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Pricing
5:31One challenge facing freelancers and agencies alike is determining how much to charge for their services. One debate: fixed price vs. time and materials.
[How to Run a Web Design Business with Paul Boag: Sales and Pitching: Deep Dive]
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So now we come to the subject of sales and pricing and all of that kind of nastiness.
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I don't know whether it's a British thing, we hate talking about pricing.
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It's embarrassing talking about money but we need to do it.
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It's a part of the job and we will need to face it.
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The first thing you need to work out is
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how you're going to go about charging your clients.
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Are you going to be fixed price or are you going to go time and materials?
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Now let's face it we do love to be time and materials. Didn't we?
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It is much easier to manage and you get a much,
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well, you get paid for the work you do basically.
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But, a lot of clients are going to be nervous about time and materials.
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For them, there are no limits. The project could cost millions for all they know.
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And it requires a lot of trust before you get to that point.
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Time and materials does work but it works better with regular clients
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that you built good working relationship with
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and it's great for smaller pieces of work.
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Time and materials should always be associated with a rough estimate
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just to give the clients some sense of security,
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some sense that they know how big this project is going to be.
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If you do go down the time and material route,
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make sure you won the client well before
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you reached that estimate that you've given them.
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If you think it's going to pass the estimate,
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if you got any doubts at all, make sure you talk to the client.
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They really don't like surprises.
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But in most cases, fixed price is the way to go
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especially when dealing with new clients.
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But that does mean you need to add contingency to cover those eventualities
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that you haven't considered and make sure you do add those in
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because it can come back and bite you if you don't.
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The other important thing to remember when it comes to using fixed price pricing
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is to make sure that you don't forget the add on project management time
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because that takes a lot more time than you think.
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Another really important thing to talk about when it comes to pricing
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and I admit this is not easy that you need to talk to the client about budget.
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How much have they got to spend?
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This is a really important question and a lot of clients,
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they really like talking about money.
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They've got this feeling that if they say to you they've got $30,000 to spend,
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then inevitably the project is going to cost $30,000
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even if there's actually only $5,000 worth of work.
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There's a lack of trust there. But, you really need to know. Don't you?
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You need to know how much you've got to work with.
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I used an analogy.
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I talked about houses and I asked the client, how much does a house cost?
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And inevitably the client has to say--well, it depends.
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It depends on how many bedrooms there are, it depends n where the house is,
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it depends on the market at the time.
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There were so many factors involved in buying a house
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and how much a house costs.
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The same is true with web design.
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For website, it depends on the technology that you're using,
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the functionality that's required, the amount of time that's dedicated,
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design or usability testing or whatever else.
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Basically, a website can cost as much as you're willing to spend on it.
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Now, a lot of clients will get it at that point.
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When you explained it like that, they will understand,
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but there are always some clients, there are always those that refused,
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that will not give you even a vague idea of what they're budget is.
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In such cases, the thing to do is give them a rough estimate, a range
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that their website is likely to cost.
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If that scares them off because it cost too much,
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then you're better off finding out then before you go to
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the effort of pitching for the work properly.
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When you do produce your final pricing,
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make sure you break that pricing down into modular chunks.
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Think of it in terms of core functionality
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that has to be on the website and optional items.
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So make sure that every item of functionality
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on the website is priced individually.
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This means that if your budget goes beyond what they are expecting,
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then they can go through and remove items
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or they can say that item was nice to have,
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but at that price, we can't afford it or we can't justify it.
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Break your pricing down wherever possible.
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Also, if there's ongoing costs, make sure to clearly identify that from.
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Things like hosting the main names or indeed
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anything else that's going to reoccur overtime.
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Clients kind of expect those things to be in a proposal and if they're not,
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then they become suspicious and wonder why there are now ongoing costs.
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The damage is the relationship and the last thing clients just despise
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the last thing that they want as prices so avoid those at all costs.
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So what is the secret here when it comes to pricing?
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The secret is a simple one. It's all about honesty.
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It's being upfront and talking about subjects that maybe
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a lot of us would prefer not to talk about.
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