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Pricing
agerhart




msg:792974
 6:23 pm on Jul 17, 2001 (gmt 0)

I am doing a new type of pricing plan and I would like to get a few opinions. What do you usually charge per hour?

 

agerhart




msg:792975
 8:56 pm on Jul 17, 2001 (gmt 0)

no one wants to give up their prices huh? :(

Mike_Mackin




msg:792976
 9:18 pm on Jul 17, 2001 (gmt 0)

right

Brett_Tabke




msg:792977
 9:29 pm on Jul 17, 2001 (gmt 0)

It is a tough one Agerhart. I usually bid by the job.

mivox




msg:792978
 9:32 pm on Jul 17, 2001 (gmt 0)

I know how you feel agerhart... everytime someone asks me for for an hourly rate quote on freelance work, I wince. Am I quoting higher than everyone else, or am I grossly undercutting the competition, and making myself look like the one-woman-Walmart of web design?

<added>For freelance design work, I also feel more comfortable bidding by the job... so that's always what I do when I can get away with it.</added>

My boss farms me out for $50/hr. I make considerably less. So there's one figure... that's also in Fairbanks, AK. Your mileage may vary, depending on location. Look for some figures on the tech headhunter websites, or look on other design shops' sites. You may get a vague idea of some very ballpark figures...

Marcia




msg:792979
 10:40 pm on Jul 17, 2001 (gmt 0)

>no one wants to give up their prices huh?

agerhart, prices can vary so much, it would be hard to judge, anyway. I do know that for design work, there are tremendous differences depending on location. I know (personally) a couple of very high-end designers in the midwest who charge $50 an hour, which appears to be A-OK for that area. Here in Los Angeles, $75-85 an hour seems to be the starting point from what I've seen, probably because of the nature of the local market. Some do charge less, however, especially those who have a broader-based market.

Setting pricing for SEO work, imho, is not as simple as for design work. With design, it's pretty staightforward to estimate the number of hours it will take to take a site to completion. With SEO work a lot more is involved - extensive research and analysis, differing number of keywords involved, varying levels of competetive markets, different site architecture to deal with. With existing sites, therefore, a different number of modifications might need to be made, and possibly content developed and written, and pages added.

On and on, I'm finding it more complicated to estimate optimization in advance than design work.

While design work can be quoted either hourly or by the job, and I've seen both models used, I'm not so sure that SEO work can be done on an hourly basis. I would like to find out if any do it that way, though not the amount charged. I think hourly or job-based rates, if decided fairly, would depend on the level of experience and reputation, and also on what the market will bear. It doesn't always work that way though, and there's also a difference in the amount of promises or claims that different people make.

There can also be differences in what's quoted to different potential clients. Some won't work for less than a certain amount, while others will work with different markets. In my case, right now, I'm working with, on the one hand, home business people who need something quick and simple without much of an initial investment (which they can't afford). One gal just got ripped off and took a tremendous financial hit, aside from her husband just having been hospitalized for a couple of months. I'm not turning her away - we've all had our tight spots. On the other hand, I'm working with a "very expensive" webmaster who just submitted our SEO bid to one of his best clients, who will be spending over $1 million on product development and site promotion.

There's "retail" pricing, direct to clients, but it won't necessarily be the same sub-contract, or "wholesale" work. I think everyone has their preferences - I prefer to sub-contract any day of the week, as in this particular case, and let the webmaster deal with the client PITA issues.

In another case, I'm working with someone on a limited startup budget, designing and promotingthe site, which could easily become a full-fledged "community" site, with message boards, chats, online classes, etc. She's aready got a large following, so there will a be ready-made mailing list, which will bring instant traffic and some viral marketing of the site. I haven't even gotten into making recommendations for that yet. It would involve figuring out a revenue-producing business model for the site. Figuring out how to charge setup and continued maintenance on that would be a bear, there'd be so much work in doing the boards and chats regularly. No idea how to deal with that, I don't have a clue.

There are so many variables, I've yet to come up with any substantial decisions. I'm also struggling with pricing issues right now, obviously.

According to the HTML Writers Guild, it's questionable whether pricing can be discussed at all in a public venue, regarding design,because of price-fixing concerns, so that's something to consider.

Also, something I just realized is that if people were to post their specific rates, we could end up with a solicitous and competitive discussion, which wouldn't be very productive or helpful.

I'd be interested not necessarily in specific figures, but in how figures are arrived at. I could easily go from there, based on my own estimate of what I should be making per hour.

I almost wish sometimes that there were a non-public forum to discuss these things. For one thing, there are specific issues I'd personally not want to discuss with everyone in general, particularly clients or potential clients who would have access to the discussions.

agerhart




msg:792980
 10:52 pm on Jul 17, 2001 (gmt 0)

thanks for the great reply Marcia.

