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Em's Pricing Thread (Version 2.7)

Sep 26, 2003 9:19 AM

Ok, so I work for an ISP that provides domain hosting. They used to offer web design, through their company, using their web designer at the time. So today I get this call from one of our domain customers wanting a few simple changes made to his site. It would probably take me all of 15-20 minutes. But said company doesn't provide web design services any more so they want me to do this on my own time (I freelance on the side). So what would you do about this price-wise? Should I give it to the guy as a freebie? Like I said, it will take no time at all and requires not even the opening of Photoshop. It's just some table adjustments I could do in notepad or Dreamweaver. The site design itself, to be honest, SUCKS. I can't capitalize that enough. I'm tempted to offer a redesign and see where it goes from there, but then again, I'm betting he'd be happy enough to just have those little changes made. So would you charge him? If so, what? How?

Sorry, no idea where to go on this one.
 
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    Sep 26, 2003 9:32 AM   in reply to Emma d\'Anise
    >Should I give it to the guy as a freebie?

    NO Em!! Charge this person a minimum of one hour. I can't help you with pricing, but this comes into how you want to run your business. Do you do projects that only take an hour or are you going to have a minimum rate?

    If your current employer is going to be a "referral" of sorts, having a contract is imperative. You want these future clients to have a clear understanding that you do not offer service through your employer "XYZ", that they are paying for a separate service from a separate business (you). You do not want to be liable for any issues they might have with your employer.
     
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    Sep 26, 2003 9:38 AM   in reply to Emma d\'Anise
    >So would you charge him?

    Yes.

    Not charging is what the express lane to hell is paved with (good intentions only pave the scenic route). basically not charging is telling this person that you are willing to do small things for free, if you have ten customers who asume that and they all ask you to do a small thing, you have just lost 3 to 4 hours of billable time.

    I charge an hourly rate and have a policy that I don't charge less than an hour. This discourages people from bothering me for really trivial stuff ("can you send so and so this file cause I can't be bothered" type stuff) and if the customer is like yours sounds like, he'll be happy to pay it for what he wants (you don't have to tell him it took you less than an hour) since he can't do it him(her)self

    Your work is worth something no matter how simple you think something is, if the customer doesn't know how to do it, it might as well be brain surgery as far as he's concerned.

    For exanmple, I just charged a customer an hour for the following: retrieving a logo from my archives, removing a dash from it, adding the TM (trademark) symbol and e-mailing it to them. Did it take me an hour? No. Could the customer have done it himself? Perhaps, but he would have lost more of _his_ billable time than it cost him to come to me.
     
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    Sep 26, 2003 10:29 AM   in reply to Emma d\'Anise
    Em, since you're starting, here is a bit of info I would have appreciated when I starting regarding how much to bill for things:

    1) Time is money and money is time. Both are equivalent when freelancing.
    2) If the customer wants to pay a flat fee, estimate the amount of time it will take you and bill the flat fee acordingly, don't forget to add some extra time for unforeseen changes, problems etc...
    sometimes you will time on something so you don't have to spend money on it, and others, you're better off paying someone and saving yourself the time. There is nothign wrong with charging someone for something someone else did and making a reasonable profit on it.
    4) How much to charge per hour? While there is no magic number, here are thigns to consider:

    a) Time is money and money is time(yes I know I said it before) you have to think in terms of "timoney"
    b) a simple way to calculate how much to charge is the following:
    1- Assume you will work 40 hours per week, 50 weeks per years, that's 2000 hours per year.
    2- Take the amount of money you want to make in a year (say $40 000)
    3- Divide the money by the hours ($40 000/2000 = $20/hour)
    4- DO NOT BILL $20 per hour, bill four times as much ($80) instead

    Why? because when you freelance, your customers must pay more than your timoney spent on their job, they have to pay for your computer, your software, your Pantone Chart etc... They also have to pay for the timoney it took you to convince them to use you (everything from going to meeting, to business cards and promos falls in this category). Lastly, they have to pay for all the timoney you will spend running your business (you know, dealing with your accountant(or worse, the IRS), billing, writing out those contracts, etc... This is all called non-billable time and expenses.

    It is reasonable to suppose that non-billable time and expenses are roughly three times as big as billable time and expenses, which is the only thing that brings in money. It therefore has to generate enough money to pay you for everything. Thus you bill four times the hourly rate you wish to earn for yourself.

    This is just a rule of thumb. You can find other ways to calculate how much to bill and you may have to play with the numbers and the whole thing breaks down if you expect to make a million per year doing web design ;) but I've found it works out pretty well overall.
     
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    Sep 26, 2003 10:42 AM   in reply to Emma d\'Anise
    >Should I give it to the guy as a freebie?

    This line is really begging for a joke.
     
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    Sep 26, 2003 11:31 AM   in reply to Emma d\'Anise
    OK Em,

    I'll send you an invoice shortly, always glad to have a satisfied customer :P
     
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    Sep 26, 2003 11:43 AM   in reply to Emma d\'Anise
    "50 weeks per years, that's 2000 hours per year."

