Pay Me Please: A Freelance Web Designer's Guide to Billing and Pricing
February 18th, 2008 in Business & Process
by: Matthew Griffin
Going it alone as a web designer will quickly lead to the discovery that your accounting skills are as important as your design skills. If you've ever done any freelancing you know exactly what I mean. When should I bill? How much should I charge? What kind of pricing structure should I use? These are questions I've wrestled with more than once over my eight year tenure as a freelance web designer. Fortunately, out of the heap of triumphs and failures, a refined set of principles has emerged. I'm sure these rules will keep you out of some sticky situations.
How Much Should I Charge?
The first rule of pricing is never undercharge. Undercharging opens the gateway to Web Design Hades. It's a horrible place filled with cheap clients who won't pay and long tedious projects that don't make any sense. It may sound strange, but charging as much, or more, than your competitors will keep the bad clients away and the good clients coming back. If you can't book projects at the going rate, then you need to sharpen your design skills and try again.
Also, when it comes to setting your hourly rate, remember that you won't be working forty billable hours per week. Don't set your rate at what you'd expect from a full-time job in your field. You need to at least double it.
When Should I Bill?
You've probably heard the saying "vote early, vote often"—it applies to billing too. This is one of the first difficult lessons I learned. Now, I bill half up front and half on completion for projects that take less than two months. For projects that take longer, I break up the second half into two or three invoices. If you decide to make this rule a policy—and I highly recommend you do—just remember that it's only effective if you hold off on starting the project until you get the first payment. Don't get sucked into the web of client manipulation. If they want a project started now, they can write a check now. The only exception you should make is for long-time trusted clients.
Also, when you're sitting right at the end of a project waiting for the client to get you the final content and the weeks are piling up, go ahead and send the final bill. You might think that this tactic could potentially tick off the client, but it my years of freelancing I've only seen good things come of it.
What Pricing Structure Should I Use?
A simple pricing structure will serve you best in the world of web design. Start by setting a flat rate for the most basic website you can imagine. This price should include the whole package—graphic design for a static template, CSS and HTML coding, basic search engine marketing research, and copy-and-paste content for four or five static pages.
Once you've landed on a base price, just build from there. Create a spreadsheet and start listing major upgrades and programming modules that could be added to your base. For example, you could list "Flash header" as an upgrade, or maybe blog, or shopping cart. Remember, this is just a guide—every project is unique so don't think of this the law. The base price is the only law. When you're writing a proposal, start with your base price and then run down your list of upgrades, adding or subtracting to suit the difficulty of the task.
The key is the base price. Instead of being elusive and vague every time you're asked about your pricing, you can just say, "Well, I charge $___ for the most basic possible website and I go up from there depending on what you need." If the price scares them, you just saved yourself a bunch of time. If not, you've got a good lead. You'll stand out from the crowd if you're honest and forthright about your pricing.
How Much Should I Charge Per Hour?
In some cases the hourly charge is inescapable, but avoid it if you can. Pay-by-the-hour work lends itself to mindless tasks that chip away at productivity. Never take on an already-built website that just needs "a little updating". And when you have to bill by the hour always bill on a one hour minimum. Also, keep your hourly rates high to discourage piecemeal work.
For more on hourly billing, check out 7 Reasons You Shouldn't Charge by the Hour.
Try not to over-think the sales and billing process. Most of the time, you're dealing with people who think about money differently than you. The price is rarely the determining factor in their final selection. Stay firm on your rate and you won't be disappointed. Also, make sure your proposals and invoices look professional and are well-organized. Simplicity pays. Many times at client will choose you simply because your system seems like less hassle.
Also, check out Freelancers: Invoice Your Clients by Tutorial Blog for a list of great online invoicing programs.
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