I was not aware that we weren't supposed to be discussing these types of things inside the forums.

I completely agree with you about having to employ a flexible pricing structure depending on the client, the client's site, their needs, and the size of their wallet. I just proposed a price to someone today that they could not afford, but I did not turn them away.

I think you have to approach it correctly. There are two options that you can take when trying to work out pricing with a potential client:

1) You tell them a price and what you are going to do (every piece of optimization that will apply to their site), and they will either accept it or they will decline because it is too expensive and they will ask you what they can get for a lesser amount of money.

This can be avoided by:

2) Once you have been in contact with the prospective client and they have seen what services you offer, they will be more interested and ask about pricing. At this point you ask them how much money they have to spend...even if it is a ballpark figure.

This allows you to take that figure and tell them how much work you are willing to do for that particular amount.....much easier than option #1, in my opinion.

mivox




msg:792981
 11:40 pm on Jul 17, 2001 (gmt 0)

Once you have been in contact with the prospective client and they have seen what services you offer, they will be more interested and ask about pricing. At this point you ask them how much money they have to spend...even if it is a ballpark figure.

That's how I go about 'formulating' my bids... Me: "So, Mr. Client, what are you interested in doing on the web?" Client: "Blah, blah, blah... how much will that cost?" Me: "Well, that's hard to say... what's your budget for this project? I can show you other sites I've done in that price range." Etc., etc... That way, I don't have to worry about my quote scaring away a potential client, and I also take care of the client-expectations-not-quite-lining-up-with-their-budget problem right up front. (Nothing worse than the client who thinks an online store is going to cost them $150-200)

knighty




msg:792982
 8:07 am on Jul 18, 2001 (gmt 0)

That would be OK but I have tried that in the past and the client will not tell me their budget.

A) because they have no idea about how much a site costs.

B) because they are supicious that you will just pitch them a price based on thier highest 'budget'

C) "you're the expert you tell me based on what I told you I require"

ettore




msg:792983
 8:43 am on Jul 18, 2001 (gmt 0)

I always go with a multi-side approach.

First of all I offer a free basic analysis of the client's site (placement in most popular SEs, overall SEO friendlyness and major problems, etc. - investing less than 1 hour of my work).

I then quote several "levels" of SEO, pointing the customer to which goals it is possible to achieve with each step, showing them examples of other works I've done, and using a standard pricelist which includes
- fixed startup (small) fee for an in-depth analysis of the site possibilities, potential markets, suggested actions, etc.
- range of prices per-keyword and per-SE placement
- range of prices per reporting

I then ask the client about his budget (often they don't have one, since they didn't have a clue about what SEO was and/or they were just ripped off by some "submit to 1000s and be found") and show him which are the "real" expectations for what he is willing to invest, picking from the pricelist and building a forfait "project".

I don't worry that much about scaring away potential clients who think that being in top 30 it's just a matter of a coupla hours spent in submitting/resubmitting: either they understand what we are talking about or I will be pleased to "filter" them off.

Actually, most of the time spent during most first contacts turns out to be a brief course about what exactly SEO means: it's quite time-consuming, but evan the scared away ones often come back after cheking other more standard (cheaper but less professional) offers.

TallTroll




msg:792984
 10:16 am on Jul 18, 2001 (gmt 0)

Do you have trouble pricing a job when the client asks for an estimate? Then try the ALL NEW Price-u-like methodolgy!

Use a fixed daily or hourly rate. When they ask "How much?", respond with "That depends on what you want to do" and start quizzing them about the objectives of the site/project. If they cant answer you properly, they need to do more (any) thinking about it, and its likely not a contract you want just yet, as they are liable to have "good ideas" part way through the project which totally invalidate everything you just did.

If they can answer you, you know what they want and can probably guess to within a day or two how long it will take. Quote the high end of that (MaxDays*rate=quote) as a "ballpark figure". If they say "yes", great, you maximise revenue.

If they balk, come back to them a day or two later with a low end quote (MinDays*rate=quote), saying that on closer inspection it wont take as long as you thought. If they stil balk, walk away. They are either cheapskates or have no idea of the market conditions. In either case they are likely to be more trouble than they are worth.

