How much should I charge?

[Klaas Koopman]

Hey All,

I just read the other thread about that guy asking about how much he should ask for his sites.. now I'm wondering thesame as you guys said he could charge $300+ for his sites. And I didn't want to hijack his thread so:

How much should I ask for:
- A PSD Design ( photoshop, so only graphics )
- A joomla site with a nice design

You can see stuff of me at:
http://klaaskoopman.deviantart.com/gallery
http://kkoopman.deviantart.com/gallery
http://koopmanmedia.deviantart.com/gallery

Please let me know, cause I am working on setting up my own company in the Netherlands, so pricing would be an important part of my service.

Thank you all in advance!

[Kitchen Designer]

G'day Klaas,
It's always hard to determine what to charge if you don't really understand the basic principle of making money. So let's take a look...

Thats my price, take it or leave it! - by Cash Monet

In a nutshell, to work out your selling price you must know two things. Cost of production and profit margin.

Sell price of Klaas's Product = What it cost to Klaas to make the product + Add a bit more for Klaas because he's not doing this for free you know!

Cost of Production
If you are to do this for a living, you need to know what it costs to open the door each day at Klaas Koopman Enterprises. Since you do not process raw materials your costs of production will overheads and time.

Overheads
Will you be working from home? Your overheads will be much less as you wont have the higher cost of rent/lease of commercial premises etc to worry about. At home your overheads will be rent, electricity, internet, hosting, phone, insurance, marketing costs and depreciation of equipment. Roughly add up all of these costs over a year and write down that figure.

Time
Well you want to be pulling a wage out of this dont you. And a worthwhile one at that. First you must work out how many hours you want to work a week. (let's say 40 hours). 40 hours x 52 weeks (yeah, you want holiday pay as well) equates to 2080 hrs a year. You will probably spend 70% of your time doing real work and the other 30% dickin' around on forums like these so your total billable hours per year will be 2080 x 70% = 1,456hrs.

Lets work it out
Lets say your yearly overheads are $20,000. To work out hourly overhead rate divide $20,000 by 1456 hrs. Around $14 per hour.

How much is Klaas worth per hour? Only you know that so dont be shy here. Lets say your worth $45 per hour. OK then, what about my profit margin? What to charge? How about we put a value on your expertise. What makes you different from your competitors? Is it because you are a qualified or highly trained web designer? Do you have a high profile in the community? Can you deliver the goods quicker than your competition? Yes? Well damn it, you have to be able to charge a premium for the extra value you bring to your client. So, lets say we add a 25% profit margin for the value of Klaas's high profile in the community. Add $14 overhead + $45 hourly rate x 25% = $74 per hour.

Well then, there it is. $74 per hour. Nice money to get if you can. But can you get it? We really have to see if your price can be justified.

You will have to establish what the market is willing to pay. You don't want to be too low and you don't want to be too high either. Do a bit of sleuthing to figure out what the benchmark is (and what added value is attached to these prices).

OK,so you are getting some leads and you go back to the client and submit your price. If your price is too high you can either lower your bid or change your marketing to find clients that will pay more for your services. The problem with bidding too low is that you may get more work but you will be working your crazy Dutch ass off. And I know you Dutch are crazy because you live 3-4 metres below sea level

Hope this helps...

[Klaas Koopman]

Originally Posted by Kitchen Designer

G'day Klaas,
It's always hard to determine what to charge if you don't really understand the basic principle of making money. So let's take a look...

Thats my price, take it or leave it! - by Cash Monet

In a nutshell, to work out your selling price you must know two things. Cost of production and profit margin.

Sell price of Klaas's Product = What it cost to Klaas to make the product + Add a bit more for Klaas because he's not doing this for free you know!

Cost of Production
If you are to do this for a living, you need to know what it costs to open the door each day at Klaas Koopman Enterprises. Since you do not process raw materials your costs of production will overheads and time.

Overheads
Will you be working from home? Your overheads will be much less as you wont have the higher cost of rent/lease of commercial premises etc to worry about. At home your overheads will be rent, electricity, internet, hosting, phone, insurance, marketing costs and depreciation of equipment. Roughly add up all of these costs over a year and write down that figure.

Time
Well you want to be pulling a wage out of this dont you. And a worthwhile one at that. First you must work out how many hours you want to work a week. (let's say 40 hours). 40 hours x 52 weeks (yeah, you want holiday pay as well) equates to 2080 hrs a year. You will probably spend 70% of your time doing real work and the other 30% dickin' around on forums like these so your total billable hours per year will be 2080 x 70% = 1,456hrs.

Lets work it out
Lets say your yearly overheads are $20,000. To work out hourly overhead rate divide $20,000 by 1456 hrs. Around $14 per hour.

How much is Klaas worth per hour? Only you know that so dont be shy here. Lets say your worth $45 per hour. OK then, what about my profit margin? What to charge? How about we put a value on your expertise. What makes you different from your competitors? Is it because you are a qualified or highly trained web designer? Do you have a high profile in the community? Can you deliver the goods quicker than your competition? Yes? Well damn it, you have to be able to charge a premium for the extra value you bring to your client. So, lets say we add a 25% profit margin for the value of Klaas's high profile in the community. Add $14 overhead + $45 hourly rate x 25% = $74 per hour.

