Digital Masters - Growing Your Web Dev Business

7 Factors in Your Website Pricing

December 22, 2021 Marisa VanSkiver, Captain Coder Season 1 Episode 34
Digital Masters - Growing Your Web Dev Business
7 Factors in Your Website Pricing
Show Notes Transcript

One of the most common questions that gets asked by new website freelancers are “What should I charge?”

Especially if you’ve worked mostly for other companies or you’re just relatively new to the industry, it can be hard to know what your price points should be.

After all, if you look on job boards like Upwork (where you’re competing against people from all over the world), customers want to pay as little as $500 and upwards of $10,000 for a website.

Where exactly do you fit in?

In today’s episode, I’m going to walk you through the seven factors you need to take into account with pricing your websites and then the options to charge for those websites you’re building.

One of the most common questions that gets asked by new website freelancers are "What should I charge?"

Especially if you've worked mostly for other companies or you're just relatively new to the industry, it can be hard to know what your price points should be.

After all, if you look on job boards like Upwork (where you're competing against people from all over the world), customers want to pay as little as $500 and upwards of $10,000 for a website.

Where exactly do you fit in?

Website Pricing is Customizable

Here's the key thing with all of that. Your pricing is pretty customizable and dependent on a few factors. I could tell you right now that you shouldn't sell a website for less than $5,000, but if you don't have the right experience or customers to back up that price point, it can be a tough sell.

What you have to do is go through a few deciding factors to get to the right range for you and your business. And don't forget that these rates don't have to be your final rates for the rest of your career. They can and should increase every few months to a year as you continue to build websites and have the proof in your portfolio.

In today's episode, I'm going to walk you through the seven factors you need to take into account with pricing your websites and then the options to charge for those websites you're building.

Let's go!

Seven Factors That Influence Your Website Prices

If you don't have a writing utensil of some kind (classic pen and paper, Rocketbook, iPad and Apple pencil, or Notes app) handy, I highly recommend you grab something now. With each of these 7 factors, you'll want to take note of where you and your business are and where the websites you build fit into each of these.

1. What Services You're Including

First, let's talk about the services you're including when you build a website. I know a lot of website freelancers that simply build the website. They don't write the copy, they use a pre-made template or design to create the look, and they're more or less just getting the website live for the customer.

While I certainly don't feel like that's the best method for any website designer or developer to take, I understand that as especially you're starting out that might be the reality of what you're doing.

When it comes to pricing your websites, take into account what exactly you're doing for your customers with those websites. Are you just building a website? Or are you providing copywriting services? Are you creating the website structure? Will you be doing on-page SEO work or providing web accessibility within the website?

Write out the basic services that you include in your websites you're building. Chances are you're doing more than "just" coding it out; even when I "just" code a website, I'm still able to show that I'm coding for web accessibility and following SEO best practices.

The more services you're including within that website, the more time it's going to take you to build it. But more than that, the value you're providing is much greater when you're including more services within a website build.

Plus, not all of us are going to be comfortable writing website copy but we want to provide that as a service for the websites we build. That can mean hiring a professional copywriter, which drives your overhead up.

These are all factors that influence how much a website costs you to produce and allows you to decide what you want your profit margins to be.

2. Your Skill Level

The next factor you have to take into account with your pricing? What's your skill level? Basically, how new are you to building websites as a whole?

I'm not a huge proponent for free work, but I am a proponent for charging lower prices to build up your portfolio. Want to know why? Your work is worth something, but if you're brand new into websites or just freelancing in general, you have to earn trust with your clients. You also shouldn't be trying to charge $10K when you've never built a single website before.

When you're a newer coder or website designer, I recommend that you cut your teeth on a couple of smaller projects. Ones that you can learn on without getting so overwhelmed (which can happen if you try to tackle a huge site right off the bat). Starting off small will allow you to charge a lower rate, too, that will be more amenable to the customer taking a gamble on you.

Another thing to consider is if it's your first couple of websites to build in a new-to-you method. For instance, if you've built websites in SquareSpace and you're now transitioning to WordPress, you may not charge the full value right up front. I've even honestly told customers I was cutting their price because I was experimenting and were they OK with that?