They may well come back to you after going to some other companies, and it gradually dawns on them that they arent going to get the wonderful asp driven, JS heavy, Flash front end site they had envisioned for 50p

BTW we charge more for 1-day or less projects, because any overrun (and they always overrun) really cuts into the margin

We also do cut price "SE Training" for our clients. Its another chance for us to show our face, it makes them feel good, and its a chance for us to upsell them some redesign, would sir like an e-commerce site and fries? etc

john316




msg:792985
 1:04 pm on Jul 18, 2001 (gmt 0)

I've sold a lot of things successfully over the years and really do find that selling web-related services offers quite a few challenges. One of the things that makes it slippery is the client. The housewife who is selling crafts on the side is not the same as an established businessman who is trying to open new sales channels on the web. The problem is that the housewife with the sideline crafts business probably knows (at least in her mind) more about the web and how it works than the marketing guy from XYZ "been in busineess for twenty years" corporation.

My approach with the housewife is this:
"My rate is $XXX.00, are you comfortable with that?"

The normal reply is this:

"Oh, that is expensive, I saw on the web where I can get free web sites, and another guy told me he can do it for $25.00 a page."

So I say, "wow, that sounds like a very good deal, if I were you I would go with it, if it doesn't work out for you, give me a call. Have a great day."

There is no basis for an agreement if the word "free" is used even once.

The approach with the businessman is quite a bit different.

Businessman asks: "How much do you charge"

My reply: "How much do think you can make from this endeavor"

If he returns a figure, than I know that we have some basis for discussion and take it from there. I keep the proposal very simple. "In order to achieve X, I believe your investment will be X." I do not detail proposals to the point of a "how-to" manual. I keep them as vague as palatable :).

(edited by: john316 at 3:15 pm (gmt) on July 18, 2001)

nell




msg:792986
 1:30 pm on Jul 18, 2001 (gmt 0)

I charge a flat rate between $500-800/week per client to promote a domain. Each is contracted for 3 months at a time. This gives them both a fixed budget and an "out" if performance is not what they envision.

I work some 80 hrs/wk. at home and handle 4-5 clients at a time. I have 2 computers on cable modem and have a part time person come in daily to help with routine submissions, etc.

Start-up was slow and for a while worked for peanuts. However, once you can show high ranked results in a variety of major keywords and have references from happy customers, prospective clients will line up for your services.

I do no graphic design but refer that work to a design house that refers SEO work back to me.

Brett_Tabke




msg:792987
 1:35 pm on Jul 18, 2001 (gmt 0)

Let's press the _pause_ button on this thread for a bit and discuss it. The topic has raised some red flags:
Discussion:
[webmasterworld.com...]

Brett_Tabke




msg:792988
 4:03 pm on Jul 18, 2001 (gmt 0)

Per the other thread - I feel it is best if we stay away from the discussion of actual figures. However, if those figures are available on the web, a direct link is ok.

I don't think we need to edit the thread - it's ok.

volatilegx




msg:792989
 4:11 pm on Jul 18, 2001 (gmt 0)

I personally set my consulting/programming rate high because I'm constantly swamped. $XXX an hour, 50% deposit on estimate due in advance. I don't solicit consulting or programming work.

(oops sorry Brett... didn't read your post until after I made mine... removed the dollar amount of my rate.)

skibum




msg:792990
 4:50 pm on Jul 20, 2001 (gmt 0)

If we aren't going into actual $$$ amounts, how bout the structure of the deal, hourly vs. flat rate, maintenance, up font %, what gets delivered at various milestones. Does any particular structure or approach seem to make both sides more pleased with the results? Balance and setting expectations are the key, hourly and flat rate both have their benefits and drawbacks.

paynt




msg:792991
 4:58 pm on Jul 20, 2001 (gmt 0)

I agree skibum, and would like to know more about how folks do structure their payments. I tend to like to get an upfront amount and either provide x amount of services for that amount or work off that at a per hour rate.

Much of what I do is structuring and restructuring sites to make them more friendly for search. I see many SEO firms pricing based on rank which isn't my focus since I'm driven by traffic.

Black Knight




msg:792992
 1:22 am on Jul 22, 2001 (gmt 0)

I hate talking figures because I always seem to be the most expensive. :)

I charge by the hour for consultancy, and I choose my clients carefully. My charges are comparable to those of a networking engineer or a database pro.

Rather than naming figures let's just say that before I took this full-time position, I only had to work 3 full days each month as a consultant to pay all the basic bills (but no treats) for a family of 2 adults and 3 children living in central London.

The important bottom line though is that the client always made at least double thier previous profit even after deducting my costs. That's how you price anything - by the value it adds on the bottom line.

Say you work for a company that is spending $30,000 per month in marketing in total and getting 90,000 sales per month for it. Well if you can show them that you can make sales grow to 180,000 per month and yet simultaneously reduce their total marketing spend to $10,000 per month or less ... well they are quite prepared to pay you in relation to the $50,000 per month real-term value you have brought. I'd say you could possibly charge $15,000 per month in that scenario and they'd be happy to pay it.

