, and have an hourly rate in mind for jobs. Right now I charge $40(AUD) / hour for sub-contracting / agencies and $50 / hour for the public. After reading this discussion I’m realising now that my pricing is probably still way too low. :)

    What also becomes apparent when you freelance is that you can easily spend half your day doing administration. I try to aim for 6 hours ‘billable’ per day and 2 hours for admin. I find this is fairly reasonable but still sometimes hard to achieve when you account for quoting, accounting, and of course learning new skills.

    Good topic Chris and enjoying the discussion everyone!

  43. This is a great article. I definitely see where this university student is coming from. Your time and skill is worth a great deal of money, and you should never sell yourself short. Good Companies will pay for quality!

    The following is a blog post of mine following up on this issue:

    What is the price tag of a website?

  44. Joe the Plumber
    Permalink to comment#

    for me it all comes down to my current offer&demand level. means if i am stuck with other stuff, if i am ok with money, i do add like 15% to 25% more as i would in a situation without being stressed on other projects. i don’t charge by the hour since i am creating a product here which i sell, so in my opinion i am in charge to do the break-even-gain calculations. to achieve that i always do split up the project in main parts and packages and pricing them separate which makes it easier.

  45. Thanks Chris, this article was really helpful as I have just started my own business and I have been going through this exact problem in my mind, trying to decide how much I should charge. so thanks :-)

  46. Permalink to comment#

    I know, I’m an idiot. A truly, goddamned, awful idiot.

    I did a webpage for a friend of mine (not much of a friend, by the way), and I intended to go cheap for him. After all, it was a one-page-site, it was a fun thing to do, and I needed something to keep my mind occupied.

    It took me three hours, all in all (including some revisions, it seems that his girlfriend didn’t like it). I asked him how much did he think it was worth, and he told me. 3€. A ‘ing eur the ‘ing hour.

    And when I asked him why his ‘ing girlfriend didn’t do the website for him (as she happens to be a graphic designer of sorts – not that i’m much sure of it either), he told me that she would’ve charged him lots of dough.

    He should thank whatever deity he worships for telling me so via IM, so I couldn’t kick his ass.

  47. freelance designer
    Permalink to comment#

    @stygyan : ow that was really bad experience. I was also tend to do like this for my friends .. but when their turn came to work for me no one did free. or gave me any discount .. so i strictly charge my rates to everybody ..

    BTW – this discussion is going on great. many different experiences are getting shared and giving me good knowledge . i must thank again to all and especially Chris.

  48. I believe we are in a price war scenario at the moment. With the advent of crowd sourcing websites (like eLance), if you have a rate that you think is fair but probably on the higher side then you get no business.

    Very worrying!

  49. Permalink to comment#

    If you are worth $100/hour, then don’t work with clients that deem it too expensive. In my experience, the clients that whittle down your hourly are the most to complain and take the most (un-billable) hand-holding. I’ve been working with the Web for 10+ years, so you are buying my experience along with the design or coding – which I (and my clients) tend to think is worth a lot. Not to say that there aren’t fantastic designers/developers that can do an adequate job for $50/hour or less – I can’t run my business on that little. I’m selling value, not a commodity.

    I tend to charge $75 for basic design/coding, $100 for Flash, but have gone down to $60/hour for a client that gives me 100 hours of work a month. Quantity and more hours = stability = less time wasted finding new clients; so I can charge less and find an ethical and financial balance.

  50. Matt
    Permalink to comment#

    Great discussion here.

    I have the “luxury” of freelancing part time, so I’m in a slightly different situation. What I’ve found over the last year or so is that my ability to communicate value to a potential client is what’s the most important. The old saying, “It’s not usually about price, it’s about value” couldn’t be more true.

    My personal experience has been that if I can propose a very specific business value for a website, my rate becomes almost irrelevant. If I simply walked in and said, “Hey, I can make this really cool looking website for you guys” I would get all kinds of pushback.

    Sitting down with a client and explaining how a redesign or website will benefit their business is so crucial. If I can say, “You’re current conversion rate is x and I believe, based on my past experience and future projections, that we can increase that by 50%. A 50% increase in your conversion rate would result in an additional x-amount of revenue per year.”

