To determine the price of a Web project, you need to determine your expenses, the general aspects of the project, how much you want to earn over the year, the profit margin you want to aim for, and how many projects you expect to have annually. You combine that with your billable hours to get the hourly rate you should charge for a project. Freelance Web design is a business and you should treat it as such, if you want to be successful.
Expenses
When you are calculating expenses for a project, it's easy to remember the office supplies you might have bought while you were doing the project, but in order to be effective, your prices should take into consideration all expenses incurred in the business:
- hardware - usually amortized over several years
- office furniture - again, amortized over several years
- office supplies
- office equipment beyond the computer - amortized
- utilities
- hosting and Internet fees
- advertising, marketing, and promotion costs
- taxes
- licenses
- insurance
- payroll for you and any staff
- travel expenses
Beyond those basics, there are also expenses that are less obvious, but still cost your business money:
- time off - either vacation or sick leave
- meetings with clients
- training
- office management and administration
All these costs together are your expenses for the year. The less tangible expenses, such as time off and meetings, are accounted for in the billable hours.
General Aspects of the Project
As I discussed in a previous article, there are some considerations you should make about every project. If it will entail special resources on your part, or it will require a rush, you should adjust your pricing accordingly.
Your Salary and That of Your Staff
Paying yourself a salary is something that might seem obvious, but with a business you need to treat yourself as a resource for the business and so receive a salary comensurate to your skills. In order to determine what you're worth, you need to evaluate:
- Your experience - how long have you been building Web pages, applications, and doing Web design? This is usually broken down into:
- Beginner - 0-3 years
- Intermediate - 3-6 years
- Advanced - 6-9 years
- Expert - 9+ years
- The type of experience you have, such as:
- HTML - low paid
- Writing
- Graphics
- Flash
- Programming - highly paid
- Where you're located. A designer in San Jose, CA might get $100 per hour while a designer in Anchorage, AK might only get $50 per hour.
Once you've evaluated your own salary, you will need to also evaluate the salary of any staff you might have.
Profit
Profit is any money your business makes after all expenses have been paid. While it's important to strive for positive profits, remember that most startups are not profitable for several years. So, while you might aim for a profit of 10-20%, don't be discouraged if you find you're not meeting that goal the first year or so.
