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Thoughts on web design and development pricing

When you contact someone like me to design your site or code up an email or put together a WordPress blog, you generally have two ways to pay for this service: by the hour or by the project. I can give you an estimate, track the hours, and bill you at the end or I can tell you a price based on what I think will be involved and keep the work to around that amount. I think both of these ways suck and I’d like to tell you why.

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First, though, I think it’s important to say one thing: no matter what I’m charging, I want my clients to be completely satisfied. In the end, that’s my only job. In addition to that, I’d like my clients to feel like what they paid for what they got was fair. I don’t compete on price because I don’t think that leads to value. I want to build great things and charge people the right amount.

But how to go about doing that? Here’s how I see it from a few different perspectives…

The Client

Let me put myself in your shoes, if you don’t mind. I am a client on a regular basis so this shouldn’t be too hard…

When I pay someone for something, there are two things on my mind: did I get what I needed and do I feel like I got a good value. There’s a balance here and the key is setting the right expectations. I expect to get what I need and I expect to be happy paying for it. It’s rare that you get everything you want and more but pay very little for it, especially with professional services. Unfortunately, it’s less rare to pay too much and not get what you need. But I digress…

So, I’m a client and I want satisfaction and value. In the web world, this translates to…

  1. I want a website or blog or template or email that looks great, is to my specifications, and performs well. I want to have my bases covered (I’m not an expert after all) and a minimum of surprises down the road. I just want to feel like I was really taken care of.
  2. In addition, I want to feel happy to be paying the amount I’m paying. Even if it’s a stretch, even if it’s a bit more than the budget, even if someone else was cheaper, I want to feel good about it.

I’m going to venture a guess, based on my experience, my opinion, and how well luxury goods do in America, that the first part of this puzzle is more important than the second to the vast majority of people. With that in mind, the concentration should be on providing the best possible product and the pricing will follow suit. Provide a great service, get overwhelmed with the response, and prices adjust accordingly.

But I’m getting away from the role-playing here. I’m a client, I want something great, and I pick someone that I think can make it for me. Now, I need to figure out if the price works. If I was able to choose between paying someone hourly or a fixed amount (a choice I offer when the situation can allow for either), I’m stuck:

  • If I pay hourly, I’m not sure what my costs will be. I would expect an estimate of some kind (ballpark) and a notice if the project runs past that but what if it takes twice as long to create something usable? What if I’m stuck at my spending limit with nothing to show but a half-finished site?
  • If I pay a fixed price, then I know how much I’m going to spend but will it be everything I wanted it to be? Are corners going to be cut to get it under budget? Am I going to have to push hard to get the features I’d like?

It’s a conundrum, either way you look at it. Would it make you feel better if I told you that the situation is no better for a developer?

The Service Provider

Back in my shoes (will, house shoes since I work from home) now…

When I create something, there are two things on my mind: did I create something great and do I feel like it was worth my time? There is a balance here and the key is choosing the right projects. There are fun projects that help me learn new things and there are projects that pay a lot but are arduous, boring, and tough to produce something I’m really proud of. The key to happiness for a developer is being able to find the fun, lucrative projects that challenge what we know and give us a lot of creative freedom. I want to say something sarcastic to the tune of “too bad there isn’t a fountain of those” but I have a pretty good track record so far. But, again, I digress…

So I want make clients happy while building things that are fun and making sure my bills get paid. It shouldn’t surprise you that these things are very tightly tied together. If I’m having a great time with the project and the people involved, the money that I eventually receive is much less important. Taken to the extreme, this is why I build side projects like the (Drudge Report website template or the WP-Drudge WordPress template). Sure, I sell them online but I have complete control and I build what sounds interesting (and the sales don’t quite make up for the time it took). Taken to the other extreme, I have turned down several projects that I know I won’t enjoy and I won’t be proud to display in my portfolio. I’m not interested in trading my finite number of hours on this planet just for cash; there has to be meta-compensation (i.e. pride in workmanship or design, learning a new skill, working with a fun group or person, etc).

I want to make people happy and I want to enjoy what I’m doing. During this love-fest, however, I also have rent and a car payment so I need some income. Being uncreative, I can charge one of two ways: I can charge by the hour or I can come up with an estimate and charge a fixed price. There are, of course, pros and cons to both:

  1. If I charge hourly, I have a timer going and I can only make as much money as I have hours in the day. What’s the appropriate time to charge for phone calls if we talked about cars for 10 minutes? What about learning time, do I charge for that if I learned the skill for that project? I can’t charge for mistakes but what about conscious changes from one approach to another because of new found information? What’s an appropriate hourly rate that covers all bases? I do PHP development as well as Photoshop design; do those get charged at different rates? What happens when I forgot to start or stop the timer accidentally?
  2. If I charge by the project, the big, huge, glaring, painful, tension-causing problem surrounds specifications. What did I agree to do for what price? If I say that I’ll build a site for $XXXX, what does that include? Should I spend 4 hours writing up exactly what I’m going to do so there is no confusion later? What about unforeseen circumstances? What about if you change your mind about something? In the end, you want what works and I want to build that but if you start changing what I’m building mid-way, are you going to understand the change in estimate? This kind of pricing rewards me for working quickly but how quick can I work while still providing a top-quality product? How many corners am I willing to cut to make sure it comes under budget? Do the projects that come in under my estimate make up for the ones that spiral out of control?