    Actually most ad agencies figure 1600-1800 billiable hours a year per employee(at least the one's I've dealt with), so if you want to consider yourself at that level, then charge accordingly.
     
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    Sep 26, 2003 2:06 PM   in reply to Emma d\'Anise
    Have you ever read that childresn book: if you give a mouse a cookie?

    This same logic goes for ALL kinds of scenarios in real life.

    Just to sum it up.

    If you give a mouse a cookie, he'll ask for a glass of milk. And if you give him a glass of milk, he'll ask of r a straw, and the bag, and the whatevers, and next thing you know he's holding you down at gun point...oh, wait, wrong story.

    Anyway, I'm sure you get the picture.

    Don't underbid yourself.

    Why? because when you freelance, your customers must pay more than your timoney spent on their job, they have to pay for your computer, your software, your Pantone Chart etc...

    not only that, but it's more then likely that there will be periods with no jobs, and you'll need to make sure you can feed yourself during intermission :)
     
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    Sep 27, 2003 10:33 PM   in reply to Emma d\'Anise
    And cover any vacation/sickness time.
     
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    Sep 29, 2003 8:39 AM   in reply to Emma d\'Anise
    >Actually most ad agencies figure 1600-1800 billiable hours a year per employee

    I never heard that number before, interesting. Is this for the "creatives" only or for all employees? ie, does this include employees who do not perform billable work. (the bookkeeper, the receptionist etc...)?

    Somehow, I have a feeling most people working in agencies put in their 40 hours per week. If I'm wrong, tell me now and I'l start applying right away! (1600-1800 hours per year is 32-36 per week, way shorter than my usual)

    >Have you ever read that childresn book: if you give a mouse a cookie?

    Yes! It's one of my daughter's favourite.

    >And cover any vacation/sickness time.

    Yeah, that too. Unpaid vacations suck like a Microsopft product and it's one of the things you customers have to pay for (and that you as a customer also pay for)
     
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    Sep 29, 2003 2:00 PM   in reply to Emma d\'Anise
    >...things you customers have to pay for...

    Oups! That should have been "your customers"
     
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    Sep 30, 2003 6:52 AM   in reply to Emma d\'Anise
    Sounds like you're off to a good start, Em. I have a feeling that you're going to do well at this new venture. Best of luck!
     
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    Sep 30, 2003 8:07 AM   in reply to Emma d\'Anise
    Well done Em, I think you're doing a great job with your new business :)
     
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    Sep 30, 2003 8:29 AM   in reply to Emma d\'Anise
    Woohoo! *tidies spare room and plans trip to Windsor to for Em to meet the Queen*
     
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    Sep 30, 2003 9:30 AM   in reply to Emma d\'Anise
    <aside><br /><br />I fell in love with England when I had the fortune of visiting it back when I was 17.  I went one Spring break, and it was wierd weather for both sides of the Atlantic.  Beauiful and sunny in England where it only rained twice during our whole trip :) once when we were on the bus , and it actually snowed in Daytona Beach on Spring Break
     
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    Sep 30, 2003 11:44 AM   in reply to Emma d\'Anise
    >So that might have been too low, but then again, like I said, this is very much a "nothing" job and I don't want to scare him away from further work.

    Not a nothing job Em or your client would be doing it himself. Charge what you are worth, don't worry about scaring people away. Clients that want quality work will pay, let the nickel and dimers move on.
     
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    Sep 30, 2003 11:53 AM   in reply to Emma d\'Anise
    >Charge what you are worth, don't worry about scaring people away.

    And remember, some people will be scared away if you charge too low.

    PS: congrats!
     
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    Sep 30, 2003 12:01 PM   in reply to Emma d\'Anise
    >And remember, some people will be scared away if you charge too low.

    I can't speak for shopping for a "service", like graphic design, but that statement is so true for product sales. I often find myself shopping for hardware, software, or some kind of gadget, and if one vendor is way below the rest of the pack, I'll steer clear.
     
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    Sep 30, 2003 12:42 PM   in reply to Emma d\'Anise
    One saying I will always remember, "The people that get the best deals complain the most".

    Know your market Emma, do the great work you have been doing and the good clients will pay for your service. Like DS Nelson referred to, if a client thinks you are giving them a "bargain price" for an important project, it will make them wonder why. The best work is half the price of the cheapest quick fix.
     
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    Sep 30, 2003 2:06 PM   in reply to Emma d\'Anise
    I knew this couple, married with twin boys. They took in a stray dog and named it "Freebie". The husband's job had him away from home often. And the dog would run off at night. So the wife would be out side on the front step yelling "Freebie, Freebie"

    True story

    Steve
     
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    Oct 18, 2003 6:51 PM   in reply to Emma d\'Anise
    PhosPhloat.

    4 from the abyss.
     
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    Apr 24, 2006 6:15 AM   in reply to Emma d\'Anise
    Here's a decent short article on the fine art of negotiating a price for your services:

    http://www.creativepro.com/printerfriendly/story/24179.html

    The Art of Business: Negotiating Fees
    "When negotiating pay with a potential client, is it in your best interest to make an opening bid or wait for an offer? More than any other element of a negotiation, "who goes first" determines the final fee."
     
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