Well then, there it is. $74 per hour. Nice money to get if you can. But can you get it? We really have to see if your price can be justified.

You will have to establish what the market is willing to pay. You don't want to be too low and you don't want to be too high either. Do a bit of sleuthing to figure out what the benchmark is (and what added value is attached to these prices).

OK,so you are getting some leads and you go back to the client and submit your price. If your price is too high you can either lower your bid or change your marketing to find clients that will pay more for your services. The problem with bidding too low is that you may get more work but you will be working your crazy Dutch ass off. And I know you Dutch are crazy because you live 3-4 metres below sea level

Hope this helps...

Fantastic reply! I'll be sure to give you some green for this!

How much do people average ( if there is an average ) pay for marketing?

And is it smarter to ask for pay per project or pay per hour?

[Kitchen Designer]

Originally Posted by Klaas Koopman

And is it smarter to ask for pay per project or pay per hour?

Dont be greedy method
It all depends on the amount of money you are satisfied with making per job. On your normal bread and butter jobs it would be easier to charge by the hour so you don't price yourself out of a job This way, you will keep a steady income happening.

Going for gold method
These may not come up so often. On large projects, you may have a rough idea about time considerations to complete set tasks but what of the time taken for the creativity in your project. How long will it take to come up with a solution for this, for that etc etc. You can add a little something here because of the unknown variables.

Don't worry, you will soon find out!

[Klaas Koopman]

Originally Posted by Kitchen Designer

Dont be greedy method
It all depends on the amount of money you are satisfied with making per job. On your normal bread and butter jobs it would be easier to charge by the hour so you don't price yourself out of a job This way, you will keep a steady income happening.

Going for gold method
These may not come up so often. On large projects, you may have a rough idea about time considerations to complete set tasks but what of the time taken for the creativity in your project. How long will it take to come up with a solution for this, for that etc etc. You can add a little something here because of the unknown variables.

Don't worry, you will soon find out!

Probably I should set myself to a min. price I want to earn per month, and just price around the first month, see how everything goes, how much clients I get etc, then next month I set everything up in pricing and have a total pricing schedule!

[Kitchen Designer]

Originally Posted by Klaas Koopman

Probably I should set myself to a min. price I want to earn per month, and just price around the first month, see how everything goes, how much clients I get etc, then next month I set everything up in pricing and have a total pricing schedule!

Yes, a good idea. That way you are feeling out the market. It's what I did when I first started manufacturing kitchens.

I also did something else! I went to various kitchen companies in my area and pretended that I was a potential customer looking for a kitchen quotation. I gave them all the same design so that they were all quoting on the same thing.

When I received the quotations back it was quite easy to 'reverse engineer' them to see how the money added up. I had about 7 quotes so I had a good spread of information. I looked at what my costs and profit margin was for the same plan and it was well within the lowest / highest quotes so that was good. It meant that I would be competitive within that market.

[Klaas Koopman]

Originally Posted by Kitchen Designer

Yes, a good idea. That way you are feeling out the market. It's what I did when I first started manufacturing kitchens.

I also did something else! I went to various kitchen companies in my area and pretended that I was a potential customer looking for a kitchen quotation. I gave them all the same design so that they were all quoting on the same thing.

When I received the quotations back it was quite easy to 'reverse engineer' them to see how the money added up. I had about 7 quotes so I had a good spread of information. I looked at what my costs and profit margin was for the same plan and it was well within the lowest / highest quotes so that was good. It meant that I would be competitive within that market.

Nice! I am now working on my website ( see link in signature ) and then I'll be putting content on and then i'll start the services online! I'll let you know how it goes! thanks again mate! Appreciate it!

[cashcannon]

With my internships I worked at 2 different webdesign company's.
One was pretty big( for dutch standrads) and the other just started. The big one rated by the hour, because they had the knowhow to do alot of different kinda stuff, but that usually means research etc.
The small one did standard websites for a fixed price of around 600,- per year. For that you get the whole package (hosting, cms, etc.) I say in your case, do a fixed amount, cause I dont think your customers will have a big budget for internet purposes, and the time or knowledge to know what can be possible to manufacture nowadays. Hope this makes sence

[Klaas Koopman]

So you say, make packages right? Like:

- Layout design - $100 - $250
- Logo design - $50 - $150

Packages:
- Layout design, logo design, hosting, and coding - $800 a year
- Layout Design, hosting and coding - $725 a year
- Layout Design and coding - $150 - $250

[cashcannon]

well, yes, keep it simple for the client. If they want an extra page add 40,- diffrenet logo 100,-. You give yourself a deadline that way aswell

[Kitchen Designer]

Packaging is a good idea. Just like McDonalds packages their meals. You just have to try it and see. Always keep thinking and trying out new ideas.

Heres one
- Layout Design and coding - $150 (includes a free Big Mac Meal!)

[Klaas Koopman]

okay thanks guys! i'll do that and let you know how it went!

[cashcannon]

oh, its allways pretty good to know what the budget is of your client. Maybe try to offer the standard fee of 200 euros, and give the client a discount if needed, maybe even up your price so that if you say you are giving discount theyre still paying the standard fee