5: How Should I Price Projects?
Pricing is the hardest thing to nail down. Go too low and people think you’re cheap. Go too high and expectations can easily misalign with what’s delivered. The right number is never easy to find and it will take time, but the right approach to pricing is as important as the actual price.
We discuss 4 ways to price your projects and I share the path I’ve recently taken for pricing in my web design company.
Listen up and let’s start the conversation.
What’s up everybody? Welcome to another episode of the side hustle to full time web designer podcast. Today’s episode, we’re talking about pricing, we’re talking about how should I price projects? It’s the million dollar question, right? Everybody wants to know that answer. It’s a hard answer to get to. And truthfully The answer is different depending on who you are, what you do, and how you structured your business. So today, we’re gonna talk about four different pricing structures. And I’ve tried them all. Some of them worked, well, some of them have not worked well. But I’ve definitely given them the shot.
So without further ado, let’s just let’s just go ahead and jump right into the first one, which is hourly based pricing, it’s where most people start, it is the most logical. And hourly is really where I started, I quickly realized that that pricing structure was no good for me. And here’s why. I was I’ve been doing web design as a side hustle for a number of years. And the idea was to scale income and manage the workload. And charging hourly just did not allow me to scale, it penalized me for getting better. It penalized me for getting better at the tools and figuring out how to be more efficient in my workflow. Because if I could do the work quicker, I essentially got paid less. And there’s so much that I dislike about that model. Because you know, anyone who’s not building websites and focused on the relationship side of things, you can easily pad projects, you can take your time with projects, you can stretch them out and charge more.
Although that is just not the way I wanted to do business, it felt wrong. And it didn’t feel like it was the best way to guarantee pricing for a client, you could say, Oh, it’s it might cost you $1,000, it might cost you $5,000. It just depends on the time, I don’t know. I just didn’t like that process. I didn’t like that setup. So quickly, I went to the second type of pricing, which was project based pricing. And truthfully, it was it’s a best guess, right? You’re kind of using the hourly model in the fact that you’re looking at the scope of your project. And you’re saying I think it’s gonna take me about this much time, I’m gonna have to add in this much cost for these plugins or this additional functionality, maybe to outsource to a copywriter or SEO. And there’s a lot of other things, right? You take that and your hourly rate into account, and you get a good idea. And you say, hey, client, based on the experience, I have the knowledge I have about this. This is how much I think your site, or this is how much I’m going to charge you to do this site.
And in your mind, you’re thinking it’s gonna be 50 hours of work. And I’m thinking I might be able to get it done in 35 hours, but it also could take me 60 hours, you kind of meet somewhere in the middle. And you hope that you hit the right number, no big major hiccups come up during the project, content gets delivered on time, which you and I both know, if you’ve done this before that that just doesn’t always happen. And you know, that’s going to be a best guess. And hopefully, you’re going to come out, you know, really ahead on this. And project based pricing is the way I’ve priced for years. And in some cases, I still use this, and it works extremely well. And that’s that’s kind of the first to project based, I think is really, really good because it’s fair, it’s upfront, there’s a defined scope of work, you know, exactly, or, you know, round about how much time it’s going to take. And it’s fair for both you. It’s fair for the client. And it really works well if you have an average project base for a similar type of site and you continue to get better. So if you’re able to do what took you 30 hours before in 18 hours, well you’ve just increased your hourly rate without increasing your price. So it’s a beautiful, beautiful thing.
And then going into number three, there’s value based pricing and you That one’s really, really tough, but can be extremely, extremely lucrative. So in value based pricing, you have to know your client, you have to know their industry and you have to do your research. Number one, you want to find out if you were to generate one sale, through your website, of their product or service, how much money would that generate the business? And let’s say the answer is $10,000. Well, if you’re if you think in a year’s time, you’re going to generate 10 sales through the website, that would have not come to you otherwise, each one of those sales is $10,000, within your website, and the project that you’re bringing to light for your client will generate $100,000 worth of revenue that wasn’t there before. Now, does that mean you’re going to charge $100,000 for the website, maybe, I don’t know. It depends on the situation.
