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Pricing
5:31 with Paul BoagOne challenge facing freelancers and agencies alike is determining how much to charge for their services. One debate: fixed price vs. time and materials.
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[How to Run a Web Design Business with Paul Boag: Sales and Pitching: Deep Dive]
0:00
So now we come to the subject of sales and pricing and all of that kind of nastiness.
0:04
I don't know whether it's a British thing, we hate talking about pricing.
0:10
It's embarrassing talking about money but we need to do it.
0:15
It's a part of the job and we will need to face it.
0:18
The first thing you need to work out is
0:22
how you're going to go about charging your clients.
0:25
Are you going to be fixed price or are you going to go time and materials?
0:27
Now let's face it we do love to be time and materials. Didn't we?
0:32
It is much easier to manage and you get a much,
0:36
well, you get paid for the work you do basically.
0:40
But, a lot of clients are going to be nervous about time and materials.
0:44
For them, there are no limits. The project could cost millions for all they know.
0:48
And it requires a lot of trust before you get to that point.
0:53
Time and materials does work but it works better with regular clients
0:57
that you built good working relationship with
1:02
and it's great for smaller pieces of work.
1:04
Time and materials should always be associated with a rough estimate
1:07
just to give the clients some sense of security,
1:12
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,
1:21
make sure you won the client well before
1:23
you reached that estimate that you've given them.
1:26
If you think it's going to pass the estimate,
1:28
if you got any doubts at all, make sure you talk to the client.
1:31
They really don't like surprises.
1:35
But in most cases, fixed price is the way to go
1:38
especially when dealing with new clients.
1:41
But that does mean you need to add contingency to cover those eventualities
1:45
that you haven't considered and make sure you do add those in
1:49
because it can come back and bite you if you don't.
1:53
The other important thing to remember when it comes to using fixed price pricing
1:56
is to make sure that you don't forget the add on project management time
2:01
because that takes a lot more time than you think.
2:06
Another really important thing to talk about when it comes to pricing
2:10
and I admit this is not easy that you need to talk to the client about budget.
2:14
How much have they got to spend?
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This is a really important question and a lot of clients,
2:23
they really like talking about money.
2:26
They've got this feeling that if they say to you they've got $30,000 to spend,
2:29
then inevitably the project is going to cost $30,000
2:34
even if there's actually only $5,000 worth of work.
2:38
There's a lack of trust there. But, you really need to know. Don't you?
2:41
You need to know how much you've got to work with.
2:45
I used an analogy.
2:50
I talked about houses and I asked the client, how much does a house cost?
2:52
And inevitably the client has to say--well, it depends.
2:57
It depends on how many bedrooms there are, it depends n where the house is,
3:01
it depends on the market at the time.
3:05
There were so many factors involved in buying a house
3:08
and how much a house costs.
3:11
The same is true with web design.
3:14
For website, it depends on the technology that you're using,
3:16
the functionality that's required, the amount of time that's dedicated,
3:20
design or usability testing or whatever else.
3:23
Basically, a website can cost as much as you're willing to spend on it.
3:26
Now, a lot of clients will get it at that point.
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When you explained it like that, they will understand,
3:34
but there are always some clients, there are always those that refused,
3:37
that will not give you even a vague idea of what they're budget is.
3:42
In such cases, the thing to do is give them a rough estimate, a range
3:47
that their website is likely to cost.
3:54
If that scares them off because it cost too much,
3:56
then you're better off finding out then before you go to
4:00
the effort of pitching for the work properly.
4:03
When you do produce your final pricing,
4:07
make sure you break that pricing down into modular chunks.
4:10
Think of it in terms of core functionality
4:14
that has to be on the website and optional items.
4:17
So make sure that every item of functionality
4:20
on the website is priced individually.
4:23
This means that if your budget goes beyond what they are expecting,
4:26
then they can go through and remove items
4:31
or they can say that item was nice to have,
4:34
but at that price, we can't afford it or we can't justify it.
4:37
Break your pricing down wherever possible.
4:40
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
4:49
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,
4:55
then they become suspicious and wonder why there are now ongoing costs.
5:00
The damage is the relationship and the last thing clients just despise
5:04
the last thing that they want as prices so avoid those at all costs.
5:10
So what is the secret here when it comes to pricing?
5:16
The secret is a simple one. It's all about honesty.
5:19
It's being upfront and talking about subjects that maybe
5:23
a lot of us would prefer not to talk about.
5:27
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