Pricing is scary as a freelance web designer.
Ask for too much and you run the risk of losing the project.
Price too little and you might get taken advantage of by a client and miss out on some serious “dough.”
Before we dive too deep let’s talk about some principles
Time-Driven vs. Value-Driven Pricing
A lot of clients will ask for your hourly rate to justify the total price you’re charging them for a project. This is called time-driven pricing.
Here’s the thing though, you can only go so far charging people hourly.
Why is that?
At a certain point, what you’re worth won’t match what someone might be willing to pay if it’s framed by an hourly rate.
There’s a lot to the value of something that has nothing to do with how much time it took to make the thing. Think about an iPhone.
Do you ask Apple, “How long did it take for you to make the phone?”
No! That would be absurd. It takes them about 1 minute to make 350 iPhones.
So, let’s round-up and say it takes them 1 minute to make 1 iPhone. So, given their current prices of $999 per iPhone Pro, that means they’re charging you $59,940 an hour.
See how that doesn’t make sense!?!? No one would be willing to pay anyone for $59,940 an hour.
But, the truth is, you’re not paying them for the time it took them to MAKE the phone. You’re paying them for years of research that they put into creating the concept of the iPhone. You’re paying them for thousands of hours of employee work to create designs, software, engineering, and everything in between to make your phone something you actually like to use.
When you give a client an hourly rate you are communicating that your value is attached to the time you spend on the project. And, there’s so much more that your client is getting than just HOURS WORKED.
- time savings (you do the work so they can focus on more important things)
- expertise (you’ve spent a lot of time developing skills they haven’t)
- future success (you’re setting the client up to win down the road)
These are all value-based benefits you are passing along to your clients that are pretty hard to translate into an hourly rate.
ALSO, as you grow as a freelance web designer, it will take you less and less time to accomplish the things that need to be done in order to give the clients the value you offer.
Especially if you’re developing systems and automation that make things even easier for you as a web designer or developer. That means your hourly rate will start getting crazy high.
So, in order to really charge what you need to charge a client, you have to eventually stop trading time for money and start trading VALUE for money.
How to Know Your Value
The next question then is “How do I know what my value is?”
There are three parts to that:
- What your cost of doig business is
- How much the market determines
- How busy you are
1. What Your Cost of Doing Business is
Everyone has a cost of doing business.
Typically, the cost of doing business is your overhead. Overhead is how much money it takes to keep the lights on in your business. So, for a retail, brick and mortar store, it’s the cost of renting out your retail space, paying your employees, and even paying for your utilities.
BUT, if you’re a freelancer that’s working from a laptop in your home, it’s a little bit more difficult to figure out your cost of doing business. After all, keeping the lights on in your home and paying for your rent or mortgage is something you’d do even if you weren’t trying to freelance.
So, the way I determine my cost of doing business is by figuring out how much I KNOW I could make if I went and got another job somewhere else OR how much I know I could charge and easily get a project right now.
If you’re just getting started it’s a bit tough to know exactly what you could easily get right now for a project. After all, you’ve not really charged anyone anything for a project.
So, instead of taking what you know you could make from a freelance project you take what you know you could make if you went out and got a part-time job.
There are a lot of those available right now.
Say, for instance, I knew I could get a job at Starbucks making $13 per hour. And, say it takes me roughly 40 hours to finish a website.
That would mean my cost of doing business is $520.
Why? Because, if I charge less than $520 for a website I’m actually losing the money I know I could be making working at Starbucks.
SO, at minimum, I should be charging $520 for a website. Is that what I’m going to charge? NO! But, that’s a starting point.
AND, you can go up depending on how much you know you could be making with a part-time job you could easily go out and find OR what you know you could easily charge if you went out and got a project right now.
2. How Much the Market Determines
How much the market determines is pretty simple to figure out but it takes some time.
If everyone says yes to you after you tell them how much your services costs then you’re charging too little.
If everyone says no, then you’re charging too much.
You want to have a mixture of people telling you no and yes. That’s your sweet spot, and that’s what the market determines is your value.
If you’re just starting out and have no point of reference from your own clients you can ask other freelancers or agencies.
When I first got started I called a few other web design freelancers and asked them what they were charging. The range was pretty big all the way from $500 to $7000 per website.
Since I was just getting started and had no experience, I went towards the lower end and asked for $750 per website. If you’ve been building websites for longer you’ll start much higher. It depends on skill and experience.
With every project, I would raise my rates. I was always worried that people would tell me no if I asked for more than my last gig but for a long time they didn’t.
In fact, it was about 2 years before I started getting more nos than yeses.
When I hit that point, I leveled off and knew what the market valued me as.
So, my encouragement to you is to pick a price. Don’t do it randomly. Find out what other people are charging who are equal in skill level and base your price off that.
Eventually, you’ll start getting a lot of “You’re too expensive for me,” comments from clients. That’s when you know you’re approaching your pricing sweet spot.
Be careful not to put too much weight on the word of 1 potential client. I’ve had conversations with a few folks that tried to convince me I was charging too much.
Typically, these folks are nightmare clients and just trying to get a “screaming deal,” from me.
There will always be people who are more price-driven than they are value-driven. That’s okay. There are price-driven companies out there that will build websites for next to nothing.
You’re looking for A LOT of people to tell you that you’re too expensive. That will give you a really clear picture of what price point the market values you at.
