I need help with my pricing structure

pricing structure, web design, ammweb

[ammweb]

I started my own web business about 9 months ago. I have had some difficulty in setting up a pricing structure that is beneficial for me and my small business clients. I really have no pricing structure for my websites. I kind of just like to meet the client and find out what they want the website to do and then I think about what I have to put into it for he/she to get what they want. That's pretty much the point where I am at a loss and I have no idea what I really want to charge. I currently have a decent client base of about 4 or 5 people but they are all people that I already knew before I started. I am just now getting into some new clients (that I don't know) and I am having trouble with the pricing. My current client only wants a three page website and has very minimal input for me. I'd like to get an idea of how I should look at charging things to people. I don't know If I should charge specifically by the hour or if I should do and estimate based on what they want or if I should make a package and sell that people. I'm at an impass and I have two new clients I haven't even met with yet. I have lots more questions about my new business. Is there anyone out there willing to take me under their wing and guide me in the right direction. I appreciate any and all ideas that anyone may have.

Thanks,

Ammweb
Adam

[varlik]

Hi Adam.

I can't speak for anyone else but what I do is estimate how many hours I think the work will take, add 15% to this (to allow for any problems) and multiply that by my hourly rate. Add to this any fixed costs and give that to the client as an estimate for the work.

Thomas

[ammweb]

thanks for the input. So how do you go about putting together an estimation. Do you meet with the customer and find out what they want and then formulate your estimate later. Do you charge for the initial consultation. And how do you thwart questions about the price until you can give them and estimate?

Sorry lots of questions I know but I need some input.

[stealthmag]

You can't give them a price until you have scoped the project otherwise it's a matter of "how long is a piece of string?"

Initially it will be trial and error in terms of you working out how many hours it takes to get things done perhaps but put together a document that outlines how you work (eg we present the client with 2 mocked up designs that they can choose from, once signed off we cut up and implement html, then we require signed off copy, and so on), then you present a timeline and your estimate and say that your estimate is based on certain assumptions (such as your process of allowing 2 rounds of amendments perhaps?).

Even before this (and after your initialy meeting), put together a Statement of Work (SOW) with a sitemap outlining which browsers you are designing for and so on. get client to sign both these documents.

I'm a bit all over the place in my answer but don't give a price until you have sat with them and then confirmed in an email what they require. Calculate based on hours - if you go over time because you under estimated you'll have to bear it. If the client comes back with additional rounds of amendments you can then say it is out of scope and will incur further cost.

good luck!

[ammweb]

Thanks alot stealth. I will try to incorporate some your great advice into my package.

Thanks alot for the input.

[kapow]

Hi Ammweb

I really struggled with pricing when I setup my business, but that was 5 years ago and a lot has changed. There are probably many ways of pricing a web design project. Each web designer will give you a different method. My advice is to only ask successful web designers.

I would say its up to you to decide what takes you the most time when creating a new website. For me the single biggest issue (on a standard website) is arriving at a template/design the customer approves. It makes very little difference (to my time) if they have 5 pages or 10, so I don't even have a price per page anymore (unless they want 100 pages). My main cost is for the Design - for me thats easily 90% of the job. So I say things like "Your site costs X and it doesn't matter how many pages you have" (within reason) - that really puts the customer at ease.

I would say 'X' is calculated from what it costs you to live + your reputation.

Then there is what I call 'Perception value' ie things that don't take me much time but really impress the customer e.g. setting up their domain name and email takes me 20 minutes but it has great value for the customer.
'Perception value' IMO also has much to do with your reputation e.g. do you have a portfolio with:
a.) 2 small business sites, or
b.) with 80 big companies and 2 household names?
I now run a 'b' type web design company :) so my prices are much higher these days.

AND what can you offer that the other web designes can't?

The next big time factor (for me) is the 'special stuff':
A simple enquiry form on a website is at one end of the scale of 'special stuff', a full shopping cart development is at the other. For this it depends on what they want. Only when:
- You know what they want.
- You know how long those things will take you.
- You know the 'Perception value' of those things
Can you give a cost.

Then there is their 'time':
They always want to know how long the job will take. I find the biggest hold up is waiting for the customer to provide their text for the pages. Few customers what to pay for a copywriter so we wait for them to provide a word doc with all their info in it. A really good customer will do this in a couple of weeks, but I have many who have taken over 6 months! So I tell them "the two biggest time factors are:
1.) Us creating a design you approve (= x weeks).
2.) You providing complete and correct text (= as long as you take).

These days I know within 5 minutes of talking to most new customers what the total price will be.

Good Luck!

[ammweb]

That was really great advice. Thanks alot. There's some real great insight there. Now my only problem is advertising in the beginning stages of my business.

[kapow]

...advertising in the beginning stages of my business

Join a local business networking group. Thats what I did. In my first 2 years 9 out of 10 of my customers came from it.

I joined BNI - Check Google to see if you have a BNI group in your area.

[ammweb]

I'll check that out thanks.

[Caimin]

A really fabulous way of advertising is to do a great job for a client. They will spread the word for you. These days most of my work comes from repeat clients, which saves me a lot of time in trying to grab new clients.

Good luck!