    Now you can’t just be blowing smoke and making numbers up obviously. But if you can prove with a reasonable amount of certainty that your design or development efforts will result in an additional $50,000 in revenue year over year, then you’re proposal price of $15,000 seems like a dirt-cheap bargain.

    Get your clients to focus on value above all, and make sure you prove that value to them, and you’ll probably never have much of a problem haggling over $50/hr vs $75/hr vs $100/hr.

  51. Martin
    Permalink to comment#

    what about if you’re coming from a country where the economic situation is different and everything costs … different? let’s say lower, and all your clients are put in the same set? then i probably should have different price list for local clients and foreigners and look for more of the second kind? :)

  52. WOW!

    Great question and answer. I know I’ve had trouble quoting prices since I started developing websites (especially since most of the work I have been doing lately has been for people I use to do it for free while in college).

    But the fact of the matter is true. You get what you pay for. And honestly, I believe that $75/hr plus is a great base rate for miscellaneous task, and starting each project at $1000-1500 is fabulous.

    One element of the design process that I really focus on is the end result that the finish project will turn out to be, and what value it will provide for the client.

    That mixed with all the particulars most people want and the rounds and rounds of edits is well worth quoting the higher rates per hour and project.

  53. There is another way to decide what to carge:

    Value Based Fees.

    What value does the client receive from the website you are producing? For example, if the Company will be able to increase sales by $75,000. Then you sell based upon the value you provide. Then charge $15,000 for the website.

    If you are able to cut expenses $63,000 and order processing costs due to your automation of order processing, Then again, charge a percentage of that.

    If it’s a church that is going to increase membership, and the value they receive is increased ability to share the mission, then you may choose to do the website for free as part of your spiritual calling.

    Value and Project Based Fees are a difficult sell to clients, and more work for the freelancer, but much more lucrative, and clients in the end feel better, because they understand their return on investment. That’s the key, Does the client receive value for the work you provide. If not, the client shouldn’t buy it, and you shouldn’t sell it.

    I totally agree with one of the commenters above:
    If a client is beating you up on your consulting rates, then you shouldn’t do it. They’ll be more of a hassle. You get to pick who you work with. Don’t forget that. If you are good, you don’t need the work.

    I totally agree that it is difficult to compete with the elance.com, odesk.com, crowdspring.com, etc… The way to compete with those companies is on communication and relationships.

    If you build strong relationships, your customers will buy based upon that rather than the price.

    I once heard: never compete on price because someone, somewhere will undercut your price. However, if you compete on value and quality, it’s much more difficult for someone to compete against.

  54. Permalink to comment#

    Blockquote You say that ‘you are cheaper than an employee’. Do you pay a web developer $17.600 a month? (Going from 22 working days at 8 hours).

    Short answer. No. Well, kinda. Some Web Developers, especially senior level, make $100k+ a year ($8333 a month). Throw in health insurance, retirement accounts, vacation, sick pay, and other perks, you can get very near to that $17,600 a month.

    Long answer. The client is not paying me for an entire month, only 10 – 20 hours depending upon the project. They also are not paying for my computer, software, training, health insurance, 401k, IRA, taxes, etc. etc. etc.

    And yet, at $100 an hour, I’m still charging LESS than what a major design house is. Granted, I don’t have as much overhead like having several computer systems, IT guys, and managers, but the client doesn’t really care about that. So really, a major design firm will be charging something akin to $500 an hour. How do you think they get away charging $20,000+ for a website? At that rate, my $100 an hour is a steal. Granted, I never tell them what my rate is. I charge on a per project basis. I’ve been getting fairly good at estimating how long a project will take and for additional services I can tack those on at the end. Bottom line, clients like to know how much something costs upfront. I mean really, would you take your car to be repaired and they say they charge $50 an hour plus the cost of parts? You’d never know what you are getting into, and would be shocked by at how much the final bill comes out to.

