I'm dabbling in the art of creating websites for several years now, but I have never actually made money out of it.
Now I want to slowly start earning from it and here's the question:
How to estimate prices? I mean, what are your specific rules, do you have any idea how to get the price right. Not too low, to be rewarded justly and, of course, not too high, to not scare anyone.
For example I have this project right now - I need to move the site from Blogger to Wordpress, entirely, without losing anything including comments and SEO. How much to charge for it? It's kind of big, 130 blogposts, tons of comments, images, etc... It's from German studio, if it makes any market difference.
Any ideas? I don't expect certain algorithm or something (:D), just a few kind tips how to get started.
Except an algorithm is exactly what you're going to get!
Hours You Estimate the Project to Take * Your Hourly Fee = Project Price
This can be really difficult when you first start out because you aren't sure how to calculate that first value. That comes with practice and experience.
Your first few paid projects are almost always going to be off the mark. What I try to get people to do is come up with a number that they'd be happy with and that they think is fair.
Hours You Estimate the Project to Take * Your Hourly Fee = Project Price
That is the problem, since I don't really know how to estimate the first two values and actually... the first one seems even easier than the second.
I mean, how should I appraise my hourly fee? Since it's directly connected to my skills, I just can't tell... when I see all those big numbers it's like "there's no way I could ask for that without being laughed at"...
I agree with @thedoc - I used to quote for amount of pages, but then realised this has nothing to do with the time you spend on the thought process, design, development etc. The bulk of the work will be on that first page.
@jimmyniceguy - There is no right answer here. Remember your intention here should not be to think about how much money to make as it's your first website, but to get the experience and see how long a project like this takes you. Also if you offer high, and can't deliver because of your lack of experience, the client wont be happy.
So my advice would be to offer a reasonable amount, probably a bit on the lower side, and make sure you note exactly how long this takes you, so for your next project, you can quote a bit more accurately.
I myself normally go by an hourly base rate, but it always varies depending on the size of the project, and the client, and whether I actually like the project or not.
Also, with the job in your post, have you done anything like this before? If you have, you can probably estimate how long it may take you, making it easy to quote - How much do you need to be paid for your time to do that? I wouldn't personally charge anything on top of just your time at this stage such as skill, expertise etc)
I disagree with some of the pricing methods mentioned above.
Your hourly rate should include your cost of living, it should not be a random number based off of someone else's. The price of the project depends on the needs of the client and the amount of hours worked however, you should also include a profit.
From a clients perspective, you should always be able to justify your pricing and your hourly rate. So it's not as simple as saying x pages amounts to a certain figure. That's not always the case with web design and development. Not all pages have the same complexity.
Similar to what @TheDoc suggested but instead of estimating the project as a whole, I suggest you break it down into different components and figure out how long each task will take, multiply each component to your hourly rate and summate the total cost. The different components are not just the pages of the website themselves but also consider the different phases of the project such as conceptualization, asset creation, prototyping, coding and development, browser testing, ftp uploading, domain and hosting setup etc.. all those things take up your time and you should be paid for doing them.
This brings you to your next concern - The contract...
As an aside, when estimating time you can pretty much take what you think it's going to take you and add another 25% on to there - developers are always very optimistic on time.
I see people making this mistake all the time. Price them selves so low that maintaining a certain lifestyle becomes unsustainable.
You also have to think about paying taxes. Good rule of thumb, for each $1 you make divide it by 3. So 1/3 goes to taxes, 1/3 goes to you and the rest is reinvested in your business (so paying for software, equipment upgrades, etc).
All of this and more needs to be incorporated into your pricing.
@AlenAbdula and @chrisburton - I too agree with this however when starting, your prices will never be accurate. The first job you do will be for the experience just as much as the money. By all means, take into account your situation, you don't want to starve, but expecting to make a good return on your first real job with no experience will be tricky (although not impossible).
it'll never be accurate because the amount of time it's going to take to complete this project, because one is just starting out, is hard to estimate. And humans in general suck at making estimates. So what to charge is impossible to answer. On top of that, we do not know all the requirements and complete scope of the project.
I would caution @jimmyniceguy not to undercut himself and the industry. What you might pay for something doesn't mean your client thinks the same way. Your job is to communicate value, which is hard to do when starting out. Don't be afraid to charge money for the work you do. Your time is money.
