As a freelancer, you need a clear understanding of web design pricing. Overcharge for your services, and you’ll have a hard time attracting customers; undercharge, and you’ll never be able to keep the business afloat.
Finding your ideal rate is essential. Every project you take will be a little bit different, but when you have a solid grasp of the value of your time and services, it’s easy to build a pricing strategy that helps your business grow.
To get it right, you not only need to know how much to charge to build a website, you also need to understand the costs of your business, how pricing impacts customer relationships, what profit margins exist, and so much more.
We’ve put together five strategies to help you gain more insight into how to build a web design pricing strategy that not only recognizes the value of your work but also helps you grow your business.
- Know the true cost of running your business
- Find the pricing model that fits
- Use price as a negotiation tool
- Offer a payment plan
- Increase your price as your value increases
Know the true cost of running your web design business
There’s a lot that goes into building a freelance web design business before you even start working on a client project. In addition to gaining practical experience, there are tools to purchase, certifications to obtain, skills to brush up on, and so much more. Determining your ideal price starts by understanding the costs that go into running your business.
To help survey what exactly your costs are, break your business down into different segments:
- Equipment:Computers, tablets, router, pens, paper, printer, etc.
- Subscriptions and licenses:High-speed internet, website hosting, domain registry, design software, etc.
- Home office needs:Desk, chair, lamps, fan, speakers, etc.
- Education and training: Online courses, certifications, accreditations, etc.
- Marketing and advertising:Ad spend, conference travel, email service provider, etc.
Now you know how much really goes into providing your services to clients. With a comprehensive list of payments, you’ll always know how to cover operational costs with your price whenever you take on a new project.
Having an outline of your operating costs also helps justify your price to customers. Design services, specifically freelance design services, can easily be undervalued by potential customers if they don’t understand what goes into the web design process. If you’re ever in a situation where customers are concerned or confused about a price you’ve quoted, a clear statement of your costs will help you clear things up.
If you want to be even more transparent, you can list what you pay for each segment on the pricing page for any potential customer to review.
Find the pricing model that fits
There are a lot of different pricing models, each with their own unique benefits. The right pricing model for your business will factor in not only the operating costs of your business but the type of services you provide and the individual project you’re working on. Codifying each aspect of your business makes your pricing decisions more easily understandable to customers.
To get started, choose an overarching strategy. Below are three popular choices:
- Value-based pricing– This model is built on the idea that your price is a representation of the value your services provide to customers. It requires a concrete understanding of their needs as well as knowledge of their willingness to pay. The best way to gain more insight into customers is through direct interviews and research.
- Cost-plus pricing– Instead of focusing on the customers who purchase your services, cost-plus pricing looks at the cost of running your web design business as the basis for a pricing strategy. To implement this strategy, you take the costs of running your business, which we talked through earlier, and apply a percentage on top as your profit. While simple to use, cost-plus pricing is inefficient and doesn’t consider what customers are actually willing to pay for your services.
- Competitor-based pricing– As the name states, competitor-based pricing looks at other players in the market to determine the price of your web design services. Basically, you see what other people are charging for similar services and copy them. Competitor-based pricing is also easy to implement but doesn’t optimize your price and may lead to difficulty in the future if your competitors don’t truly understand their pricing either.
Most freelancers charge by the hour when starting out, which helps you hone in on a price that most clients will understand. Hourly pricing also helps you build an efficient working schedule and makes clients more conscientious about your time. Just remember that using an hourly rate makes you beholden to a set delivery window — which, if exceeded, is a negative experience for the customer.
Potential clients will likely prefer a per-project rate. It’s easier for them to conceptualize and fit into their marketing budget. But per-project pricing can be beneficial for freelancers as well. Product-based pricing will:
- Help you define the real value of your services,
- Allow for more freedom than hourly rates, and
- Give you an easy upsell path if a client needs additional work.
Using a combination of these two pricing strategies will help cover almost any kind of work you need to do for clients. And it gives you the ability to tailor the price to the unique needs of every customer.
Use price as a negotiation tool
Defining your pricing model and rate structure helps make price negotiation easier. Building your web design business can take time, and some customers will be unwilling or unable to pay exactly what you quote them. It’s important to stick with the prices you have set as often as possible, but knowing what wiggle room you have will make pricing conversations smoother.
Just remember, undervaluing your services not only makes it difficult to keep your business running, but it will also slowly degrade your brand over time.
