When you are working as a freelance web designer, there are many ways that you can approach the pricing of products. However, you must be competitive and, of course, you must make a profit. But there are many variables to account for when pricing a website. Not least of which is the possibility of being landed with a problematic client who keeps changing their mind. So, knowing how much to charge for the design of a website can be challenging.
There are various pricing models that freelance web designers could adopt. But, unless you supply simple turnkey solutions, no single model will likely suit all projects. So, it is best to price each project individually, using variations of the following pricing strategies to help you decide on a price and payment structure.
10 Pricing Strategies for Freelance Web Designers
Cost Plus
Cost-plus should be the starting point for any pricing calculation. This costing method calculates the cost of the project and the profit you need to make on top. For a freelance web designer, the project’s cost will be the cost of your time plus costs such as hosting and any add-on software. And, you will need to factor in a portion of your overheads, too.
Hourly Rate
Charging clients an hourly rate can be tricky because the customer has no guarantee of a total cost. So, you will need to provide estimates before you begin work on a project. However, you can use hourly rates as the basis for pricing. Your hourly rate needs to cover your salary or employee salaries, plus profit and enough to cover your overheads. You can then use these minimum hourly rates in the cost-plus calculation discussed above.
Daily Rate
Charging a daily rate is similar to setting hourly rates. But a daily rate is how much you need to earn each year divided by the number of days per year you intend to work. Daily rates are pretty typical in large-scale freelance projects. But, for smaller projects, clients are likely to prefer to have a fixed price. You will probably also need to quote an hourly rate for small pieces of work such as final tweaks to a site and minor bug fixes.
Fixed Rate
Fixed-rate pricing is where you charge a fixed price for the completion of a project. This type of pricing is great for clients because they know precisely how much their site will cost. However, there are risks for the web designer if the development of the takes longer than anticipated. Still, if client expectations are set and scope-creep managed, this pricing model can work.
Once again, the basis for calculating a fixed price will be your hourly rate multiplied by your estimated number of hours to complete the job. Plus, it would be advisable to add extra time to cover any surprises.
Modular Pricing
A slightly different take on fixed-rate pricing is modular pricing. In this model, you charge a fixed price for the various elements of the website. For example, there would be a price for the home page, product pages, and functionality. Then, you can present the client with a menu of options from which they can choose.
Modular pricing can be a good sales tactic because it breaks down the total cost into less daunting, smaller costs. And it allows the freelancer to upsell additional elements later. The cost of each module will be the time charge for each piece plus a contingency.
Opportunity Cost
The opportunity cost of a web design project is the loss of income that could have been generated from other projects. For example, suppose you were pricing a complex web design project. In that case, the opportunity cost would be the lost income from the five simple sites you could develop in the same amount of time. Opportunity cost is unlikely to be the way you price most projects. However, it is something to be aware of when arriving at a final quote for a customer.
Value-Based Pricing
Value-based pricing is based on the website’s value to the client. For example, suppose the customer is likely to generate $250,000 in revenue from the site. In that case, that should be factored into the pricing of the development of the site.
Value-based pricing is a tricky concept to sell to most customers. However, you might want to consider what the site is worth to the customer when setting your prices. For example, you might want to charge a much higher rate for developing a large corporation’s site than you would for a one-person small business.
A riskier version of value-based pricing is to accept a share of the site’s revenues in place of some or all of the development costs. This pricing approach would not guarantee your income. However, if the website you design is successful, you could earn more than conventional pricing models.
The downside of this approach is that you have no control over the success or failure of the site you have developed. So, it would be unwise to use this pricing model for all your clients. However, it might be worth considering if you can see the potential of the site. Or, perhaps, if your client has a limited budget and you have the available time.
Market Price
All the pricing models in the world won’t win business if you overprice your projects. So, whatever pricing strategy you adopt, you must also consider the market price when quoting for a web design project. You might charge more than your competitors for top-quality work, innovative design, and slick functionality. Still, it would be best always to remember that your quotation will not be the only quote the customer will be considering.
Retainers and Subscriptions
Retainers and subscriptions are best used for recurring work such as website maintenance and ongoing search engine optimization (SEO) work. This type of pricing is great for cash flow management because it provides a reliable and regular source of income. However, you need to carefully price retainers and subscriptions to ensure that you don’t make a loss. And, it would help if you considered the opportunity cost of such arrangements as well.
Conclusion
So, the baseline for pricing a web design project should be the cost-plus approach expressed as an hourly rate. You can use that hourly rate to calculate a fixed-rate, daily rate, or modular pricing. However, it would be advisable also to consider the opportunity cost and the market price of each project. And, sometimes, you might also want to employ more creative pricing strategies like profit shares.
