One of the most common questions I get is how to give an estimate for your website builds. When I first started out, this was a challenging issue for me. In the beginning, I lost a lot of money undervaluing my time. And like any beginner in this industry, when you do not have a lot of experience yet, you are afraid to overprice yourself.
So here are a few tips to help you get started with pricing your website projects.
Fixed Price or Hourly
I have learned from experience that fixed-price contracts can be a real problem when you are starting out. You bid out a project at $1000, and then you end up spending over 100 hours because of scope creep. Now you are only making $10 per hour. If you are a freelancer, 30% of that will go to taxes and another 30% will go towards overhead (unbillable work) and before you know it, you are making $1-$2 per hour.
So I strongly encourage you to start off charging hourly rather than setting fixed prices. You can give your clients an estimate based on the scope of work, and let them know that it is an estimate, not a fixed price quote. I have found that most of my customers respect my time much more when they are paying by the hour.
After you get comfortable giving accurate estimates, you will be more comfortable offering fixed price quotes if you decide that’s what best for you down the line.
Setting Your Hourly Rate
Next, you have to determine how much you would like to be making per hour. You should always factor in taxes and overhead.
When I first started, I was happy making $25 per hour, so I only charged $25 per hour. It did not take long to figure out that after taxes and overhead, I was only making about $12 per hour. Living in California as a single income household, that was not going to work out. If I ever wanted to hire sub-contractors to help me out with my projects, I needed to start charging more.
It did not take long to realize that I needed to be charging over $100 per hour. As we become more experienced and faster at what we do, that rate goes up.
[bctt tweet=”I always looked at it as billable time lost while learning, was money I would have had to pay for some courses anyways, so it balances out in the end.” username=”genoq”]
When you are starting out and still learning along the way, you can still charge a high rate, just don’t bill for the time you spend learning. The time you spend learning should be on your dime, not the clients. I always looked at it as billable time lost while learning, was money I would have had to pay for some courses anyways, so it balances out in the end.
Get Your Estimates to be as Accurate as Possible
With several years experience with WordPress and the Divi Theme by Elegant Themes, I am very confident of the time it takes us for a variety of web design tasks. So it is pretty easy for us to ask the right questions and get an accurate estimate to our clients.
Below is what we inform our customers in the initial email:
Our work is done at an hourly rate of $XXX, so we create our estimates based on the amount of time we think will be required. Billing is done based on the amount of time spent on the project. We spend most of our time working on the home page, which is usually around 15-18 hours. From there, the sub-pages would typically require about an hour each. The final piece is making it responsive, or mobile-friendly, and that usually is about 4-5 hours.
These are some of the areas you will have to consider when coming up with your estimates. The key is knowing pretty much how long it takes you for each of these items.
- General Development and Setup of Website
- Homepage design and development
- First sub-page design and development
- Service 1
- Service 2
- Initial blog setup
- Blog page development (if any)
- Blog archive page layout customization (single post, category, tags, etc.)
- Initial Store setup
- Special features & customization
- Shipping rates setup
- Set up tax rules
- Setup & test add-ons
- Number of products to be entered
- Additional Plugin Setup & Testing
- Feature / Plugin 1
- Feature / Plugin 2
- Feature / Plugin 3
- Additional Custom Functionality / Development
- Functionality 1
- Functionality 2
- Final Adjustments
- Screen size testing and adjustments
- Browser testing and adjustments
- Correspondence, client research, and incidentals
- Setup website environment on staging and install Divi
- Migrate to live server
Apply an estimated amount of hours for each item that is applicable, multiply it by your desired rate, then add it all up. Now your client will be able to see how much cost is associate with each item and if the estimate is higher than the client expected, having each item broken down will make negotiating a lower cost much easier for the both of you.
Explain to Your Clients the Benefit to Them for Hourly Pricing
Here is an example of how we explain it to our clients:
We know from experience that fixed-price contracts are rarely beneficial to you, as they often limit you to your earliest ideas. We don’t want to limit your ability to change your mind or add new requests. We will take your scope of work and break down each item each with its own estimate for your approval. This will allow you to have better control over the budget through the course of our ongoing business relationship.
