How do you charge?
on March 18th, 2010 | Interview
I have noticed there is several way to charge clients and a lot of debate about each way. So, I once again called upon the experts in our field. The answers I was looking for was the method, not how much.
I have broken the main three ways of ways to charge clients:
- Short Term: This is what I am officially calling “charging by the hour”. You give your client an estimate on amount of hours it will take for the project. If the clients demand more additions or changes you can easily charge more. This also might limit the client on something they really want.
- Project: This sounds like what it is, you charge per project. A client tells you that they have a set price and you either take it or leave it. The great thing about per project is both sides of the party know exactly how much they are getting. The bad part is the client can beat you into quitting your job if you do not lay out everything in the beginning.
- Retainer: This is where you set up a yearly contract, sometimes a half year. This is better for someone that does freelance full time or a company. You set up an initial fee, then brake down the year into monthly payments. This can work great because you can have a better relationship with your client and a website is always living. This gives it room to grow and improve. You have to be organized and have a set schedule to to get everything done in the day.
Name: David Perel
Website: www.from-the-couch.com
Twitter: @obox
Promoting: www.obox-design.com
Location: Cape Town, South Africa
Q: How do you charge?
A: It depends on the project but we always use either “per project” or “per hour”.
In cases where we charge per hour we set a minimum payment amount. We also only do this when the scope is not yet finalized or if there is a lot of design work that is required (social network sized sites).
For “Per Project” deals we have a minimum starting point as well. These kinds of projects are usually WordPress type blogs which involve the design and the coding.
I would say that with experience we have worked out that we benefit from either method. There have been the odd occasions where I wish we had used an hourly setup and vise versa. My advice is to always charge a 50% deposit up front.
If you are charging per hour make sure that you charge for minute that you are doing that work, that includes actually thinking up concepts etc. We also round off our minutes, so even if we do 5mins work we write down 15mins.
Name: Dustin Ward
Website: www.dustinward.com
Twitter: @duward
Promoting:Custom WordPress Theme Development
Location: Oklahoma City, OK
Q: How do you charge?
A: This is a very common question in the web development business, and there is not a right or wrong answer. For me, it comes down to the actual project at hand. In some cases it does not make sense to charge a fixed price. If I am only modifying a portion of the site, or adding functionality, I normally charge an hourly rate. If a client comes to me with an end-to-end project it usually makes sense for me to charge a fixed price. Although, if not done correctly and guidelines are not set up front, you can really put yourself in a bad place and will find yourself working on the site with no finish line in sight. The most important thing about a fixed price project is what has to be accomplished and what the end point for you is. Now, do not think that hourly pricing does not come with its own issues. With some clients you will run into what is an actual billable hour or how long “they” think it should take to finish something. Sites like odesk.com help with this, in some regards, with their oDesk Team software that takes random screenshots of developer’s desktops while logged in and it charges hours to the client. I prefer this method as it is rock solid proof of the billed hours that I’ve claimed.
Milestone payments are another way to charge clients. A milestone is a specific set of defined tasks agreed upon by you and your client. After you reach a milestone, a payment is made to you, and you and the client agrees on the next set. You can communicate with your client about unexpected issues of that portion of the project and both parties can decide to continue on to the next set of milestones. Identifying possible schedule issues earlier reduces your risk of investing more time than you originally estimated. I use the milestone way of doing fixed-price projects if the project is expected to run six months or longer. At the end of the day, the decision is yours on how to charge your client. The best solution that I have come up with is communication with the client. You should find out what they can or cannot do and what works best for you. I use all of the methods that I have talked about, and have had to adjust to the client’s needs, and I think that is one of the most important parts of being a web developer.
Name: Kevin Tomasso
Website: www.progrphx.com
Twitter: @ktomasso
Location: Tallahassee, FL
Q: How do you charge?
