Pricing

Mar 26 2017- POSTED BY projecth 0 Comment

After you decide to take on the project, you should get back to your client with an official project proposal and a quote.

Working for Free

Working for the first time on a project, you might consider working for free. Working for free has great benefits for starting freelancers, but there are also cons. For example, you will have to support the project after delivery, possibly again for free. There’s also a chance to damage your relationship with the client in case of a conflict because of working for free.

So if you can afford to, look for a client that can pay.

Pricing Models

1. Hourly Pricing (Rate x Hours)

Use this pricing method when:

  • Hard to determine time involved
  • Project likely to have lots of changes
  • Unfamiliar with complexity of project
2. Per Project Pricing

Use this pricing method when:

  • Familiar with project
  • Relatively short projects
  • Client’s budget is inflexible

Hourly Pricing

Establishing a Baseline Price

A baseline price should be enough to cover your expenses, billable work hours and profit.
Total direct and indirect expenses for the year:

  • Rent
  • Utilities
  • Insurance
  • Salaries & Benefits
  • Advertising & Promotion
  • Equipment & Supplies
  • Business Taxes
  • Client Services

Next, figure the number of hours you plan to work in a year.
You calculate the number of working days per week, and the number of hours per day.
Deduct the time of any planned vacations.

Total Annual Expenses  +  Profit Margin (10% to 15%)
——————————————————————————  =  Hourly Rate
.                  Number of Working Hours / yr

$72,000 + $7200          $79,200
—————————  =  ————  =  $41 / yr
(241 x 4.5 hrs / day)       1928

 

Creativity Coefficient

Other freelancers use a multiplier that’s unique to the project—a creativity coefficient. This number is a multiplier of your base rate to help you match the price you charge with the level of creativity and difficulty of each project.

Administrative Work

Don’t include time spent on administrative work — things like writing proposals, billing, and self-promotion because that’s not strictly client work.

 

Per Project Pricing

  1. Estimate the number of work hours
  2. Multiply the number of hours with your rate
  3. Compare the result with the client’s budget and whether it covers the cost
  4. If it doesn’t, try to:
    • negotiate a higher fee
    • propose a different cheaper solution
    • reduce number of features
    • some other form of mutual agreement..

Extra Pricing

  • Revisions – Charge for revisions outside the scope of the project.
  • Education – Educating the client on the built project.
  • Setup – Charge for all costs of setting up and managing the final project.

Pricing Notes

  • Don’t Price Low – Low prices could indicate poor quality
  • Charge Your Worth – Price competition can drive your prices down very low. Still, charge what you think you’re worth.
  • Inform Clients Before Charging More – If the client asks for extra work that would mean increasing the price. Discuss that with the client instead of just doing the work and charging them.
  • Don’t simply charge because you took longer to complete the project than you thought it would. That just means you didn’t estimate the time properly and didn’t communicate that to the client.
  • Be Upfront – Be as upfront as you can about anything price-related
  • Rate Changes – Time your price increases and always inform your clients that your rates are changing. Think about when it’s best to increase your rate. You could do it at the end of the year or when you’re taking on new projects or even when your existing contracts end.

 

“If the client is not complaining, then you’re not charging high enough.”

 

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