3. How Busy You Are
Your prices when you are slammed with work and have projects lined up for the next 6 months should not be the prices you charge when you have nothing you’re currently working on.
That’s simple supply and demand.
If you have people waiting in line for you to get done with your current project so you can help them with their project means you have a higher demand.
When that happens you need to raise your rates.
That means the value you’re offering clients has outpaced the amount of time it takes you to finish a project which means you have some freedom to start charging more. This is a great place to be in.
Although it might feel awesome to have folks waiting in line for you to help them, it really just means you could be charging more which means you aren’t estimating your value accurately.
So, when you get busy, it’s time to bump up your prices.
How to Raise Your Rates
There comes a point when you hit a ceiling on your prices. That’s when you start getting more rejections from clients than you get clients wanting to move forward.
When that happens you’ve got a few options. You could lower your prices OR you could get better at communicating your value OR simply add more value to what you’re doing.
The first is the easiest thing to do and takes no extra effort on your part.
Communicate Your Value Better
Being good at communicating your value takes time and intentionality.
I used to work as a bank teller. We had sales goals that we had to try and hit each month. Every once in a while an offer would pop up in our system for the client we were helping.
During my first week, I had a trainer standing next to me as I was helping customers. The trainer was there to help me out and show me the ropes.
As I was helping someone, one of those offers popped up. I was excited! This was my opportunity to show them what I was made of, and that I was eager to learn.
So, I went for it.
And, quickly bombed it.
The trainer had to step in and try to help salvage my stumbling attempt. I didn’t even have answers to his questions about the credit card I was trying to sign him up for.
Me: “Do you want a credit card?”
Customer: “What’s the annual rate?”
Me: “I don’t know.”
But, here’s the thing, I didn’t let that discourage me.
I kept trying. And, I got better.
Much better, in fact. In a few months, I had some of the best sales averages in my region.
But, that could only come from going for it, making mistakes, and adjusting along the way.
Here are some practical things you can do to communicate your value:
1. Keep it Close to the Client’s Revenue Stream
In the book, “Clueless at the Works,” my friend Anthony Garone says that if you want to move up either in position or income at your company you have to keep what you do close to the revenue stream of your company.
The same is true for freelance web designers.
If you can’t connect what you offer with your client making more money, it’s going to be a hard sell.
So, instead of saying, “I make awesome designs.” Say, “my designs drive engagement from users which turns into conversions which makes you more money.”
2. Store Up Past Success
With every project you work on, you want to make sure that you’re tracking the success of the project.
So, make sure to look at things like how much revenue the client was making from their old site and track the difference a few months down the road after you’ve done your work.
You could also look at things like bounce rate or the amount of time a user spends on the website.
If you get deep into Google Analytics you could track goals right from within the analytics dashboard.
Bottom line is you need some solid facts about your value. Not just feelings based statements about how awesome you are.
3. Let Other People Talk for You
No one can convince potential clients of your value like the testimony of another person.
This is called social proof.
Humans look for it in almost everything they buy.
Think about the big purchases you’ve made in the past year. Did you ask friends for the opinions or if they knew someone?
Did you read reviews on amazon before making the decision?
This is all social proof and will help you a ton when it comes to communicating your value to a potential client.
But, here’s the thing, testimonies don’t come easily even from clients that are super happy with the work you’ve done.
So, you’ve got to be sure you’ve got a system in place that makes it easy for clients to give you feedback and then use that feedback to help you.
When I first got started, I personally asked my clients to write a google review for me. A few weeks later, if they hadn’t done it yet, I followed up and asked again.
The record for a client giving me feedback is 1 year after I was done with their project. Believe me, I asked them for a solid year.
What finally did it? They needed some help with something simple and I didn’t charge them. INSTEAD, I asked them to write a testimony instead.
Make sure you make it easy for clients to give you feedback AND be persistent until you get it.
Increasing Your Value By What You Offer
After you’ve done everything you can to communicate your value in a better way it’s time to start increasing your value.
You can do that in a number of ways. You can add the services you offer and bundle them into the projects you work on.
So, for web designers, that could mean offering branding packages or copyright services along with a website. OR it could mean adding conversion rate optimization or SEO along with a website build.
OR instead of adding more to what you do, you could just get better at what it is you’re currently doing. You do that by improving your designs OR making what you do even more specific to a TYPE of client like really narrowing in on photographers or lawyers or some other niche that is looking for what you have to offer.
The truth is it’s a lot less difficult to increase your value than most people think. It doesn’t take a master’s degree in design to justify charging higher prices. It just takes improving the skills you already have and communicating that improvement in a way that makes sense to a client.
A Simple How To Pricing Guide For Freelance Web Designers
Finding the right price to charge your clients as a freelance web designer takes some time. But, over time you will dial it in and feel confident about what you charge.
The most important things are:
- Figuring out your cost of doing business
- How much money could you be making if you were doing something else?
- Discovering Your Market Demand
- You want a good mix of people telling you both no and yes for your services. Too many one way or the other tells you you’re charging too low or too high.
- Increasing your prices when you’re busy
- Communicating Your Value
When you reach your ceiling you don’t necessarily need to come down in prices. You just need to figure out how to communicate your value in a better way or get better at what you do.
If you stick to those principles it won’t be long before you feel great about the prices you charge clients as a freelance web designer