How much does a website cost? It’s a question designers and developers are asked all the time. It’s an impossible question to answer without details and your response is likely some variation of “it depends.” At some point you learn the details it depends on and have to come up with a price. How do you determine what that price will be?
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Last week I offered thoughts about how to determine your costs for a project. This week I have a few more quick thoughts about cost, but mostly I want to look at some of the things you should think about when setting a price for a project.
A Bit More About Cost
In last week’s post I talked about costs per project, however those aren’t the only costs we have. You probably have to pay for one or more of what’s below:
- services (hosting, merchant fees, etc.)
- computers and other equipment
- office space
- health insurance
- retirement savings
I’m sure you can think of a few more things to add to the list above. We have to pay for these things and we have to account for them when we price projects. When you’re determining the minimum you’ll accept for a project, remember the costs not specifically associated with the project.
Price is a Negotiation
I think most people wanting to understand how much to charge for a website want an answer along the lines of you should charge $X when the requirements of the site include Y. It’s the answer I always hoped for. Unfortunately that answer isn’t given and for good reason.
The truth about pricing services is every project is a negotiation between service provider and client. For any project there’s a maximum the client is willing to pay and there’s a minimum you’re willing to accept. Assuming the client’s max is greater than your min, a price you’re both happy with can be found.
If you consider only the one project, your client would like the price to be as close to your minimum as possible and you’d like it to be as close to the client’s maximum as possible. There are a lot of variables that set those mins and maxes and help determine where in the middle to meet. You have to think about more than one project, though.
While there are reasons at times not to charge as much as you can, remember that the money you make as a service provider is tied to how much time you can spend working. If you’re a freelancer or a small shop, you aren’t making it up on volume. You generally need to charge more per project.
What Should You Charge?
I wish I could offer you the simple charge $X for a site with Y requirements, but again it really doesn’t work that way. Instead I want to raise some questions you should think about when setting prices.
What is the client willing to pay?
If you’re negotiating a price between 2 endpoints, it would be helpful to know those endpoints. One comes from your costs. The other from the client’s budget. I find it helpful to ask for a client budget as soon as possible.
I don’t need to know the exact budget immediately, though I’ll gladly accept that information if it’s given. Typically I explain that it’s common for people to want more from a website than they’re expecting to pay and if they can give me a rough idea of their budget ($500?, $5,000?, $50,000?) I can do a better job estimating a price and what can be done at that price.
If the thought of asking for a budget makes you uncomfortable read the articles below or the one I linked to a couple paragraphs above.
What value do you bring to the project?
I can’t stress this enough. Learn to see the value you bring to clients and charge based on that value. You figure out your costs to help determine an absolute minimum to charge. Value is more about understanding what the client can earn from your work and how much your client is willing to pay.
Get over feeling like you don’t deserve more because you don’t have enough experience or because you think the work will be easy. You have more experience than your client and the work is almost always more than you initially think.
You determine costs not to lose money. You price to maximize revenue and profit over time. To best do that you need to understand your value.
What value do you deliver in general?
Think about your business in general and think about what value you can bring to all clients that your competition can’t. Maybe you have specific experience in an industry or have knowledge from another that helps improve your designs.
The more you increase your skills as a designer/developer and in general, the more value you bring to every project. For example I have a pretty good understanding of search engines, and can write and edit client copy. Both of these allow me to charge more, since they add value above and beyond what’s expected of me as a designer/developer.
Is there long term potential with the client?
In the short term you want to maximize the one project. In the long term it’s possible you’d do better to charge a little less to build a lasting relationship that maximizes the money you bring in over the long term.
That decision should come from you and not the client. If someone holds out the carrot of more work later for a low price today, I can almost guarantee there’s no work coming later. However, if you see long term potential working with a client you might adjust your price to ensure you get the job.
However, understand that long term client relationships will generally not be about price, but about quality, trust, and communication.
How will the price you set affect your brand?
People tend to recommend you based on why they chose to work with you. If you set a price too low, expect future leads to be looking for a low price. If you set a higher price, perhaps there will be less leads, but those that come will be much more willing to pay that higher price.
At any price point some will think it too high and others too low. Some will think it perfectly reasonable. Think about who you want as clients. Your prices will inevitably target some people over others.
Don’t be afraid to say no if a client isn’t willing to pay your price. It’s hard to do, especially when first starting out, but it’s more important to consider the value of your brand than worry about getting one project.
How much work do you have scheduled?
Let’s face it we have bills to pay and sometimes we just need some work. It’s a gamble working for less than you should, because another job might be just around the corner. Still…a bird in the hand…
If your business is like mine, the work isn’t steady. It’s busy for a time and then not so busy for a time. Sometimes during those not so busy moments you might charge less for a project just to have some cash flowing into your business.
Can the cost of the project be justified in other ways?
Is there another benefit from working on a project? Maybe when first getting started you need to build your portfolio or being associated with a project will carry prestige and lead to more work.
Be careful here as we usually have a tendency to be more optimistic about these other potential benefits than is realistic. Still there are times when a project can bring benefits worth a lower price.
How interesting is the project?
It’s possible you’re simply interested in the project. Sometimes money isn’t the most important consideration and you just want to work on a project. It’s not all that different from working on your own projects.
I’ve taken on projects because they gave me opportunity to learn something or because I wanted to be part of it. There’s even a business application in choosing projects you like. The projects you work on today tend to influence the projects you work on tomorrow.
A month ago on an episode of the Unfinished Business podcast, Sarah Parmenter offered the perfect response to the question “how much does a website cost” by asking a question in return. How long is a piece of string?
Just as the length of string is different from piece to piece, the price of a website is different from site to site. There are a lot of things to consider when pricing. Your prices should be in constant evaluation. Just because you charged $X for a project today, it doesn’t mean you should charge the same $X for it tomorrow.
If people are saying yes to your prices too quickly, it’s probably time to raise your prices. Whenever someone agrees to my price without hesitation, I assume I charged too little and should start charging more with the next project.
On the other hand if too many people are saying no to your prices, maybe you need to offer a lower price. You might be attracting the wrong clients so don’t assume a lower price is the answer, but it might be.
Pricing is an art and it’s something you’ll do better with practice. The most important thing to remember is to price based on the value of your services and not the cost of your services. Learn to see the value you’re giving clients and charge accordingly.
There are a couple more topics I’d like to cover in regards to the business side of design. Next week, we’ll take a look at how to cut your costs to increase your profit and also how to collect money to improve cash flow.
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