If you spend 20hrs per week for next 2 months working on this project, is that really worth $1500 to you?
That's $9.38 per hr. (without tax + other expenses)
it'll never be accurate because the amount of time it's going to take to complete this project, because one is just starting out, is hard to estimate. And humans in general suck at making estimates. So what to charge is impossible to answer. On top of that, we do not know all the requirements and complete scope of the project.
Exactly! Which is why i'm saying don't think too hard about cost, do the job and then he'll have a better idea for the next project!
Your second paragraph contradicts the first. How can one undercut themselves if they have no idea of their worth?
By accepting anything below minimum wage. And that's money paid to you, after taxes and other expenses. If the project runs longer than expected, this will essentially cut into your profit.
I sort of expected that the first time will be pretty much an experiment, only after that I will be able to analyse the actual time needed for completion and estimate a minimum wage for the future projects.
Thanks a lot again, many great thoughts, I'm very grateful!
Value based pricing is something that I've been doing some research on for the last couple of months and so this is an interesting discussion. Did anyone else listen to what Alen linked?
I thought it was a very intriguing concept. I think at the end of the day there is a developing expertise that you just are not going to get with any other designer. For example, if you approach each project not just as a project, but as an opportunity to consult solutions that have total business impact, that is something the guy down the street who is just calculating hours isn't going to include. That has value.
I'm personally looking at a bit of a hybrid where I know for a fact that I'm moving toward value based pricing, which isn't what the market can bear, but it's more of adding a premium for services that you know are unique to what you bring to the table. I'm looking at creating some kind of baseline and then developing on top of that. If someone gets more face time, more conversations and more information than anyone else and on top of that advice on how to market their business, not only does that provide a much higher value, but you as the business professional needs to continue to support advancing knowledge.
Hello!
I'm dabbling in the art of creating websites for several years now, but I have never actually made money out of it.
Now I want to slowly start earning from it and here's the question:
How to estimate prices? I mean, what are your specific rules, do you have any idea how to get the price right. Not too low, to be rewarded justly and, of course, not too high, to not scare anyone.
For example I have this project right now - I need to move the site from Blogger to Wordpress, entirely, without losing anything including comments and SEO. How much to charge for it? It's kind of big, 130 blogposts, tons of comments, images, etc... It's from German studio, if it makes any market difference.
Any ideas? I don't expect certain algorithm or something (:D), just a few kind tips how to get started.
Thanks in advance! Jakub
Except an algorithm is exactly what you're going to get!
Hours You Estimate the Project to Take * Your Hourly Fee = Project Price
This can be really difficult when you first start out because you aren't sure how to calculate that first value. That comes with practice and experience.
Your first few paid projects are almost always going to be off the mark. What I try to get people to do is come up with a number that they'd be happy with and that they think is fair.
Here are mine to give you a starting point. http://www.websitecodetutorials.com/worksheets/web-design-prices.php
@Eric - the amount of pages a website may contain has nothing to do with the price, especially when you're using a CMS.
@TheDoc it does when you are entering the content and formatting all of those pages.
Thanks for the responses!
That is the problem, since I don't really know how to estimate the first two values and actually... the first one seems even easier than the second.
I mean, how should I appraise my hourly fee? Since it's directly connected to my skills, I just can't tell... when I see all those big numbers it's like "there's no way I could ask for that without being laughed at"...
I agree with @thedoc - I used to quote for amount of pages, but then realised this has nothing to do with the time you spend on the thought process, design, development etc. The bulk of the work will be on that first page.
@jimmyniceguy - There is no right answer here. Remember your intention here should not be to think about how much money to make as it's your first website, but to get the experience and see how long a project like this takes you. Also if you offer high, and can't deliver because of your lack of experience, the client wont be happy.
So my advice would be to offer a reasonable amount, probably a bit on the lower side, and make sure you note exactly how long this takes you, so for your next project, you can quote a bit more accurately.
I myself normally go by an hourly base rate, but it always varies depending on the size of the project, and the client, and whether I actually like the project or not.
