There are many ways to price a web design job. For the most part, freelancers and small design agencies get this completely wrong and leave endless amounts of cash on the table for no reason at all.
This article is going to explain the three ways to price a web design job, and the pros and cons of each. Once you have your pricing structure down, we’re going to look at some hacks you can put into action immediately in order to increase the value of each job.
1. By The Day or Hour
This is awful. I don’t care if your day rate is £1,000, you’re under pricing yourself. The problem with this method is that it’s worked out based on you being able to bill yourself out 100% of the time. So best case scenario is you’re billed at 40 hours a week. Then on top of that you have to do un-billable work like writing proposals, admin, billing, sales and customer service.
In addition, there’s a built-in reservation to paying someone more than you get paid. It’s why people hate paying for accountants and lawyers despite them being worth their weight in gold.
Finally, with web design especially there’s an element of consulting built in and your rate for consulting and advice should be way higher than your price for web design. Say you’re £40 an hour for web design, you should be £100 an hour for consulting at least. Explaining you have a different rate is weird. Your time is either worth £40 an hour or £100. It can’t be both.
The other main issue is the fact that you’re not giving your client an actual figure. You might estimate it but ultimately, it’s going to be billed by the hour. This is nerve wracking for any potential client as the incentive is for you to take as long as possible. Not great for selling.
Per hour pricing is great for consulting, beyond that, all it will do is hold you back.
2. Multiplication of cost + profit
This mostly comes into play when you take staff on. It’s a variant of the per hour pricing but one level up. It works by working out how long something’s going to take, using the day rate of your staff / freelancers to get a baseline figure then adding on the amount you want to make on top.
This isn’t entirely terrible but it has an obvious downside. You’re providing your client a fixed cost but your costs are scalable. If you’ve priced it wrong, or something takes too long then you can end up out of pocket.
The one thing I would say about this is it’s a good foundation for our third option, and if you have staff or outsource, this method always needs to be worked out as you’re adding up your costs and working out a minimum you need to make.
3. Charging on value
This is the only fair way to charge for anything in my book. Who cares how long it takes or what your staff cost you? Why is that the concern or problem of your client?
If a one page website with a basic opt in form takes you 4 hours and you charge £40 per hour, that’s £160. Fine, not bad for a morning’s work – that’s certainly one way to look at it but think about it. If you’ve asked the right questions during the discovery session, you might find out that this is going to be their main lead generation tool for a new product launch and they have a £10,000 per month budget for it. Charging them £160 is completely out of line with the total cost of the project.
Realistically, the job should be bigger and include some research, perhaps buying some photography or writing some copy but it’s certainly not a £160 job. It’s more like a £1,500 / £2,000 job. Ask yourself this – if they’re spending £10k a month, doesn’t £2,000 for the landing page seem about right to you?
Whenever I speak with web design companies about how they price up jobs, the end result of why they don’t charge properly is because they don’t want to lose the work to another company. The reality of the situation is that by locking yourself down to an hourly rate, you’ll never get away from it and you’ll always be compared to the next guy.
Provide a cost based directly on the value that the client is going to receive. It’s the only fair way to both yourself and your client.
1. Charge properly for hosting
Don’t give away hosting like it’s negligible. It’s a vital aspect of the end product and it should be treated like it. This means charging from day one. If you’re charging any less than £10 per month then you need to increase it to that at a bare minimum.
2. Do not discount anything
There’s no example in the world where discounting actually needs to take place. You’re just giving them money for no reason at all. If you discount, it means you’re either pulling figures out your ass in the first place, or you are taking a shortcut somewhere in order to deliver it. Neither are good. Do not discount.
If someone can’t pay it all, split the job up or some up with a payment plan, but don’t just discount it.
3. Offer payment plans
Only do this if you have a pricing negotiation and they literally do not have the cash. Explain they can pay £2,000 now and the remaining £3,000 over the next 3 months.
That way you keep the job at £5,000 and simply need to wait a month or two extra for the money rather than discounting it for no reason
4. Don’t do extras
It’s not necessary. Don’t tart up their logo because it “only took 5 minutes”. By all means, call the client and say
“Hey, I’ve just hired a new designer and want to give him some little jobs. Your logo has seen better days and we could do with a hi-res version anyway. I’m not suggesting you pay full rate of £1,200 for a new brand. For £50 I can get him to re-master it for you. You’ll need it at some point anyway, is that cool?”
Just don’t fall into the trap of “chucking stuff in”. It’s not a car boot sale. You’re a professional business. Act like one and people will treat you like one.
5. All monthly payments are made with Direct Debit
Do not negotiate on this unless they are a corporate and simply refuse to use Direct Debit. No small business can negotiate on this point.
Those are your terms and that’s it.
If they don’t pay by Direct Debit, then it’s 2x the price for all monthly fees. Every debt you need to chase is a waste of brain space. An email, a phone call, checking the bank, nagging your client, it’s all bad news and you need to avoid it.
To collect direct debit – use GoCardless. It’s the smartest business decision I ever made.
6. Non sales meetings are chargeable
When I ran my agency, these were the rules. If it was a job under £5,000 then there would be one meeting if necessary and that’s it. Everything else can be done on Skype.
Anything over that was allowed one additional meeting free of charge. After that it was chargeable. There’s technically no reason why meetings need to take place in person now other than to bond, build rapport etc so we started charging for them. It’s amazing how many less meetings you have when you tell them this meeting is going to cost £300, but it’s free if we do it over Skype.
If it was what I deemed to be an unnecessary meeting in London, it was £1,000 premium for that meeting. No exceptions. I’ve been very public about my distaste for London as a city in general but in a business setting it’s beyond awful. The £1,000 just about justified it.
Those are 6 money making tips you can integrate into your business starting now and I promise you, you’ll thank me.
If you’re a little worried about any of them – just try it with a client you don’t like and would be happy to see go.