One of the biggest questions any freelance designer or developer has to ask themselves is how much to charge. If you are new to the industry, this can be a hard number to come up with. If you are established in the industry, you may be thinking about raising your prices. The question is, how do you find the magic number of how much to charge?
Unfortunately there is no such magic number. But, there are a few steps you can take to come close to finding such a number. Below are ten factors for you to consider when trying to determine how much you should be charging.
1. What services am I pricing?
The first thing to consider when setting your prices is what service is being offered. If you offer a variety of services in your business, odds are they arenâ€™t all equal. As a result, some services will demand a higher price, while others a much lower one. Take time to consider what your service is and make sure your price reflects the worth of that particular service.
2. How much does it cost me to run my business
In order to determine how much you should be charging, you first need to know how much money you need to make to break even. Take some time to consider all of your expenses and add them up. This number is your break even rate. You will need to price your services high enough so that you can at least meet this number.
Some expenses you should consider are:
- Rent â€“ If working from home, figure 20% of your rent for this number.
- Internet Service
- Premium Services â€“ This includes things like project management services, invoicing software, etc.
- Utilities â€“ Donâ€™t forget to include your cell phone bill into this.
3. How much money do I want to make?
Your break even rate is a worst case scenario number. After you determine how much you need to break even, you should think about how much you want to make from your services. Think about how much money you can realistically earn per month over your break even number.
4. What is everyone else charging?
Unless you are extremely gifted at what you do, it is important not to overcharge for your services. The best way to do this, is to visit the website of other who offer services similar to yours. Make sure that the websites you visit are also similar to your skill level. After all, just because a large design agency charges $2,500 for logo design, doesnâ€™t mean you can.
Some designers and developers will post ballpark figures or project prices. If they donâ€™t, try sending them an email asking for them. Most designers will offer up a ballpark figure with little to no information.
5. How bad do people want what I have?
This question goes back to question one. It is important to price each of your services based not only on their perceived value, but on market demand. If one of the services you offer is highly in demand, then your price should reflect this. Charge more for services that are high in demand. This will allow you to make up for some of your services that you canâ€™t charge higher rates for.
It is important to evaluate the demand on your prices regularly. For example, back when MySpace took the world by storm, a designer could charge twice as much as they do today. But, since the demand for MySpace pages has drastically gone down, a designer canâ€™t charge as much as they used to.
6. How good am I at what I do?
It is important to be honest with yourself on this one. If you are just starting out in your design career, your prices should reflect this. As you get better at what you do you can raise your prices accordingly. But it is important that your prices reflect your skill level. If you try to charge rockstar prices, but your portfolio suggests newbie skills, you will have a hard time getting any work.
7. How long have I been doing this?
Experience, although similar to skill, is another skill in itself. The longer you have been in business, the more you are going to know about the business. Having experience in a given industry means you have the ability see potential pitfalls, make more accurate suggestions, have a better idea of what works and what doesnâ€™t, etc.
8. Will I charge by the hour or by the project?
Aside from the basic question of how much to charge, the project vs. hour question is nother popular one. There are some who only charge by the hour, while others only charge by the project. Some also have a unique mixture of the two. There are pros and cons to each, so this is something you have to decide on for yourself.
It is important to point out that if you decide to charge by the hour for anything, that you canâ€™t actually charge for every hour worked. This is more of a means of determining the price for a project. For a good example of this, think about how mechanics work. They charge by the hour, but give you a quote for the entire job.
9. How much can my client afford?
One reason that many designers and developers donâ€™t post prices on their websites is so that they can price their services according to their client. It only makes since that you would charge more money for larger clients than smaller ones. Would you charge your local salon the same amount for a website as you would for FedEx?
While larger clients can afford more, be sure not to over charge too much. Finding the perfect price for a client can be a hard thing to do.
10. Whats my business strategy?
Your price should reflect that of your businesses strategy and its brand. If you are a jack of all trades who wants to pick up as much work as possible, you will probably need lower prices. If you only wanâ€™t to work with serious clients on large projects with big budgets, you should price yourself higher.
Now, this isnâ€™t to say that if you price yourself high, you will magically attract high paying clients. But, it is important that your prices reflect that of your business.