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Do you feel like you are struggling to make money in your website design business? Do you think you could be charging more, but are too afraid to lose clients or drive business away? What a lot of website designers may not realize is that you can be potentially making double the amount of money by doing the same amount of work. How do you determine if you can increase pricing?
In this guide I am going to show you how to increase your pricing easily in a solid way to boost your revenue in your website design business.
Chapter 1: How Knowing Your Value Can Lead To Double The Money In Your Pocket
Many website designers are missing out on some serious money. You need to understand and reiterate that your work you do is valuable, and serves a legitimate purpose. If businesses are willing to pay more you are ultimately underselling yourself by charging less than your competitors. There are other ways you can sell your services as being a better option for your potential customers than by lowering your pricing to accommodate. (More on this in the next parts of this post.)
Chapter 2: Researching Market Rates To Justify Increased Pricing
One of the ways you can determine what your pricing should be is by looking at what the average data shows for the amount of money website designers are charging in the industry in general. If a large majority of designers are charging around the same price, this is definitely a factor to take into consideration while determining what you are going to charge. Chances are your prospective clients will be researching this data as well so they have an idea of what they are going to be paying for website design services. There are several ways you can find information on market rates.
1. Using Google
The first option in identifying general market rates is to use Google. Type in “average cost of website design YEAR” into Google. (Example: average cost of website design 2019). Several results will appear. Write down the first four results on a piece of paper. Next either choose the medium-range number, or calculate the average of the prices you have listed. That is what the average website designer is charging, and you can show clients these averages during meetings. The most effective strategy we have used to show our clients what they should be paying is typing it into Google during a meeting and showing them in-person that is what the going market rate is for website design.
2. Using nuSchool’s How Much Should I Charge Tool
nuSchool put together a convenient tool that automatically calculates how much you should charge for services like website design. https://thenuschool.com/how-much/#/start
Keep in mind this tool does not take into account the location you live, and the average service costs in your area. Despite this tool not calculating based on location and competitor factors, it is still valuable for getting a second opinion based on average industry pricing and project scope.
The tool does take into account the type of client, project size, how valuable the project is to your portfolio, and your hourly rate.
This is how the tool calculates what you should charge, from nuSchool themselves: “We calculate your "break-even" price by multiplying your hourly rate with your estimated hours. This is your base rate. Under this price the project is not profitable.”
Chapter 3: Cost Of Living In Your City/Area
Another set of data you need to take into account is the cost of living in your city or town. Different areas cost less, and pricing of businesses can vary. For example, living in New York City or Los Angeles can be much more expensive than living in the middle of the country.
Pop open Google and type in “cost of living in AREANAME”. Compare the result to areas like Los Angeles and New York. Now Google “average cost of website design in AREANAME.” Do this search twice - once for your area, and second for New York or Los Angeles. Write down the numbers you are seeing in two columns (one for each area/city.) Now compare the numbers you have written down. Is there a large number difference? If yes, you need to make sure you are charging what the market rate is in your area. If no, you should be charging the prices you found back from Chapter 2.
Chapter 4: Competitor Analysis Ninja Style
An easy way to determine what customers are willing to pay in your area is also to take a look at what your competitors are charging. By writing down the pricing of your competitors, you may find similar prices that a majority of your competitors are charging. You can also calculate the average price amongst all of the numbers. It is likely your competitors have already went through some pricing research when they first started their businesses, and it can save you a lot of time during your research.
Write down the pricing that your top 5 competitors charge. Now calculate the average price from the list you have accumulated. If you are bad at math like I am, you can use tools like OmniCalculator’s Average Calculator, or CalculatorSoup.
This will give you a rough idea of what the website design pricing in your area generally falls into. It is absolutely understandable that you would charge the same price as your competitors, and clients cannot fault you for charging what would be considered a “normal rate.” You would be surprised how much your website design work is actually worth locally compared to what you thought it was. If your competitors have been in business for years, and have been charging the same rates, clearly prospective clients generally do not have an issue with the numbers they are proposing.
Chapter 5: Setting Up Packages To Relay Pricing Options To Clients
One of the easiest ways to sell higher pricing is to have different packages. Packages also help with discrepancies when it comes to price as well, as everything is laid out for your customers to see. What may or may not be included in the work done per package should be explained in detail to your potential customers.
Packages can also result in a client deciding to pay for additional services. We have had many clients decide they wanted more website features and pay to upgrade the package for their website design. Clients also like seeing what options they have for their website design service as well.
Many people use the name of precious substances for their packages. The most common naming scheme is “Silver, Gold, and Diamond” for packages. This naming scheme works well because when people think of silver, gold, and diamonds they immediately think of value.
Another popular naming scheme that we at Presto Website Design use are the olympic trio - Bronze, Silver, and Gold. In 2018, 19.8 million people watched the Olympics. Chances are your prospective client will identify with olympic-medal style packages.
Chapter 6: Ensuring You Are Paid For Time Invested
In business your time is worth money. You need to ensure you are being paid appropriately for the amount of work you are investing into a project. If your clients truly respect you, they should have no problem paying for the time you are sacrificing for their website. Keeping track of the time you spend on a project is important for anyone in a service-based business.