Building websites is honestly all about gaining the experience. The longer you do it, the faster you become, but the better you become, too. You'll be able to add in more services, increase the value of the end product, and thus increase your prices.

Specialized Skills Vs. Website Builders

Another thing to keep in mind - if your skills are a bit more specialized, you'll be able to charge more. Someone who's using the same tools a client could - SquareSpace, Wix, Elementor, Divi, etc - shouldn't be charging the same way that a coder who's building a custom WordPress theme does. The skill involved with creating something with custom code is just different and more valuable. Clients understand the value of a custom solution where it might be harder to convince them to pay you to build a Divi website when they did that themselves the last time they built a website.

3. The Type of Website You're Building

If you're at all like me, the types of websites you build varies greatly from project to project. But that also means that my prices vary widely from project to project. A client that hires me to build a small, informational website for their business is not going to pay as much as the client asking for a more customized eCommerce or eLearning solution.

That's because, simply, the functionality required for an eCommerce solution is just more labor intensive than a simple informational website. Typically, eCommerce clients will also understand that they need to pay a bit more to get those secure functionalities, too. They know that what they're asking requires a bit more specialized skillset.

I will say, not everyone does. And frankly, the ones that don't understand that they're hoping to make say $5,000/month on eCommerce sales should think to pay about twice that for an eCommerce website are not the ones you want to work with. Many times, clients don't understand the finer details and time that things take. When you're creating a Membership area for a website, for instance, you have to communicate to your client what all it takes to build that out. They see their competitors have one and they think it should be "easy" right? Well, unfortunately, not, it's not.

When you're working with clients that want these more specialized websites, you have to remind them not only of the time it takes to create the website, but of the value they're getting in return. Just because they ask doesn't mean they understand they need to have a bigger budget.

4. Who Your Clients Are

What will affect your price probably more than anything else? Who you're building websites for.

Let's be honest, clients that are a brand new business will not always have the right budget for a custom website solution. More established companies, however, tend to know what they're paying for and tend to have a better budget.

If you work with a specific type of client, or niche, that can affect what your pricing looks like, too. If you're dealing with an industry where their annual revenue tends to be in the millions, chances are they're likely going to be OK paying higher price tags for websites.

So why doesn't everyone go after those whale clients?

Sometimes they're not always the most fun to work with. Sometimes they expect large teams when they outsource a website and maybe you don't want to work with a large team. Getting in the door to work with some of those "whale" clients can be a little difficult, too.

What you do need to decide is find the types of clients you want to work with and ones that you may already have a bit of an in with. And you don't have to settle on a specific niche either. I prefer to work with small businesses that have fewer than 5 employees and a business owner that's still super involved. It's more fun for me to dive in and tell their stories. I typically am building their second or third iteration of a website, so they have a budget but they might not have worked with a website designer or developer before.

See how that works? You don't have to niche down to a specific industry to get clear about who your client is. Just pick clients that can actually pay what you want to charge and how you want to work.

5. The Scope and Size of the Project

This goes in a bit with the type of the website you're building, but the size of the project matters. When I'm building a website that's only 5 pages, that's a wildly different price tag to one I build with 30 pages that I know will require even more revisions.

When you're looking at charging for a website, whether hourly or a flat rate (which we'll talk about in a minute), you'll need to account for client feedback. It's not all about how long it takes you to build something, but also how many changes they might request. And believe me, they'll request some kind of changes.

The larger the website, not only the more hours it'll take to build the website but also the chances are high that you'll need more revision time, too.

You may also want to include some language in your contract to prevent scope creep and keep what you're doing pretty on track. In my own contracts, I include a line that we can add other features in a phase 2 of the website that will be quoted separately from the current project. Then it's up to my discretion to invoke that when a client asks for tweaks or additions that just go outside of what we'd originally discussed. Asking for a new form isn't a big deal, but if they suddenly want to sell products, that's a totally out of scope item.

6. The Features You Need to Include

Which brings us to the features and tools you're going to be including in the website. Just like the type of websites you're building - simple vs eCommerce - affect how you charge, so do the tools and technologies you're using to build the website.