A: Per Project. The caliber of clients I have are all on very limited budgets, and the thought of not knowing how much the total would be (by using per hour) is terrifying to them. Per project works because, like you said, it lets both parties know how much the project is worth up front. However, it’s often times hard to get a fair price, as the actual cost to profit on a job scares the client away. The other main drawback is “scope creep,” where the project starts out with one set of services, and ends up being twice the amount of work after multiple “can you just add this” requests by the client.
Name: Jacob Gube
Website: sixrevisions.com
Twitter: @sixrevisions
Location: Bloomington, IN
Q: How do you charge?
A: To me, the best/easiest method is to charge by project. However, this sort of charging method is best left to professionals who are experienced and good at solid requirements-gathering. You don’t want to end up doing more work than you had quoted for due to something that you failed to account for. A contract for this method has to be bullet-proof. You should also have contingencies for charging more if there is scope creep. What’s nice here is that there’s mutual agreement between you and the partner about the exact deliverables that you will be providing for the rate that you are charging; this gives both parties a road map and a checklist which can be nice in providing closure to projects.
Name: Jacob Cass
Website: justcreativedesign.com
Twitter: @justcreative
Location: Brooklyn, New York
Q: How do you charge?
A: For identity design projects I charge 50% upfront and then 50% before delivery of high res files. For web design jobs it is split in increments based on the size of the project. I’ve found working on a project to project basis makes things easier for both the client and designer, though you must ensure everything is outlined in the contract before starting the project otherwise, like you said, things could backfire later down the track.
Name: Andrew Houle
Website: www.myinkblog.com
Twitter: @myinkblog
Location: WNY
Q: How do you charge?
A: At this point, I always bill by project. I’ve learned through trial and error that this is the best technique for me. I also think it’s the fairest method. Charging by the hour has too many troublesome variables to deal with. From the client’s perspective, they tend to be consumed with the amount per hour, and have the urge to cut corners to save on cost. From my perspective, I was never sure what the right amount to charge was. Plus, I tend to work in spurts, so it was a challenge to keep track of my time. Charging by the project allows me to work toward the best possible solution at a set rate. The client knows what to expect, and I avoid rushing the job.
Name: Tim Smith
Website: timothybsmith.com
Twitter: @timothybsmith
Promoting: “Art Direction” on the web through his personal site.
Location: San Diego, CA
Q: How do you charge?
A: The method I use really depends on the project. However, I find myself using the “short-term” and “project” methods the most. There are some clients that due to their loyalty, I give them a flat rate. It doesn’t matter if I end up working a bit more than projected because, I know they’ll come back. To first time clients, I’ll usually charge by the hour. Thankfully, I haven’t had any problems with clients and I believe it has to do with my flexibility in method. Really, you could charge them the same with each method but, some feel more secure doing it a certain way and I’m more than happy to oblige.
Name: Elliot Jay Stocks
Website: elliotjaystocks.com
Twitter: @elliotjaystocks
Location: Cheshire, England
Q: How do you charge?
A: By and large, I charge on a per-day basis; i.e: if it takes 10 days, you pay for 10; if it takes 20 days, you pay for 20. The main reason I do this is because very early on in my freelance career (when I was freelancing alongside a full-time job) I took on a project which spiralled out of control from what was initially a week to months and months and months of work. Fortunately, I charged by the day from the outset, which saved me from working for free for all that time. It could’ve been a disaster!
But in general, clients like to have fixed prices. So I often quote them a fixed per-project price based on the number of days I think something will take, and be prepared to have a bit of flexibility with the time. But I also explain that if it starts running into more than 3 or 4 days extra, then they’ll have to be billed for that (assuming it’s down to client demands rather than me making mistakes). Really it’s about agreeing on a spec before any work begins and then sticking to that. If the spec changes, so can the money.
Having said all that, I charge differently for illustration and identity work, where I offer a fixed price for a certain amount of iterations, another fixed price for a further amount of iterations, etc. This keeps things manageable and affordable for the client.
I always charge a 50% before start the project.