    Oh, and BTW, the salaries of a web developer, a customer service rep, a sales manager, a designer, and a project manager would grossly exceed that $17,600. Which when being a freelancer, that’s pretty much what you are doing. You aren’t just a developer or a designer anymore, but everyone rolled into one. So you need to charge more. Unless of course, you don’t think you’re worth it.

  55. Permalink to comment#

    Scott Stawarz has it right. Beat them on quality and customer service, not price.

    I’d never be able to compete with a developer in India, who is charging $7.50 USD an hour. I couldn’t even eat or pay rent at that rate, unless I was working 100+ hours a week. And even if I had enough projects to work that much, I’d never want to.

    But unlike an Indian developer, I can communicate directly with my clients, walk them through everything, and tailor a site to their specific needs. Heck, I even live in the same time zone, which is another plus, and they don’t need to pay for international long distance. That, and a client knows they can contact me anytime and get a response.

    Quality over quantity. Customer service over price.

    I think this article http://justcreativedesign.com/2008/06/22/a-guide-on-how-freelancers-can-compete-against-large-design-studios/ helps put things into perspective.

  56. I always ask for a budget. I simply dont like tapping into the blind. Some clients really have no idea what it costs. I once had one who wanted a social community website. When I asked for the budget hey said around € 500. So what. So I always ask… what do you want to accomplish and how much do you want to spend.

    After I did so, I noticed that a lot of salesmen do so… I was out buying a stereo in a BOSE store and they asked these questions too, also when I was buying a ring for my girlfriend… “how much do you want to spend”.

  57. Permalink to comment#

    Don’t forget respect.

    Sure, you can work for $10, or $20, or $100 an hour. At the end of the day, the customer takes a way a site based on $10/hr, or $100/hr work. Which looks better?

    Which will the customer feel has more value? The value is “what you paid for it”. And this is the danger of undercharging. Price yourself to compete with a garage full of high schoolers, and regardless of your work, you will be competing in a high-school type market.

    Guru.com is farming out a lot of design work to bids – up to $25/hr. If you are working a commodity market, with a commodity product, that is great. But of you are really designing, if you have watched your client’s business improve because of the work you did, then your price needs to be consistent with a craftsman-level of workmanship.

    With experience, and with customers recommending you, your price should be protecting you from the flea market hagglers ($25 is a lot, would you do it for $20? $18?).

    And be clear about hosting and domain management – it is easy for clients to blame you for misunderstandings, and especially family will expect free hosting and domain.

    Yes, you could do the work in your spare time, so there ‘is no cost’. But at some point that time will eat into work, study, recreation – at it’s most costly to you, what would that time be worth? If that is your minimum charge at all times, you won’t resent or balk at unexpected problems, over-runs, and “can you add ..”

  58. I agree.

  59. Enlightening post – thank you for actually putting some numbers out there. Comments are interesting too. My concern is that I am charging a fairly low rate at the moment, and some of the clients whom I’ve worked with the best, I know they couldn’t afford a higher rate. Freelance writers, artists, etc.
    But I am definitely thinking of raising rates in 2009.
    I tend to give a per-project cost estimate, but I come up with that number by estimating how many hours each task will take me.
    I’m definitely not totally satisfied with my charging set-up. When everything goes smoothly and as-planned, it’s fine, but when a client goes haywire, I feel like I’ve got no cushion.

  60. kitster79
    Permalink to comment#

    Can anyone tell me how what they require from the client up front in the way of payment. I have heard some designers ask for 50% up front, but how do you know what 50% is if you do not know how many hours the project will require?

  61. Thanks for the post
    some good info there

  62. Permalink to comment#

    Yes pricing is very touchy.. I always put it this way… at the end of the day there will be clients that will feel that their $ 10,000 website looks crap and on the other hand your clients $ 400 website look like a million buck! you know what I mean :)

  63. Paul
    Permalink to comment#

    I totally agree with your post and this conversation thread. Time is worth money, just because there is an intangible "electronic" product, doesn't mean that the work should be devalued. I am still relatively new to the freelance game, and like many others have become discouraged by the pricing wars-with other freelancers. Eventually I came to realize that these el cheapo clients arent worth the time and effort, and that I was holding myself back in pursuing them. I have also been holding myself back by working full time with a company at a ridiculous wage. The only benefit was the doors it opened up to me-the true professionals I was able to meet, and what I was able to learn from them and eventually start earning for my valuable time.

    bottom line-
    Overhead costs money
    Insurance costs money
    College wasn't free
    and neither is my time

  64. Permalink to comment#

    Hmmm…seems I've been undercharging. I'd better bookmark this so I can show those "non-believers" who balk when I say $50/hour!

