It’s probably the biggest question any freelancer faces: how should I price my services? Which pricing model is best for my business?
For some people, this is an emotional issue. Usually, human resource departments decide an employee’s value, and many tend to undervalue skills outside the executive suite.
Factor in the hours most full-time website designers or developers work and this devaluation is even more pronounced. You can get a pretty good idea of your value when you take time to consider what you bring to the table for a client who needs a new website and lacks either the time, skills, or both.
When asking yourself, “how much should I charge as a freelance web designer/developer?” consider the following eight steps. (We’ll discuss these in greater detail shortly.):
- Step 1: Determine the true costs of running your business
- Step 2: Calculate your cost of living
- Step 3: Keep an eye on the competition
- Step 4: Assess individual client needs
- Step 5: Educate your clients about costs
- Step 6: Choose your pricing model, or consider blending the two options
- Step 7: Offer strategic discounts
- Step 8: Craft a payment plan
Manage your freelance web design and development clients with The Hub by GoDaddy Pro
One way to boost your efficiency and help your freelance business stay profitable is to use The Hub by GoDaddy Pro. The Hub enables you to manage all of your clients’ web design and development projects in one convenient dashboard, no matter where they’re hosted. You can create project timelines, make bulk site updates, create to-do lists, monitor and track metrics and more. The Hub also includes invoicing and payment features, allowing you to generate, send and manage invoices so you can stay in the black.
Freelancer pricing models
Before you start deciding what you should charge your clients, it’s helpful to understand the two most common freelance designer rate pricing models: hourly vs. fixed (per-project). Keep these models in mind while reading the rest of this article, as they’ll help you best determine how to set your freelance web developer or designer rates.
Most freelancers start out quoting hourly rates because they don’t know how much to charge. Many will use the rate they used to be paid at former jobs as a baseline.
Using this model, the total compensation is calculated by multiplying the agreed-upon hourly rate by the number of hours worked.
If you decide to charge an hourly rate, be sure to thoroughly research the typical hourly pay for employees with your level of expertise. Then, factor in additional costs, which will be discussed later.
Here are some of the benefits to the hourly rate setup:
- It gives you an idea about how long it takes you to complete different kinds of website projects, which can be helpful for scheduling your time.
- It makes most clients a little more conscientious about your time.
- It’s useful if you’re offering additional “à la carte” services, such as logo design or animation.
- It’s often the best way to charge for vague or open-ended projects where clients aren’t sure what they want or may make frequent changes.
Hourly rates do have some drawbacks, including:
- An hourly rate only considers the time put into the work, not the value of the work itself.
- Working quickly can mean that you earn less.
- After gaining extensive experience, you may hit a price ceiling that clients won’t want to pay.
Fixed per-project rates
Many clients ask for a complete project cost because it’s easier to factor the project into marketing budgets. Fixed per-project rates are often advantageous for freelancers, too:
- This style of pricing model helps you turn a profit sooner as you become more skilled and can complete projects faster, developing efficiencies of scale.
- Clients tend to see more value because they aren’t looking at the same clock you are during the design stage.
- You can build in pricing for the ad hoc services that most clients request — particularly those clients who take a big-picture look at website design services.
Like the hourly rate model, having fixed freelance design or development rates also has disadvantages, including:
- It can be difficult to gauge fair pricing for projects at first.
- You’ll have to lay out a reasonable timeline with deadlines, set the number of changes or edits you’ll allow within your given rates, and determine what to charge if the client requests extras.
- If the project takes longer than expected or the client does request bolt-on services, you’ll need to renegotiate the contract, or you’ll have to accept that you’ll be paid less this time and apply what you learned to future projects.
Setting your freelance design & development rates in 8 steps
Step 1: Determine the true costs of running your business
Like any business, website design and development requires tools that cost money. These are investments in your business that must be factored into the consideration of your pricing model. The first thing you want to do is list these costs. Here are a few examples:
- Equipment: Computers, monitors, software, maintenance.
- Subscriptions and licenses: Hosting; domains; premium add-ons for software like WooCommerce; Shutterstock; ThemeForest; management platforms; and so on.