Basically, the more intricate and complex features that you'll need to create the website, the more time and the more skill it takes to create the website (thus the more you'll charge).

For example, an online business owner who needs both eCommerce and an online learning platform will require certain tools like WooCommerce and LearnDash to be able to make their site work. There might be premium plugin licenses you'll need to calculate in and make sure they understand those licenses are an annual cost.

Maybe a local restaurant you work with needs a menu page that they can and need to update on their own. Creating a simple layout that they can adjust without breaking the design is another advanced, more complex feature that a lot of web designers and developers simply won't o for them.

Some of these advanced features also add a great deal of value into the website you're building for your clients, too, on top of the time it takes you to build them.

7. What the Website Will Do For Your Clients

And that value is huge for what you can charge your clients. What's the potential ROI for the websites you're building?

If you're working with a smaller business who just needs a home online and they're not doing a ton of other marketing, the chances are they're not going to get a huge ROI from their website. Especially not right away. But if you're working with an eCommerce business or a business that drives a ton of direct traffic to their website and has a marketing plan in place, they might be getting a huge ROI for that website you build.

Simply put, you don't want to charge $5,000 to a company that may never earn $1,000 from their website (that'll just make them mad), but you also don't want to charge $5,000 to a company that will earn $15,000 in their first month.

One of the ways to delve into this is ask what their marketing plans look like. How much are they earning for their website now? Where would they like their new website to take them, financially? What kind of ROI are they hoping for? Knowing what their actual goals and numbers are will help you know roughly what you can and should charge.

Hourly Prices vs Flat Rates

Phew, those are a lot of things to keep in mind when pricing a website but we're not quite done yet.

When it comes to setting a price for a website, you have one more thing to consider - will you be charging hourly or a flat rate for the websites you're building?

Advantages of Hourly Billing

Charging hourly means you're paid for every scope creep, every revision, and every single hour you put into the project. A lot of clients actually expect an hourly rate, so it doesn't take a huge explanation in the sale.

Even if you are charging hourly, you should provide a ballpark estimate so your client knows roughly what they can expect to pay and decide on communication when you start to go over that estimate.

Flat Rate Billing

My preferred method is actually billing a flat rate. This helps me to not only bill on value, instead of time spent, but also is a lower risk for your clients. They like knowing exactly what they're going to pay. I can't tell you how many times I've had a prospect tell me they were quoted one price for a website and ended up paying double because it was billed hourly. Even if that was their fault for requesting out-of-scope changes and revisions, it still left a bad taste in their mouth and made them reluctant to trust another website developer.

When you're billing flat rate, you still want to estimate internally how much time the website will take to build. That's how you come up with your basic number and then you can add a buffer of so many hours to account for revisions and the value you're bringing to the business with the new website.

Turning Flat Rate into Recurring Revenue

Another advantage of flat rate? It's easy to turn a flat rate website price into some recurring revenue. You could allow them to "pay down" their full website fee over the course of say a year and bundle it with SEO, website maintenance, hosting, or other digital marketing skills like copywriting and email marketing to provide even more value for the website.

Of course, if you do bundle in additional services, you need to add that into the monthly fee; don't do that work for free! But it helps you to get some recurring revenue into your business. Then you simply create a package for their second year where you provide the additional services but they're done paying down the website.

Remember, too, that if you're charging a website over the course of a year that you need to calculate in some interest. Clients who pay upfront should get a bit of a discount compared to those paying over time. I'd charge less than what a credit card charges you for interest though.

Pricing Your Website Services

One thing that I will tell you, even if you are not charging hourly, always track your time for every website you build. Knowing how much time and effort is put into a website will help you to better determine pricing down the road.

You'll definitely get better with pricing the more you build websites, too. The awesome thing is that once you feel comfortable charging the rates you want to charge, you'll start to attract the right kinds of clients. You just have to be confident in your skills and be sure to communicate the value of what you're providing in a website you're building. Those seven factors we discussed? Turn all of those around on your prospects and show them the amount of value they're getting when they work with you. The better you get, the fewer people will bat an eye at paying those prices.