But in that way, you can say, hey, client, this site is going to cost you 20 grand, I’m going to work from beginning to end, we’re going to build this site, it’s going to be fast, it’s going to be efficient, it’s going to be designed 100% to get people from intrigue, to converted, right, they’re going to go from lead to conversion. And that if you sell 10 of those on your site, you are going to generate $100,000 worth of sales, I’m going to charge you $20,000 for your website. And we’re also going to work on content, content creation that’s going to generate interest and drive people to your website. And we’re going to put email marketing behind this so we can nurture those relationships and generate the sale. So that doesn’t mean that it’s going to be short term lead to sell pipeline. But you are saying, I think I can generate this much revenue for you, which validates the price of the site, so that it’s in third option.
So you got our leads the first one, project based pricing. And your third one is value based pricing. And depending on the situations, one of one of those three could be extremely perfect for the situation. But I do have a fourth one for you. And this fourth one is something I’ve played around with in the past. And something I’m going back to actually as we speak. And the reason for it is if you look at the times that we’re in right now, not everyone is cashflow heavy. And people are very much used to subscription base with, you know, Netflix and Amazon and all those different things that you’ve got out there. There’s subscriptions everywhere. So what I’m going to be doing in my agency is putting together deliverables, and you can see those at Redefined Creative.com you can actually check those out.
They are three different buckets of small and medium, a large, you know, a small businesses and medium business and in a larger, more like e commerce membership business. And they’re going to start at a certain price, let’s say just throwing out numbers, I haven’t solidified anything. But you take your website, and you figure out what the average cost would be on your project base. And you divide that by a number of months. In my case, I’m going to do it over two years, so to be 24 months. And that puts at a perfect spot where when that 24 months ends, what I’m going to do is start up a conversation about refreshes to the website to start planning for over the next six to nine months, we’ll have content and conversations that are conversations being had and content being built, that will go into updating the website and not an additional charge, because it will pay for the website will be continuing the subscription ongoing.
And it’s going to cover certain functionality. So let’s say it’s $179 a month for the small site. And that includes hosting care plan, the works, they’ve got anything they want to do to their site, anything wrong with their site, anything at all, they go to one person. And that reinforces how my agency is designed. We all want it to be all about long term relationships, not transactional. So when they come to me, I want to build trust, I want them to know we’re gonna take care of them. I want them to know that we’re there for them for the long term. And that is reinforced by the subscription model, which works for me and does not necessarily work for everyone. But it reinforces the commitment to that long term partnership. So I’ve played with that model again, in the past and I’m going back to it. I believe it’s the right choice. I believe it’s the right thing for the relationships I’m trying to build. And I think it’s great for businesses at this time. But they’re not necessarily you know, wanting or able to put up half of a project right now you know, it might be a 1500 check.
At the beginning of this project, that’s that’s, it could be a tough one to write, depending on the business, you know, it could be four or 5000 as a as a deposit, you just, you know, that’s a tough one. So if you can break it out, reinforce that long term partnership, I think that’s what’s right for me, I know that, well, I have a feeling that’s what’s right for me and my agency. And that’s what I’m going to do. But any of these four, pricing structures can work for your business. project based works extremely well. If you’re a freelance gigger. And you’re going out and you’re picking up things on like on Upwork, or you go into Fiverr, you know, or solid gigs, you can use those things. And you, you can really get a lot of great business based off of some of those project based pricing.
Hourly, I’m just going to toss that one out the window right now, we get into this freelance side hustle, entrepreneur web design space, really to have a little bit of freedom, right? I did. So I never wanted to charge hourly because it was capped by the amount of time I had, you know, if you charge $100 an hour, and you managed to book up for 40 hours a week, you know, you’re talking about $4,000 a week. And $16,000 every single month, which is great money, don’t get me wrong. But that means you’re you’re capped at $192,000 per year, before taxes before expenses before everything. So if you want to be able to make more money, you do the same amount of work, but you you’re able to price higher because your skill and your expertise, you can scale that a lot higher and potentially work fewer hours. So I throw out hourly right off the top. But those four pricing structures, I think can work in a lot of different situations, or at least the other three. So I’m interested to hear your thoughts on pricing. Go over to Keegan Lanier.com. Leave your comment below this episode. And let’s continue the conversation.