- Overhead: Internet, phone, rent/mortgage (even if you work from home), utilities.
This is how much you’re investing in your own business to simply hang up a shingle.
Even if you think that working from home isn’t really a cost, it is. You’re using more utilities than you otherwise would. Keep in mind that working from home also means “losing” space for your home office — a space you might otherwise use for an extra bedroom, hobby room, or (wo)man cave.
Second, focus on the expenses required to develop and maintain the design and technical skills you bring to a website project. These skills include some of the following:
- Education and training: Fees and travel-related expenses.
- Marketing your business: Advertisement costs, tickets and travel to industry events, blogging (or hiring a blogger to write) about your business, time spent on social media.
All of this adds up in your operating costs.
Step 2: Calculate your cost of living
If you charge rates solely based on your business expenses, you’d barely scrape by. Determining how much to charge as a freelancer means figuring out your cost of living — how much you need to earn to support yourself.
After you’ve outlined your business costs, outline your personal costs. Similar to setting a budget, calculate your monthly living expenses, including:
- Healthcare, like insurance, prescriptions, and doctor’s visits
- Housing costs, like rent or mortgage
- Survival needs, like food, utilities, fuel for your car and clothing
- Debt costs, like college loans and credit card payments
- Family costs, like childcare, diapers, clothing, school supplies, extracurriculars, etc.
- Extras, like how much to put into savings, retirement or entertainment services that add value to life
Once you know roughly how much you need each month, you can set a goal for your yearly salary, using that as a guide to set your prices. Depending on the cost of living in the area where you live, you may want to charge more, as the cost of living in a major metropolitan area can be more expensive than it is to live in a smaller, more rural area.
Many freelance web designers and developers who are just starting out have base hourly rates starting at $31, with that rate increasing for experience, project type, costs for their and other cost adjustments. More experienced designers and developers can command upwards of $42 per hour, up to as much as $100 per hour for design services.
Step 3: Keep an eye on competitor’s rates
While they shouldn’t be the only reference you use to set prices, current market rates can give you valuable insights. They signal how much those who are just starting out are charging, how much well-known web designers and developers are charging and how much clients are expecting and willing to pay.
Job websites like Glassdoor and Upwork will give you an idea of what others are charging, and the U.S. Bureau of Labor Statistics provides updated data for the average salary earned by web designers and developers. Keep in mind that factors like location, project plan and type, education, experience level and target audience can influence rates, too, so take competitors’ prices with a grain of salt.
You want to stay competitive while still earning enough to support yourself. If you’ve already set prices, compare them to current market rates and direct competitors with commensurate skill sets. If your prices are higher than others’, reevaluate your budget and expenses to see if there’s room to cut costs. If your rates are lower, you might be undervaluing your skill set and should bump them up. If what you charge is right in the middle, it’s probably a fair rate.
Step 4: Assess individual client needs
Web design and development are definitely not one-size-fits-all services. Offering limited pre-defined packages means most customers are not getting accurate pricing, and you’ll find yourself with projects that are more time-consuming than anticipated.
Pricing all sites at a fixed, page-based cost can quickly prove to be problematic, as pages have a wide range of complexity and functionality.
Crafting a custom proposal lets you demonstrate value and price far more accurately, while highlighting your skills and the required effort.
Because each project will have its own unique deliverables, it makes sense that your pricing will be unique, too. Factors to consider when determining your individualized pricing include the size and type of website (for instance, a large e-commerce website will have different needs than a basic small business website), as well as the client’s budget.
Ask if they have a set budget for this project, then take it from there. Decide for yourself if you’re willing to complete the project within that budget. If not, it may be helpful to explain what you can do for their offered price point. It may also be beneficial to think about the project from your prospective client’s perspective, analyzing what you would be willing to pay for freelance web designer and developer costs if you were a business owner.
Step 5: Educate your clients about costs.
“Are web design and development costs more accurately reflected in hourly rates or per-project flat rates?”
