Deciding how much to charge a client has always been tricky business for me ever since I started freelancing. There are many factors to consider and the fact that each client has different needs and expectations makes it even more difficult to come up with a standard pricing scheme. That’s because each website is customized and every company is different. Some customers require more attention than others. Therefore, I will share a few things I’ve learnt and some observation during my years in the freelancing business. Hopefully it will be an inspiration and a guideline to those starting out.
You can’t just charge the customer based on what you will normally earn when you are working full time for other people. That’s because if you are working for a company, they will provide you with everything you need to do the job. On top of that, the company will provide you with EPF, insurance and other perks. There are also other support staff available like the salesman and accounts clerk, so you only need to concentrate on your design work. So the monthly salary that they pay you is only for the work that you are doing.
On the other hand, as a person running your own business, you have to charge more. Firstly, it’s to cover your overheads like your computer equipment, scanner, printer, internet bill, electricity bill, rental etc. Then you also need to pay for your own web hosting service especially since having my own website is crucial in my line of work. Next you also have to consider your car and petrol, because now you will be your own salesperson and you will have to drive out to meet clients. As a designer you will also need to purchase software licenses, fonts and stock photos.
Don’t forget the tens of thousands of dollars spent on your education, and all those years spent at design school or computer graphics courses. You have to earn back the money. For me, I must have spent at least Rm50,000 for my design and animation diploma and thousands more to obtain a Computer Science degree. Imagine how many websites I need to design to earn back the money if I’m only charging RM2000 per website. It’s not enough but some clients still say it’s too expensive and they can’t afford it. Anyway, just make sure you take this into consideration when pricing your services. Don’t charge your clients too cheap.
Another cost of doing business is investing in extra equipment for backup purposes. For example I have an extra modem and extra internet connection line just in case one line gets cut off. You could also have more than one computer at home, just in case your computer breaks down. I also buy DVDs to backup files. So, all this requires money.
You also need to save up for retirement and for any down time. You can’t expect to keep working forever, non stop. Sometimes you need a break, to go on a vacation or to learn a new skill. Or there might be a recession coming up so you have to make sure you have enough savings to protect yourself.
You also have to invest some time for research and development, to learn new software and programming languages so that you can be more productive and offer more services to your clients. Most of all, if you are running your own business, you also have to take care of your staff. You have to pay them their monthly salaries and occasionally reward them with a bonus. Actually the largest expenditure is staff salary.
Finally, what’s the point of doing the work if you are not earning a decent profit. The reward has to be worthwhile, unless of course you have other reasons for taking up the job.
In conclusion, make sure you take all these factors into account when you quote your client. That’s why it always seems like freelancers earn more than people who are working full time. The cost has to include your overheads, education, research and development, staff salary and savings for retirement.
Creating a website involves a lot of things. It’s not like designing a leaflet. Designing a leaflet is just one page and at most you only need to design it and send it to the printer that’s it. On the other hand, web design requires some technical skills and planning.
Besides designing, web designers have to code the website in HTML, CSS and add in functionality like navigation bar and feedback forms. After the website template is done, there might be some data entry work. We could also add in other stuff like counter, content management system, flash and other frills. So, you really have to charge more if you are giving all these value added services.
Another consideration is to anticipate what the client wants. You have to quote them in advance, the services that they would most likely request for, but initially they don’t know they might need it. A good example is charging for maintenance / future updates. If you don’t include maintenance in your original quote, the client might feel offended or surprised when they want to add a small thing to the website and you want to charge them for it. For me, I help them make the small changes for free, because it has already been included in the package. So, the client will be happy. Thus, that’s another reason why you have to charge your clients more, so you can offer them better service.
Everybody wants a discount, whether they are driving a Mercedes or live in a big house, they will still ask for a discount. Its something automatic that people say in response to your quotation and most of the time people are just joking or trying their luck. Actually if they don’t ask for a discount and quickly agree to the price, you are probably charging too low.
I have made the mistake of giving discounts too many times. One mistake was giving a RM500 discount. Well, I was young and naïve then so I just said ok to everything. But later I was thinking it was really dumb and the boss was just trying to take advantage of my stupidity.
The second big mistake was to give discounts to a big company. This company was a well known engineering company and was part of a large corporation. So when the client asked me to give a reasonable price and give a discount, I quoted them a normal small business website price – RM2500. So, in the end I undercharged them when I should have asked for more. The client said my price was very very reasonable and the boss who recommended me the job asked me why I charged so little. Well, it’s a big mistake, but I’ve learn my lesson. When large corporations ask for a discount it means you can still charge them a lot. Because usually advertising agencies will charge them tens of thousands of dollars for a website, so charging them around RM5000 is still peanuts.
I still give small discounts to clients, especially to my regular clients. Its to keep them happy, and they are also polite, buy me dinner and give me more work. At this point in my career I’ve learnt to trust my instincts, whether the client really genuine or not.
From my experience I find that people who are willing to pay more make
better clients. Yes, logically, if they pay me more I will be happier, but
its not all about the money. Clients who are willing to pay are more generous
at heart and they appreciate your work. It also means they also care about
your needs and treat you as a friend. It also means that their business
is doing well and they have the funds, so you don’t have to worry that they
run away and not pay you. They also tend to pay on time, and refer you more
work. Clients that are willing to pay more are also more professional and
make sure you have all the information you need to start the project. They
make very good long term clients.
It’s a fact that 20% of my clients contribute 80% of my income.
If you can charge your clients more and become financially stable then you will have the flexibility to take up more interesting work. Then your choice of clients won’t be purely based on profits. You can do some charity work or work for clients that have a low budget, but who provide interesting projects that allow more creative freedom. It’s something like Robin Hood, take from the rich and give to the poor. So, that’s why its good to charge your clients more.
In conclusion, don’t be afraid of asking for the price that you want. Asking for more money is not a bad thing. After all, you need to cover your overheads, make a profit, and you need to know the value of your own work. Generous clients are also nicer to work with. So I wish you good luck and hope you will learn from your own experiences.