If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!

From forum to forum there is a common question you hear across them all, “How do I set prices?” The answer to this question could determine the number of projects you gain and the number of projects you lose.

There are 3 pricing mindsets that most designers go by:

Hourly Pricing

I am not a fan of hourly pricing for a couple reasons. First, with hourly pricing there’s no way that your client has a firm understanding on how much the overall project is going to cost. I’m not sure about you, but I’m not willing to give someone a blank check to do some work.

Web development is an expansive field. One developer could perform a task in 2 hours while it could take another 4 hours. How is your client to know which one you are?

My second complaint about hourly pricing is that it limits the amount of money that you can earn. Many who base their costs on hourly pricing do so because they say, “I want to make $100,000 a year, how many hours do I have and what do I need to charge per hour to make it?” Thinking this way makes your roof at $100,000. Not that it’s a bad number, but I’m sure you’d be happy to make more!

Competitive Pricing

Competitive pricing falls under the “I’m cheapest” category and is one I can’t stand. Nobody ever said there was a problem offering your clients a bargain, but many will see your “cheap price” and relate it to “cheap quality”.

For example, I recently signed on a new client where there were at least 10 other developers quoting for the job. Was I the lowest bid, or even close to the lowest? Nope. As a matter of fact with the exception of one developer, my quote was the highest. Not all clients are like this. Some are out for the cheapest price. Yet, in my experience those tend to be the hardest clients to work with.

Which leads us to the pricing mindset that you should use for your design firm…

Value Pricing

At first you may read that and say, “Hey, isn’t that pricing cheap?!?” No, it’s not.

Value pricing is based on the value that you provide to the client. Say you developed an application that you intend to use for multiple clients. The first client gets the large cost because of the development of the app. Now, will you charge future clients that use the app less just because it takes less time? Of course not!

You should base your prices on the value that your client receives from your services. Of course you have to factor in the time spent developing the project, but the value provided should far exceed that time. Your pricing conveys the value of your service through its price. I’m sure most everyone has heard, “You get what you pay for”. This is the filter through which most buyers view the world.

I’m not saying take advantage of your clients and please don’t go crazy marking up your prices to astronomical levels, but don’t think you need to be the cheapest to succeed.