Ammon Johns

pete




msg:792993
 9:25 pm on Jul 22, 2001 (gmt 0)

We try to stick to a fixed hourly rate - the same as in any other fee based business. This is a good starting point (I started off in law so I suppose my background has had an influnece!

But, where it gets interesting is whether you introduce a retainer model, revenue sharing or performance (pay per click or pay per top 10 position).

In all our proposals, we give the client the retainer and performance option and let them choose. Obviously, the retainer option is costed out in projected hours!

Every project is different - if you get a client who is new and has no directory listings or any presence on the engines in an emerging industry, its a great opportunity! Less so, if the client has come via another optimisation firm and has unrealistic goals.

Robert Charlton




msg:792994
 9:58 pm on Jul 22, 2001 (gmt 0)

Pete - Can you elaborate a bit on the retainer model, particularly as related to search? Not having the benefit of a law background, I've always been a little unclear about this.

I would think that a revenue sharing model would be dependent on many other factors besides getting eyeballs to the site, many out of the SEO's control.

In general, I'd think that the way you charge is inherently related to the type of optimization you do. Cloaked doorway pages, say, would involve a very different fee structure than either rebuilding an existing site or optimizing the content, structure, and linking presence of a new one.

I too am having a lot of difficulting estimating my time in SEO projects, and I have a background in putting together very high-budget media projects with a great many variables. One of the big problems with SEO projects, even if you're working with a professional design company, is that the ultimate clients are almost always amateurs (and not in the good sense of that word) who don't understand the consequences of the details. And education doesn't work... it's really a built-in mindset.

When I'm able, I've tried to build a "discovery phase" into my projects... in which I do a detailed site analysis (if there's an exisiting site), search term research, test searches, etc.

pete




msg:792995
 6:24 am on Jul 23, 2001 (gmt 0)

Hi Rob,

How do I cost out the retainer part?

In law, we had to account for every second of our time. From each telephone call, a photocopy made through to a consultation, every hour or part thereof is costed at a standard rate depending on your experience and speciality.

Most law firms have very tight time management systems. I have taken this mentality and applied it to our web development and SEO team. After initial thumbsucks and monitoring time on projects, we have become very good at estimating how much time one will spend on a project. A detailed proposal and spec is key including keyword analysis, site analysis, searchscape analysis (where they are and arent on the directories/engines). If we get it wrong, its often on understimating a project and costing out your time at well below the market fee.

So, Option A will always be a set up fee and monthly retainer with the average contract spanning 9 months. Our SEO rates are costed out at the same as our programming rates (Asp).

Option B consists of a small fixed fee with the major component being variable.

Option C would be revenue sharing but as you said there are loads of things to take into account. How good is the clients fulfillment? Is it a lucrative industry and is it suitable for selling on the web? On most occasions, we only institute Option C after the client has been through option A or B and we have confidence in their business and ability to make money on the web.

Robert Charlton




msg:792996
 12:45 am on Jul 26, 2001 (gmt 0)

Pete - Thanks for your post, which was very informative, but I didn't phrase my question clearly. I don't know technically what a "retainer" is. I've heard it described as fixed non-refundable minimum fee from which hourly charges will be drawn... but I've also heard it described as a fee on top of which hourly charges will be added. It looks like you're using it as the former.

I wonder also at the difference between A and B... would the larger retainer of A essentially be a guarantee of availibity, and does this setup give the client a lower hourly rate?

>>So, Option A will always be a set up fee and monthly retainer with the average contract spanning 9 months.<<

On most projects, the largest part of my work is up front, usually in the first one, two or three months... with obviously some maintenance beyond that... but my approach consists mostly of target analysis and site design or restructuring and content shaping. Are we talking about the same thing? I can see how different optimizing approaches (eg, the maintenance of cloaked doorways) might be given to different contractual setups.

I like your term "searchscape analysis." I've sometimes been using "web context analysis," or, as in my post above, "test searches," which doesn't sound nearly so impressive.

WebGuerrilla




msg:792997
 4:13 pm on Jul 26, 2001 (gmt 0)

Robert,

I do all consulting on a retainer basis. Basically, I have a set minimmum that is based on an hourly figure. The client pays the minimmum upfront and gets a specific amount of my time. When the time has been used up, they need to purchase another block of time. The key is that it is always paid upfront. Never bill for consulting. Quite often, the client might not like, or choose to ignore what you tell them. If the answer you give them isn't what they want to hear, they tend to take longer to pay. :)

The other advantage of a retainer model is that it allows you to offer discounts based upon the amount of time they purchase. It also helps eliminate the brain suckers who are looking for a free ride.

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