Setting Your Price

setting your prices

Finding your place in the market is not an easy task. Charge too much, people will walk. Charge too little, people won’t take you seriously. The latter, is a tough one to learn. I, naively used to think, if I undercut everyone, I’ll do well for myself. Offer the cheapest rates and everyone will come to me. Let me tell you, if you offer the cheapest rates, you get the cheapest clients. If that’s your thing, fill your boots.

But if you want to be taken seriously, you need to find yourself a perfect price point between demand for your service and your talent for said services. Maybe you have a high opinion of yourself and you like charging $90/hr. So if you do, and you are, you need to make sure you can get about twice as much work done as someone who charges $45/hr for doing the same thing. If you charge too little, because you’re nervous about losing a client, you’ll die a slow death, simple. If you charge too little, there’s no wiggle room when S hits the fan. And doesn’t it always?!

The best way to position yourself is to go online and look at your competition. Look through their portfolio. Be honest with your team’s skill level, and if you can do what they do, send them an email pretending to be a potential client. Go through the process with them and see how they do it, and what they charge. Don’t be afraid if you charge more; just make sure you show them why.

Setting Client Expectations

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Setting a client’s expectations seems like a pretty straight forward thing to do. It isn’t. Some clients, if not most, will always want more than they are willing to pay. Or, they think your quote is too high based on what they want. Because a website is not a physical object they can touch, or drive, or live in…it’s difficult sometimes to understand how much work goes into designing and developing an effective site. So it’s only natural for a client to think that just adding a few things here and there, or coming up with another design concept takes no time at all. “Come on, it’s only one more mockup…”

A client may say, “it’ll only take 5 mins.” The response to that of course is, “5 mins. plus 15 years of experience”

All this goes can away if you properly (and politely) set your client’s expectations which all goes back to developing a good contract.

But before you get to the actual contract, effectively communicating what you can and cannot do can be tricky. Not necessarily because of what you are saying, but because of what they (the client) are hearing. Make sure your client understands important things like, how many mockups they will get. I used to always be apprehensive in telling a client in plain English, they get 2 mockups, any more they will be billed extra. But then I found myself doing mockups all day long doing 7,8…10 mockups until sign off. But there wasn’t even a sign off…because there was no contract, because I was willing to do whatever to get work coming in. But that’s called paying your dues. How else are you going to grow your portfolio? It’s like trying to get that first job: “We’d hire you, but you don’t have any experience…”

Now, several years later when speaking with clients, I make sure the they understand what they are getting for their budget. The contract is merely something for their reference when they can’t remember why they need to pay extra for excessive design requests.

Be firm with your quotes and your deliverables. Explain the process to your client. Once you start hearing yourself talking about what’s involved in putting together a kick-a** website, it’s easier to stand up for yourself when giving your proposal. If you start to bend, they will keep asking for more. Time off your life is valuable, so set your prices accordingly. The reason you set a limit on the number of mockups or revisions you do, is to prevent the client from changing their mind. It’s amazing how quickly someone can settle on a concept if they know they have to pay extra for another one. Let them know what your hourly rate is for after sales service and give them the source files, it’s good practice. Setting prices and terms simply makes everything fair for everyone. And yes, I realize this is business and it’s not supposed to be about being fair, but you’re not selling furniture, you’re essentially selling a service and if you’re not on a level playing field, someone is going to get hurt.

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What’s Your Budget?

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When I was 18, I knew these 2 guys that bought and sold cars. I happened to be looking for one, so they showed me a Ford Escort. They asked me what my budget was. I told, them $1500. Guess, what? The car happened to be $1500. What a coincidence. Turns out the thing was only worth about $800.

That experience has stuck with me all these years. It’s impact, prevented me from asking clients about their budget. I would spend an hour on the phone with a client before I found out they would be better served looking on Craigs list for help or down loading a free WordPress template. Nobody wants to waste that time, least of all you.

I felt that as soon as I asked the, “what is your budget” question, I became a used car salesman, trying to trick them. But the truth is, “what is your budget” is the first question in establishing a trusting relationship with your client. It puts everything on the table and allows a common ground from which you both can work. If they are up front and tell you their price range, it allows you to move the conversation in a particular direction. It helps save everyone time when you know what kind of budget you are dealing with and sets expectations. You know the saying, why try to sell them steak if they have a hamburger budget.

There are clients that will tell you, they’d rather get a quote than give their budget. That’s of course fine too, but it’s tricky, because you don’t know what they want and in my experience, a client will under estimate their needs, so your pricing needs to allow for a large margin of error. It’s unsafe. The best way to determine a client’s budget is to ask them for sample sites. Sites they like. They don’t have to be related to their industry but seeing any live example of what they want is absolutely best way to deliver an accurate quote. If your client adds in a site map, even better. So this way, when putting your pricing together, you can start with, “Based on (the website examples and site map provided by client X) we can deliver blah blah for a total cost of $XXX…” Of course if they have a high budget, you’ll be the one putting together the site map!

It’s definitely ideal to get a budget upfront. Being asked for a quote without knowing, is like playing pin the tail on the donkey. And don’t even get me started on the impact that game had on me…

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Be Accountable

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Hopefully, by the time you get out of high school you learn that, for better or worse, your reputation is everything. Unfortunately, when you’re young, sometimes you don’t quite get that. The good news is, if you mess up, you’ll probably end up moving to a new town or city when you’re older anyway so you can start over. But in business, it’s not that easy. Throw in the Internets and it’s pretty much impossible to escape your reputation.

For example, if you’re employee or contractor quits in the middle of a job, you need to find yourself another employee to finish that job, regardless of added expense. If you paid said employee a deposit and they quit before they got halfway through the first round, the best you can do is ask for it back. But considering you probably paid them a couple weeks prior, chances are you won’t see that money again. It’s the course of business. What you need to do is, notify your client immediately. Again, as in most cases, don’t be an alarmist. Tell your client that you saw this coming and you already had a contingency plan in place. Let them know that another developer on your team has taken over so please allow a few extra days whilst they are brought up to speed. Pretty much anything can be handled with proactive, honest dialogue. In a case like this, don’t email the client. CALL THEM. Then you can email a follow up. What you can’t do is whine and complain and don’t blame the guy that just quit on you. Dig your heels in and get the job done.

As a small business owner, there is little you can do if your employee quits mid-way through a job. If you don’t have another source that can continue the work, you need to do everything you can to find one. Hopefully, they will work on 100% at completion of a project, but chances are they won’t. You can’t blame them or ask them, so you must find a way to pay them in order to keep the project on task. You need to do everything possible to keep your reputation in good standing. Your client will understand. They will see your efforts and will appreciate your hard work. Your margin may have been cut in half, but that’s nothing compared to your reputation being…wait for it…cut it half.

If you don’t believe me, believe this guy: jason nazar

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