One of the most common mistakes for beginner web development freelancers is charging too little for a website or web development project that it results in a loss for the freelancer. While it is not strange to charge much lower prices when building a portfolio, if the freelancer is losing money with the deal the price is too low.
Pricing By Time And Hourly Rate
The easiest way of calculating the price of a web development project is estimating how long it’s going to take and then adding about 20% to pay for the time spent closing the deal, managing the project and other unpaid hours. Multiply that number by your desired hourly or daily rate and presto! you have a price to stick on that proposal.
However, this system won’t guarantee that you don’t end up working at a loss, because it implies that a freelancer web developer can accurately estimate how long it’s going to take him to finish a project. When starting up it’s easy to overestimate how quick you can work, or how many hours are you willing to put in each day without burning out. Even if it means losing a few projects to the competition, it’s better not to plan on working over 12 hours a day. After all, you will be able to get their clients when they miss deadlines or stop working due to burnout.
Depending on your level of experience, you may want to adjust your estimates, and even add as much as half the estimated time to the final result just to be on the safe side. However, one of the best ways of calculating how long your projects are going to take is actually keeping accurate records of how much are you working on each project, and how long does it take to finish them up. If you are very disciplined, keeping a document with all the time invested on each project and updating it every time you change activities may be enough. If you think you may forget to keep track of time there’s software products that will do it automatically for you.
Pricing By Value
Another option which is often the most profitable for a web designer is to price on value. The goal is to prove to your client that your cost is just a fraction of the profits they will make from their updated website. If the new website is going to make six figures extra profit per month, spending a few thousands on it won’t sound so expensive. This works best if your clients are large enough; a small business may not profit enough from a brand new website or marketing strategy to actually pay a lot for it.
Pricing by value frees you from being a slave to rates. It also means that your value won’t depend on how many hours you spend, so if you work more efficiently your profit will increase instead of decrease. However, you will need to be a better salesperson to use this method; most clients won’t take your word at face value if you just say “I will increase your sales by $10.000 per month”. You will need to question them about their value per customer or lead, their profits for unit and other metrics that you can then relate to values that will be uplifted by their new website. Double Your Freelancing Rate is an awesome free course that goes deeper into the topic.
For an established web developer, figuring out how much to charge for a website or web development project may not be an issue. “Just charge whatever they are willing to pay” may work when your clients are actually asking for you by name. However, when somebody is just starting up it may be more difficult to figure out a price that covers costs, and the best way of accomplishing that is making sure your time estimates are as accurate or at least err on the side of caution and aren’t too small to be unable to finish the project on time and on budget. After all, if the website is finished before the client expects you will have more time to polish it and the client will be receiving much better value for his money than if you had to rush the job.