That said, negotiating your price can have a positive impact on customer relationships. People want to feel like they’re getting a deal. That’s why bringing down the price can help you make the sale, as long as you’re careful not to undercut the value of your services. Most larger, more established companies have clearly defined rules about how much they can spend on certain services, so if you don’t meet the mark, you’ll lose out on those opportunities.
Just make sure you always have a signed agreement before any work is started. Price negotiation should always happen at the beginning of the relationship.
If you’re working with per-project pricing, you can also use features and additional services to adjust pricing.
Here’s an example. Let’s say you’ve been in conversation with a potential new client, and they’re looking for you to build a website for their home organization business. The site itself will be pretty straightforward, a home page, pricing page, about us page, etc. But the client also wants to integrate their Instagram feed into an area of the site, which is much more difficult.
Your original quote might look like this:
- Website design services– £500
- Instagram integration– £100
- Site maintenance– £15/month or £150/year
The client isn’t able to pay the additional £100 for your Instagram integration but is more than willing to accept the base price and ongoing site maintenance. For the sake of this example, your customer has a pretty substantial following on social and is growing at a steady pace. Completing their site would help increase awareness of your web design services for a much larger audience.
Considering these factors, it would make sense to negotiate the price of the Instagram integration to £50 or even £0, as long as it doesn’t undercut the costs on your end. In doing so, you’ll be making the customer happy, closing a deal you otherwise would have lost and increasing awareness of your brand. That’s a win across the board.
Offer a payment plan
Not every client will be able to afford the cost of your services upfront. And some projects have ongoing responsibilities that can’t be covered by a one-time payment. In these situations, it’s beneficial to create a payment plan strategy. Take building a website versus maintaining one. While it’s easy to calculate the price of building a website because there’s a fixed deliverable; the price of maintaining a website may be subject to change over time.
Payment plans also help you categorize the different types of projects you’ll do for clients.
Payment plan templates you can use
As you build out the different types of services offered by your web design business, choosing the right payment plan template will help you create a pricing structure that makes sense.
- Monthly recurring payments– A monthly payment is ideal for work that requires an ongoing relationship with the customer, like site maintenance and monitoring. You’ll receive a predictable, recurring payment based on your contract with the client, which is ultimately less stressful than chasing after payment directly. Typically, a monthly payment plan is based on a specific invoicing date every month with a grace period. When you’re building a contract, just make sure to include a cancellation policy, otherwise, you’ll be caught by surprise when someone stops payment.
- Annual recurring payments– Similar to monthly payments but on an annual basis. Annual plans are your opportunity to offer a discount to potential customers to ensure a more long-term relationship. You can use a quarterly or biannual cadence if that works better for the client.
Recurring subscription payments make a lot of sense in certain circumstances but can be harder to implement for more project- or feature-based work. For traditional one-off situations, it makes sense to offer a different type of payment plan.
- Payment upon completion– Standard for the web design market, payment is rendered when the project is complete. Also called payment upon acceptance, this type of plan ensures that both parties are satisfied with the results before payment is made.
- Split payments– If you’re not comfortable putting the work into a project without first receiving some payment, you can also split the payments in two, 50% at the beginning of the project and 50% at the end. A percentage prepayment ensures that you are held accountable for your work and acts as evidence of the trust you have with the client.
- Payment per feature– Use a per-feature payment plan for larger projects that will take a considerable amount of time. Instead of working through to the end of a big website build, your client will pay based on the individual features you create over time. A feature-based payment plan lends itself to long-term relationships as opposed to one-off projects.
Your best option is to create a number of templates for the various types of services your web design business offers. When you come to a client meeting with options available, it’s easier to make a deal that both parties are happy with.
Increase your web design price as your value grows
When you’re just starting out as a freelancer, the expectation is that you’ll take almost any work available, as long as it pays. As your business grows and you become more proficient and well-known as a designer, you should re-evaluate your pricing strategy.
At the very least, look at how your pricing is structured on a yearly basis. Check into the current market standards as well as your past work history to see how things have changed. If a particular tool has become more expensive or you’ve started using another service more often, consider increasing your price to adjust for the difference.
Yearly periods of evaluation are also a great opportunity to interview customers (both past and present) and learn more about what they value about your business. If their willingness to pay is much higher than you’re charging, it might be time to increase your prices. With steady changes, scaling your services becomes easier over time.
Understanding web design pricing helps you build your business
Pricing is often one of the things that intimidates freelancers when they’re starting out. But it’s also one of the most important decisions you make at the start of your business. When you know how to build a web design pricing strategy that helps your company grow, you’re making it easier to tap into the most revenue potential possible.
Effectively pricing your services also ensures that you can always handle the workload required to sustain your business.
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