  65. OK… I’m getting in on this late. In response to Mr. De Wit’s concerns. Lets really look at what it costs for an employee?

    But first… what is standard in the consulting world? I work for a consulting firm. I do an occasional website, but my main product is custom data-management and analysis software. My companies goal is to bill me out for 2.5-3 times what they pay me. So, if you want my work, but don’t want to pay for me as an employee, it’ll cost you 3 times my ‘employee market rate’ which is strangely enough [add sarcasm] my ‘consultant market rate’.

    Here is why:

    My company pays for a desk for me, the office space that desk occupies, health benefits, 401k contributions, coffee, a computer, all the software I need to do my job, workman’s comp insurance, staff to handle getting work for me (marketing), staff for billing and collecting (accounting), and staff for all the administrative work that comes along with consulting. Every client knows these are things that have to get paid for, so when they want work from a consultant… those costs are carried over to the client. If they weren’t, the company wouldn’t be profitable. You ask why should you have to pay for them? Well, someone’s gotta!!! You want my work? You gotta pay!!!

    When I was an independent, all these costs were my own, and guess what? My clients paid for them by paying an hourly rate high enough to cover those costs. If they didn’t, I wouldn’t be in business, and I wouldn’t make my mortgage payment. Administrative work I could do myself, usually, but at times I would hire that out…. on a contractual basis!!!

    If you are considering hiring an employee instead of a consultant, be ready for all these costs. The gap between $25.00 an hour and $75.00 an hour shrinks rather quickly. If you think paying an employee $25.00 an hour costs you $25.00 an hour, you are sorely mistaken. Try around double. What if you need only 1000 hours of work? Are you going to hire someone for 6 months and then just fire them? If you tell me it’s only short term, I’m not going to accept a long-term type salary. Or I’ll just pass on the work.

    As for the start-up and entrepreneurial aspects… ummmm why would a web-developer (or any other consultant) assume YOUR risk for a start-up? They have their own by being a consultant. If you want them to assume some of your risk rather than being paid, you better be able to sign over some of the possible reward of your start-up in lieu of cash. People aren’t going to work for free because they want to see you succeed. Now… how much is THAT worth.

  66. veerendra
    Permalink to comment#

    Here is why:

    My company pays for a desk for me, the office space that desk occupies, health benefits, 401k contributions, coffee, a computer, all the software I need to do my job, workman’s comp insurance, staff to handle getting work for me (marketing), staff for billing and collecting (accounting), and staff for all the administrative work that comes along with consulting…

    bravo .. very well said !

  67. steven stonehouse
    Permalink to comment#

    i am just starting out my self of this web design stuff and i have about 4 websites lined up i did not go to school for web design yet but i charge $15.00 to $25.00 per page the website i am working on now has about 21 pages and will have a shopping cart when it is done so far i have put about 50 hours in to this website. am i going to cheap??? even tho i did not go to school for it and still learning new stuff as i go???

  68. Let go of the idea you need school for it…. the best resume for a consultant is a portfolio.

    If you’re just starting out, I’m guessing you don’t have much of a portfolio to demonstrate your worth to clients. If that’s the case, then they’ll be taking a higher risk in hiring you. To mitigate that risk, you have to charge less.

    Has it taken you 50 hours because you have a larger learning curve than a seasoned pro? Yeah, you’re making a crappy hourly rate, but how much of your learning should a client really have to pay for? (They’ll argue none.)

    Get your experience up, it’ll take you less time. Do more websites, and you’ll be able to demonstrate your worth with examples. With those two things, you’ll be able to better estimate how long a site will take you, and prove to others that you’re worth $75 an hour.

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