That’s the question your customers will weigh when they review your rates. However, as we’ve discussed, it’s not a fair way to look at the true costs to you, the website designer/developer. Perhaps a broader conversation about website design and development costs are needed for both the customer and provider. This requires educating clients about costs.
Pricing models or pricing guides are excellent tools to demonstrate the basic website design and development costs that are required to build a simple, functioning website.
A good pricing model educates clients about the real costs to them and to the website designer or developer they select.
In addition, there is a real push for transparency these days. If your business is using well-known and respected tools, there’s no reason not to give your customers (and potential customers) information about upfront website design costs like domain registration, hosting fees, themes, plugins and content support.
Once you recognize your time frame on different types of projects, you can accurately predict hours most of the time. Convert these hours into a project fee and add some cushion for unexpected expenses and interruptions that might otherwise add costs to your side.
Step 6: Choose your pricing model, or consider blending the two options
After walking through and considering all the aforementioned steps, it is finally time to determine what to charge for your freelance web design or development services.
As mentioned previously, each pricing model has its benefits. Charging freelance web developer and designer costs by the hour is useful for open-ended projects or when you’re starting out and aren’t sure how long projects will take to complete. Charging a fixed rate per project is best for short projects that have high value to the client or when you hit a price ceiling on hourly rates.
If neither model seems sufficient on its own, you could use a combination of both in what’s known as the mixed-rate pricing model. It allows you to create a system where your fees are a combination of fixed and hourly rates. For instance, if a client wants you to build or design an extensive website, you could charge hourly for the basic project, then offer add-ons for fixed rates – such as $500 per additional webpage.
Some web designers and developers do the opposite and charge a flat fee for website development and an hourly rate afterward for additional services that fall outside the project scope. Examples include site maintenance, software and content updates, and changes requested after the project is completed.
Step 7: Offer strategic discounts
Discounts sound counterproductive when it comes to bringing in more revenue, but they contribute to retaining customers and considering you for future projects or continued work. Established clients may deserve some amount of discount on subsequent projects, as you’ve not invested in marketing to land that project and your client-interaction overhead is more efficiently managed.
One way you could try this is by offering clients a small discount when paying for multiple months in advance, rather than auto-billing every month. This ensures they’ll stick around for a while.
Referral bonuses are also a great way to reward clients who send more work your way.
Step 8: Craft a payment plan
In addition to determining how much you get paid, you also need to figure out how and when you get paid for your design and development freelance work.
Consider credit cards and digital payment systems such as PayPal or Amazon Pay, but remember that accepting them means paying processing fees. On the other hand, demanding payment by check risks losing someone who would rather put large purchases on a card and receive kickbacks or rebates. Accepting online payments can also lead to invoices being paid much sooner.
As for when you get paid, recurring revenue is easily set up as monthly auto-billing, but for projects, how do you split up the payments?
Some clients may worry that if they make the final payment before the work is completed, there is a risk that the freelancer will start working on something else and not be so motivated to finish the last tiny details of their project.
That’s where progress payments come in. The normal expectation for web pros should be a deposit, followed by one or more progress payments, ending with the final payment after completion. Paying a deposit means the client has skin in the game.
Knowing they don’t have to make the final payment until they see the site usually boosts confidence. For websites, a typical fixed-rate payment plan may be to request a 25% deposit, 25% after architectural work has been completed, 25% before launch and the final 25% to be paid within two weeks after launch. To ensure that you get paid for your web design or development freelance efforts, don’t turn over the keys or passwords until the last payment has been received.
Start developing or refining your freelance pricing strategy today
Not all your customers will understand the true costs to get a website up-and-running. It might take some time, but with the right tweaks, you will find a pricing model that balances your costs, the value you bring to a customer, and the time you spend on a website’s design and development.
This will keep you competitive while you earn a living and a healthy profit!
Learning how to price web design and development services can be a trial-and-error process, and how and what you charge will likely vary from project to project. The Hub by GoDaddy Pro can help you manage and track projects and invoices from all of your clients in one place, so comparing the growth of your services and fees over time is easy. When you find a pricing strategy that works best for your freelance web design or development business, both you and your clients will be happy.