We are usually able to complete smaller tasks within 2-3 business days. We organize our larger projects into a 2-3 week long sprint. Each sprint has a theme, a set of requirements that we are going to finish during the period. It might be a sign-up process one week and a shopping cart the next. We’ll cover all the areas of a project across these sprints; and because you will know the estimated time/cost in advance, you can budget accordingly. If you have a great idea for something new, or simply change your mind, no problem. We roll up those requests into another sprint week, and you can then make a business decision about spending money on those items.
Communication is Key to Making it Work.
[bctt tweet=”Remember that you are their web design consultant as well as their designer. The more informed you make them, the more they will trust you to lead them.” username=”genoq”]
It is imperative that you set realistic milestones and expectations. Our contract states what we do and what we don’t do. A client may not know that content creation, stock images, and SEO is not part of the package.
So be sure to be upfront about what exactly is included and not included. Remember that you are their web design consultant as well as their designer. The more informed you make them, the more they will trust you to lead them.
And always let them know where they are with hours, especially if they have a lot of change requests. If you estimated 18 hours for the initial homepage design and they are at 15, let them know before they pass the estimate. Most people are afraid of hourly because of getting gouged at the end of the project. By keeping them aware of how much time you have spent on each task, you will be surprised at how much they will respect your time and prevent scope creep
Well I know there is so much more to cover on a topic like this but here are my general tips. If you have anything to add or if you have any additional questions, leave them in the comments below.
Excellent advice! Information I wish I’d know in the mid-90s when I started in the web marketing business.
Hi Geno, thank you for the excellent info – and great timing, too. I’ve definitely lost a lot of money while charging a flat rate per project and I hope to change this! I have a couple of questions for you.
1) Do you itemise everything, including migration, correspondence, etc?
2) Do you feel the explanation about the benefits of charging hourly could also be sent to mom and pop businesses, or only to larger corporations?
Have a lovely Sunday.
Hi Noelle. Yes. Not only do I itemize everything, I keep track of the amount of time I spend on each item. Sometimes I spend more time on one item but make up for it on another item. I send the hours to both big and small businesses. Big or small, they will have a better appreciation for your time.
I completely agree with this process. At the beginning of my career I‘ve done fixed priced projects mostly and due to scope extensions or additional requests I paid it, not the client.
Therefore I started to use an estimation and pricing on an hourly basis. That gives transparency to both parties and my clients are pretty happy with that.
Thanks for the feedback Oliver. It’s great that reader see that see actual confirmations. I appreciate it.
Thanks a million Geno! Excellent and just in time for me! Please go on in other financial aspects of WordPress coding, web development and maintenance as well as getting contracts, specifying a contract with the client, communicating with clients and building a long term relationship along the way. I’ll appreciate all tips how to make and manage living on this. Thanks!
Thanks Ivan. I plan on covering all those topics and more. Thanks for following along 🙂
This is Gold for a Startup… Thanks Geno
the TTDs (things to do) you provided are only in the mind of every designer, not written in any diary of notebook. As per my terms, it is of great use in making and executing the whole website from A to Z. Great information. Thanks Quiroz!
You are welcome!
Great article. I’m just starting out and wanted to ask how do you find clients? And if you charge them monthly or as one time fee?
We charge by the hour. When I first started out, I had to start by contacting everyone I knew asking if they needed help with a website. Churches, small businesses, & non-profits are a good place to start. Then treat them really well and ask them to tell others about you. Nowadays we dget many leads from my website because of all our content marketing. https://quiroz.co/reaping-the-benefits-of-blogging-for-brand-authority-seo-exposure-and-more/
Hello Geno. I have a question: In Latin America there is not much culture about (Charge / Hour), how to guarantee the client the real hours worked? and How can the client know how many hours I worked?
Great question. It really comes down to a matter of trust. Here in the US, lawyers, repairmen, car repair shops, all usually charge hourly. What I do is provide estimates breaking down all the pieces of the project. It helps them to see how much time goes into it. Most clients just trust me on the time and I let them know in advance if they are requesting too many changes and are going over for the part of the project. For clients that need a firm price, I offer template package deals. It is a fixed price but they have to pick a template and stick to it. You can read more about that here: https://www.montereypremier.com/affordable-web-design-options/
Excellent advice! Information I wish I’d know in the mid-90s when I started in the web marketing business.
I have benefited a lot from reading this article. Thank you very much for doing this article.
If you are planning to estimate your business website, you need to set the business goals in the first attempt otherwise your planning may fail due to not the right path is chosen