One of the toughest tasks you will face as a new web designer is figuring out how to charge for your work. Some designers ascribe to the school of thought that all projects should be structured on a fixed-price basis. Others, meanwhile, prefer to charge by the hour. Regardless of which method you choose, it’s essential to take into account all your monthly expenses to ensure you’ve set yourself up for financial success. It’s also important to decide the scope of your services – do you just offer designs to clients, or do you offer complete website solutions?

Let’s review some of the expenses you need to consider when devising a pricing plan, and examine the pros and cons of the fixed-price and hourly methods for a designer that takes on each phase of website creation, from design to deployment.

Add Up Your Expenses

To begin, you’ll need an idea of your monthly expenses so you know what your target income needs to be. There are the big items, of course – rent, utilities, car payment, insurance, and food – but don’t forget other important and oft-overlooked business expenses:

• Hardware and software upgrades
• Subscriptions to services like Dropbox or Adobe Cloud
• Registration fees for conferences
• Membership fees for professional organizations
• Contributions to savings and/or retirement

Remember as a freelancer you’re responsible for it all! Adding up all your personal and business related expenses will give you a good picture of how much money you need to earn each month and have a little left over to have some fun now and then. As a good measure, add $100-$200 to your monthly expenses to account for unforeseen circumstances. Try using an online freelance calculator to determine the expenses associated with your preferred work and lifestyle.

Developing a Pricing Plan

In addition to factoring in the costs discussed above, you should also consider other factors that will impact your pricing plans. As a new or fairly new designer, you won’t be able to charge as much as someone with several years of experience. If you are struggling to maintain a full slate of work, you may have to drop your prices to encourage more business. Time is also an important factor in determining your price – longer projects will incur greater costs on your part, and thus necessitate a higher price for your clients. Also think about any extras your client may request, such as an added page to a website design, a more complex contact form, or time spent editing and re-editing wireframes. As the old cliché goes, time is money. Be sure you’re accounting for the time you spend working on your projects.

Fixed Rate Pricing

Fixed rate pricing will require you to provide a prospective client with an estimation of the costs for the entire project. It’s important to note that this should be an estimation, not a calculation. There are a wide variety of variables that can impact the price of a job, not the least of which is the client changing his or her mind about some aspect of the project after you’ve begun work. Giving clients an estimated budget is essential in order to protect yourself from doing 20 hours of work for only 10 hours of pay. That being said, adjusting a price upwards after you’ve given your client a quote can be extremely tricky, especially if you didn’t do a good job of estimating the amount of time the project would require.

Advantages of Fixed Rate Pricing

• Tracking your time is not necessary
• You have a clear understanding of your income
• Clients have a clear understanding of the cost
• Better pay for projects that take less time

Disadvantages of Fixed Rate Pricing

• Difficult to revise price
• Clients may expect multiple revisions or ask for additional work for the same price
• Technical issues, such as difficulty connecting the website to a domain, may arise that require more time than you thought
• The longer the project takes, the less money you make for your time
• Payment may not be provided until the job is totally complete

An easy way to give yourself more leeway with fixed pricing is to quote a price for each aspect of the job. For example, you might quote a specific price for designing the homepage, a separate price for developing a contact form, and another price for deploying the site to the client’s domain and servers. Pricing your services in this manner will help protect against shortchanging yourself while offering clients more transparency into where their money goes.

Since fixed rate pricing is great for quick projects, think about using one of many online tools to boost productivity. You can also streamline your time by using a website builder to design awesome websites with ease. The free design resources and features available with website builders allow you to offer clients many more features in a shorter amount of time. Additionally, website builders give you the power to charge for your design work as well as development work. No more outsourcing to integrate a Facebook feed or to add an online store. With a website builder, you can truly do it all from the initial designs to deployment of the site. By offering such a wide range of services and solutions, you’ll be able to market yourself as a “website creator”, not just a website designer, and have many more services for which you can charge.

Another important aspect of fixed rate pricing is to clearly state in your contract what services you provide for the price. For example, in a quote for designing a website, include the specific number of pages you will create for the price provided. Specify the features you will include, such as social media integration, integrated analytics, or a contact form. Some clients view a fixed rate price as the amount they pay regardless of how much additional work they add, so to prevent exploitation of your services it’s important to be as specific as possible.

Hourly Pricing

Setting an hourly price for your work is a popular option for many web designers. Hourly wages provide some level of protection for freelancers in that they are assured of being paid for each and every minute they put into the project. This necessitates more paperwork on your part, because clients will want to see how much time was spent on each aspect of the job. You’ll definitely still want to provide a quote up front about the cost of the work you will perform, but rather than focusing on a final, fixed price, you will provide an estimation of the number of hours you expect the project will take.

Advantages of Hourly Pricing

• Price adjustments are much easier as the scope of the project changes
• Flat hourly fees are easy for clients to understand
• Clients use your time more wisely
• Timeframes are easier to estimate
• You can invoice expenses along the way, rather than waiting for a lump sum upon project completion

Disadvantages of Hourly Pricing

• New clients may not trust your honesty when reporting hours
• Time tracking requires additional paperwork, including a breakdown of billable and non-billable hours for each project task
• Income is more fluid and less reliable
• Some clients may balk at your hourly fee
• Hourly billing can make working on multiple projects extremely difficult, as you need to track your time and rates for each project

As with the fixed price method, it is abundantly important for you to communicate with your client that your hourly pricing is just an estimate, and that the end price may well be above what was originally quoted. Additionally, when setting an hourly wage for yourself, be aware of setting it too high and pricing yourself out of work. Also be leery of setting your prices too low as that might give the impression that you are inexperienced or produce shoddy work. Finding the right price will involve striking a fine balance between being competitive with other freelancers while still making the income you need to cover your expenses.

To handle the paperwork associated with working on a per-hour basis, consider one of the many free or low-cost invoicing and time tracking tools available online. PayPal is an excellent option that allows you to create and manage invoices. Clients do not have to have PayPal in order to receive invoices and remit payment. Hiveage offers the same free features of PayPal, with the additional option of adding time tracking, automated billing, and detailed reporting for a small monthly fee. Hiveage also allows you to establish online billing and payments in multiple currencies. An additional option is Wave, which offers mobile invoicing, automated payment reminders, and online billing, as well as accounting software so you can track your income and expenses. Wave’s features are all provided for free.

Choosing the Right Plan for You

Deciding how to charge for your web design work will depend largely on how you prefer to work. Do you like knowing exactly how much income a project will generate? Or do you prefer to have the flexibility that an hourly fee will provide you? Another factor to consider is where you’re at in your career. As someone just starting out, it can be a challenge to accurately estimate how long a project will take, which makes the hourly fee approach more attractive. Yet, deciding on an appropriate hourly fee can also be difficult without having much experience. It might behoove you to give both methods a try to see which one suits your tastes more. There’s nothing wrong with charging a per-project fee for some projects and an hourly fee for others. At the end of the day, what’s most important is that you are making a livable income.

How do you charge your clients for the work you do? Do you have additional ideas for charging for your work? Be sure to share your thoughts with other readers by leaving a comment below.

Photo Credits:

Dollar Sign by OTA Photos via Flickr Creative Commons

Paperwork by Kozumel via Flickr Creative Commons

Signing Paperwork by Dan Moyle via Flickr Creative Commons

Time is Money by Tax Credits via Flickr Creative Commons