You can utilize free tools like Online Stopwatch to track time spent working on projects. https://www.online-stopwatch.com/
To use the tool, simply click on the green “start” button to have the stopwatch begin counting how much time goes by. When you are done working, or need to take a break, click on the green “pause” button to pause the time counter.
It is important to document the amount of time invested using Microsoft Word or Google Docs.
Chapter 7: Pros & Cons To Fixed Pricing Versus Hourly Costs
Charging per hour versus a fixed cost can be two very different things. Here at Presto Website Design we utilize a soft-spot in between the two pricing models. We have fixed packages that include a set amount of work hours put into whatever project we may be working on. If we are going to go over the amount of allocated hours, we will contact the client and get an approval before working overtime.
With that said, this is one of the biggest debates I have seen in the website design industry. It seems like every other business owner I talk to has a different option on fixed versus hourly pricing. Here are some pros and cons for fixed pricing and hourly rate. At the end of the day, it is up to you to decide which pricing model you identify with and feel more comfortable implementing in your business. My goal is to provide you with as much information about each pricing model, and then let you decide which one fits you and your business the most.
1. Fixed Pricing
Hourly pricing can lead to laziness and taking longer than needed on work. Furthermore, clients do not realize how much time you invest into website design work. If they see a project took 30 hours and in their mind they think that type of work only takes 15 hours, for example, they will have a sour taste in their mouth about what they are being billed (even if that is not true and you did spend that amount of time on their design.) It is also hard to showcase exactly how much time you did invest into work for clients.
If you are a fast worker, fixed pricing can actually lead to you being able to charge more per project. For example, I personally type 160 words per minute, so I tend to get a lot of tasks involving typing done in a much shorter period of time than other website designers. If you are a master of a particular skill involving website design, or you use tools most designers do not to make the job faster and easier, you can get fixed rate work done at twice the pace as other people that would be working on the exact same project.
Also if you are a new website designer or are doing website design freelance, and you do not have an existing portfolio or references, it can be hard to justify why your services are $200 an hour for example. Many people also like knowing how much work will cost them with an exact number as a quote. Many clients are uncomfortable with not being able to know how much they will be paying by the end of a website design contract. This involves psychology and the perception of value.
Let’s tackle the biggest elephant in the room: If a project takes longer than you thought it would but you are not venturing outside the scope of the agreed upon service - you are now doing more work than you initially thought for less money because you are not being paid per hour. This is a trap many new website designers fall into face-first. Because they have not built many websites before, they think to themselves “this will only take a few hours so I can absolutely charge $500!” 40 hours later they are burnt out, feeling like their work is not being valued, and wondering why they even agreed to take on this project in the first place. They are miserable, and they spend twice the amount of time a similar project would take for only the pay of one project.
2. Hourly Pricing
One of the best things about using hourly pricing is you know you will end up getting paid for the amount of time you are putting into a project. It is hard to predict how many hours will go into a project, and clients can often throw you a curveball that you did not expect when you giving an estimate for the cost of work. I have been surprised countless times by clients requesting an element I never thought they would want for their website. A recent example of this is an autoplaying video for a construction client’s website, and it can end up taking up a lot more time than initially planned.
Another positive argument for hourly rate pricing is that hourly rate numbers can seem lower to a potential customer than a fixed cost. This has to do with the buyer’s psychology. $100 an hour sounds better than $500 because it is a smaller number. Even if the work ends up taking more than 5 hours, it still can seem cheaper to the customer.
A big con of the hourly pricing model is clients like knowing how much they are going to be charged for a service with a set dollar amount. If you are an inexperienced website designer, it can be tough to justify why clients should be paying a large amount for your time. It can also be hard to justify to yourself why your service is worth $100 an hour or more if you have virtually no experience when you are first starting out offering website design service - whether as a business or a freelancer. If a majority of your competitors are using fixed pricing it can make it harder to implement hourly pricing in your business as well.
Chapter 8: Encouraging Repeat Business With Rewarding Loyalty Program/Discounts
While in the majority of this guide I strayed away from recommending to charge less in general, there are times charging slightly less is recommended and beneficial. On average, Sixty-one percent of small business owners report that more than half of their revenue comes from repeat customers, rather than new business. You want to encourage your customers to come back and use your service again. Repeat customers are easy to deal with because they have a higher percent chance of giving you no issues and you know they have made their payments in the past; they are the safe option. Giving them a discount encourages them to use you again for website design.
You can also implement a referral program to reward clients for sending other clients your way. You can even implement a referral program into a loyalty program, and encourage repeat business and referrals. Conversion rates are way higher with repeat customers than with new customers, and you don’t have to spend time or money on acquiring new clients.
With that, that is my ultimate guide for pricing your website design work. Now I want to turn it over to you. What do you think about the strategies mentioned in the guide? Is there something I missed?
Let me know by leaving a comment down below. Great job making it all the way to the end of the article!