Also, with the job in your post, have you done anything like this before? If you have, you can probably estimate how long it may take you, making it easy to quote - How much do you need to be paid for your time to do that? I wouldn't personally charge anything on top of just your time at this stage such as skill, expertise etc)
You might wanna read this: http://optional.is/required/2013/01/21/getting-to-your-minimum-hourly-rate/
I disagree with some of the pricing methods mentioned above.
Your hourly rate should include your cost of living, it should not be a random number based off of someone else's. The price of the project depends on the needs of the client and the amount of hours worked however, you should also include a profit.
From a clients perspective, you should always be able to justify your pricing and your hourly rate. So it's not as simple as saying x pages amounts to a certain figure. That's not always the case with web design and development. Not all pages have the same complexity.
Similar to what @TheDoc suggested but instead of estimating the project as a whole, I suggest you break it down into different components and figure out how long each task will take, multiply each component to your hourly rate and summate the total cost. The different components are not just the pages of the website themselves but also consider the different phases of the project such as conceptualization, asset creation, prototyping, coding and development, browser testing, ftp uploading, domain and hosting setup etc.. all those things take up your time and you should be paid for doing them.
This brings you to your next concern - The contract...
As an aside, when estimating time you can pretty much take what you think it's going to take you and add another 25% on to there - developers are always very optimistic on time.
@chrisburton +100
I see people making this mistake all the time. Price them selves so low that maintaining a certain lifestyle becomes unsustainable.
You also have to think about paying taxes. Good rule of thumb, for each $1 you make divide it by 3. So 1/3 goes to taxes, 1/3 goes to you and the rest is reinvested in your business (so paying for software, equipment upgrades, etc).
All of this and more needs to be incorporated into your pricing.
@AlenAbdula and @chrisburton - I too agree with this however when starting, your prices will never be accurate. The first job you do will be for the experience just as much as the money. By all means, take into account your situation, you don't want to starve, but expecting to make a good return on your first real job with no experience will be tricky (although not impossible).
@croydon86
it'll never be accurate because the amount of time it's going to take to complete this project, because one is just starting out, is hard to estimate. And humans in general suck at making estimates. So what to charge is impossible to answer. On top of that, we do not know all the requirements and complete scope of the project.
I would caution @jimmyniceguy not to undercut himself and the industry. What you might pay for something doesn't mean your client thinks the same way. Your job is to communicate value, which is hard to do when starting out. Don't be afraid to charge money for the work you do. Your time is money.
If you spend 20hrs per week for next 2 months working on this project, is that really worth $1500 to you?
That's $9.38 per hr. (without tax + other expenses)
Exactly! Which is why i'm saying don't think too hard about cost, do the job and then he'll have a better idea for the next project!
Your second paragraph contradicts the first. How can one undercut themselves if they have no idea of their worth?
By accepting anything below minimum wage. And that's money paid to you, after taxes and other expenses. If the project runs longer than expected, this will essentially cut into your profit.
Thanks for all the help, guys!
I sort of expected that the first time will be pretty much an experiment, only after that I will be able to analyse the actual time needed for completion and estimate a minimum wage for the future projects.
Thanks a lot again, many great thoughts, I'm very grateful!
Bumping this with this link:
http://businessologyshow.biz/wordpress/positioning-branding-value-with-tim-williams/and
http://businessologyshow.biz/wordpress/value-pricing-with-daniel-mall-and-jason-blumer/Direct link to all podcasts: http://www.spreaker.com/user/businessologyshow
Value Pricing... first couple of seconds there are some tech issues just fast forward little bit...
Value based pricing is something that I've been doing some research on for the last couple of months and so this is an interesting discussion. Did anyone else listen to what Alen linked?
I thought it was a very intriguing concept. I think at the end of the day there is a developing expertise that you just are not going to get with any other designer. For example, if you approach each project not just as a project, but as an opportunity to consult solutions that have total business impact, that is something the guy down the street who is just calculating hours isn't going to include. That has value.
I'm personally looking at a bit of a hybrid where I know for a fact that I'm moving toward value based pricing, which isn't what the market can bear, but it's more of adding a premium for services that you know are unique to what you bring to the table. I'm looking at creating some kind of baseline and then developing on top of that. If someone gets more face time, more conversations and more information than anyone else and on top of that advice on how to market their business, not only does that provide a much higher value, but you as the business professional needs to continue to support advancing knowledge.