Learning to price up your work is a daily challenge that in some ways never goes away until you become more established and you know what your clients will accept. A price sheet can help breakdown what you charge for different types of services, but arriving at those prices can be difficult.
If you’ve previously worked for a firm that is in the same line of business as your roles as a freelancer today then you may have been able to get some idea about their billable client rates. However, this may not really help you if they are a far larger operation than you, have been in business much longer or have developed a respected brand over time as their rates reflect this stature.
Here are a few thoughts to consider when it comes to how to put together a price sheet which will be competitive and well considered. This way you can avoid either under-billing which can create the impression that you are cheap and low quality, or over-billing and annoying prospective clients who probably won’t sign with you and may spread the word around town that you’re greedy.
Breaking Project Estimates Down
If you’re a web developer and looking to create an estimate for your latest project, you’ll need to divide the project up into its component parts. If software is required, what do you charge for sourcing that and what’s your profit margin?
If a new logo design is needed, how many design choices will be presented? How many changes will be made to the logo chosen from the initial selection? Unlimited changes is not a profitable way to operate and sets the wrong expectations from the start.
These kind of specific questions are not necessarily asked by web developers who are new to pricing up creative projects or new to being a freelancer, but they are important to take the time to consider.
Without such considerations, you won’t have a realistic idea how many hours each part of a project will take, and therefore how long much time the whole project will consume out of your upcoming week or month. Ditto, how to price realistically for the project will continue to elude you.
How Is Your Skill-set?
Look honestly at your skill level compared to other competitors in the market. If you design logos, look at design blogs that showcase new logo designs to see how yours compare to the best logos being released by the top designers in the market.
Be honest about what your true capabilities are. Some skills you can learn on the job and can get up to speed as you go, while others like graphic design and programming really are things that you need to know before you start on the next client project. Be careful not to oversell your capabilities and overextend yourself.
For instance, depending on your skills as a logo designer, you could choose to price your logo design services at a substantially lower price point than your competitors. This is on the understanding that you’ve show your logo portfolio and that the prospective client will be happy with what you can really deliver in design work.
Therefore, pricing for different services is as much as function of capabilities as it is about current market pricing levels. You won’t get very far pricing to market if your services don’t match what your competitors can deliver.
Discuss With Professional Colleagues
Contrary to what you might think, it is possible to develop non-conflicting relationships with other freelancers who work in the same industry segment as you do.
While they will be unlikely to eagerly hand over a sheet of paper with their rates, it can be possible to find out what they charge for certain services so that you have a basis for where to start.
If you really cannot entice them to tell you, you could also suggest that you have some overflow work that you may wish to outsource, so you’d like a quote for a client “brief.” This way, they will actually pitch you directly for the job and you can get the information handed to you. Obviously you don’t have to outsource the assignment to get such information releases.
Don’t Guess or Ask The Prospective Client
Whatever you do, never guess about pricing. Depending on the complexity of the specific task, there can be more than one way to price it, so guessing at it is next to worthless.
Some designers new to freelancing may ask the client for their price range. This can be useful when you know what prices are reasonable, but not when you don’t. Some clients will suspect a lack of experience and try to take advantage of your lack of knowledge. Others will simply shoot back, “Don’t you know your own prices?” and you’ll look naïve.
Keep Updated
Reading about what’s going on from related blogs about freelancing helps to be apprised about changes in approach, new laws that affect how to conduct business (i.e. FTC law about disclosing whether you make affiliate commissions from linked products which will have been discussed on blogs ahead of time) and pricing too.
Some freelance blogs have sample documents like invoices, price sheets, agreement forms and other useful items to download and customize for your business needs.
Do You Have a Niche Market?
If you design web sites for a target market, like novelists, then it will also be a good idea to monitoring news sites for that industry so that you can keep up with news within their industry too.
Dropping such information into conversations with clients can also show that you understand their business better than another developer would. This also helps in the future when it comes time to increase your rates for these clients. It’s one more feather in your cap that shows that you’re worth it.
Fixed Prices versus Hourly Rates
Lastly, we come to the eternal debate over fixed pricing versus hourly rates.
With freelance writing projects, it may depend whether the client will expect subsequent drafts or rewrites. At certain price points they’ll likely expect it, whereas at lower price points they can be persuaded that rewrites are not part of the agreement reached.
For design projects, be very careful what you agree to. Making an agreement for a fixed price is dangerous if you haven’t nailed down the exact requirements. If you’re also new to designing, then it’s extremely difficult to know how long it’ll really take you to complete the project.
You may wish to mock up some designs of your own in order to time yourself, so you can get a better sense of how long it really takes you to complete tasks.
Scope Creep Risks
Be careful about scope creep. It is a classic problem where a client will add extra aspects to a development saying it was always part of the agreement when it never really was. The clearer the agreement before you start, the better position you’ll be in to protect the rates you decided upon and to hold to that so you’ll make the money you expected to earn over the life of the development.
Often you’ll find that clients try to take liberties by adding more than was agreed. And they know it. When challenged that these new additions fall outside of the scope of the project and asked whether they’d like a new price quote for the extra work, quite often you’ll find that they had no intention of paying for the extras they so urgently needed included. Life’s funny like that!