Problems abound for both methods.

What’s the right way?

Wouldn’t it be great if I just totally write the right answer down here and solved this problem for all time? Alas, Josh Can only Help so much…

I think the key to this is found between two things I said above:

  • Clients want value and will often pay more for higher quality.
  • Developers want to create something they are happy with, even if it takes more time.

So if the final cost is less important than the final outcome (not unimportant, just less), then it’s safe to say that the concentration should be on the work itself rather than the price, especially in places where quality work really shows.

In the end, the right answer, as usual,┬ájust┬ádepends on the person asking the question. For myself, I’ve moved more and more to an hourly system with a rough estimate up front, similar to a mechanic. I’ll let you know what I think it’s going to cost, keep you updated along the way, and notify if it goes over. I’m also working on a rate card for easily repeatable, often-requested services (installing and configuring WordPress, analytics reports, etc).

Whether you’re a client, a designer, a developer, or none of the above, I’d love to hear your thoughts on this.

Replies

Total: 6

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  1. Irena

    November 28, 2011 at 8:24 pm  •  Reply

    Irena says:

    I’m in this bind as we speak. I just had to send a revised scope of work estimate to a client who I imagine is rather upset and trying to figure out how to respond. I originally took the project estimate route but there were so many changes post sign-off along the way, that it began to feel like we were working pro-bono. The project is taking three times longer than anticipated for multiple reasons (not related to design), and the client has become micro-managerial. I really like your thinking about the end result – will they be satisfied with the outcome? I will use some of this language to help them understand that we created a brand and that the work going into that has a value more than it has a cost. I hated having to ask for more money, but I have to value my time and my expertise as a professional. I also have to compensate the efforts of my team in a fair way. In the end, i will ask, “Are you happy with the site?” I believe they will say, “yes.”

    • Josh

      November 28, 2011 at 10:49 pm  •  Reply

      Josh says:

      Irena, thanks for the comment and your thoughts here. Hopefully it felt better just to get it out!

      There really is little more frustrating than a project that should be done dragging out over time. It gets especially hard if you’ve locked yourself into a price so you either see it as your hourly rate spiraling down, down, down or you see it as working for free.

      I set expectations in the beginning of any set-price project that if anything comes up that would extend this cost (changes to the design, unforeseen server issues, feature changes) that this is passed along to the client. Many people have questions about this and I go a long way towards explaining the reasoning behind it and when that might happen. Rarely do I need to expand the budget but, when I do, the expectation was there in the beginning.


  2. heike

    November 8, 2011 at 1:09 pm  •  Reply

    heike says:

    i loved reading this, josh. thank you so much for saying it out loud…what matters is that we enjoy our time spent with our creativity…
    pricing is a bitch and i find myself in these situations constantly where i don’t have an answer. right now for example i am supposed to quote the price on a membership plugin in WP which i have not done before so i have no clue what to base the price on. it seems to be a constant challenge coming up with a price for stuff that works for both ends.
    thanks for making me feel less crazy…:)

    • Josh

      November 8, 2011 at 3:25 pm  •  Reply

      Josh says:

      Glad you enjoyed it, Heike, and thanks for the comment.

      I think pricing is one of worst parts of my job. If it’s too “hourly” then it’s just a trade time for money situation. If it’s too “project-y” then it becomes risky.

      These days, I’ve been leaning more towards “project-y” pricing and just building in a buffer in case something goes. I’m also building an “expansion” clause into my contract to say that the budget might increase and I’ll inform ahead of time.

      In the end, I hate the idea of price getting in the way of good work. I also hate the idea of being paid much less than the work is worth. Catch 22!


  3. Ivan

    February 11, 2011 at 11:50 am  •  Reply

    Ivan says:

    Hi Josh, it’s me Ivan :)
    i found your website because you leave a comment on mine.
    I love this article! Me myself also a web developer and most of the time i couldn’t figure what is the best price for a project. My client only said “I want something like this this and this, how much it cost?”.
    I can’t answer that question instantly. It is a dilemma. If i charge too high, client will find another developer. If i charge too low, i won’t happy.
    And i found a solution for it. I said “give me a day to do analysis, then i will get back to you.” So in the meantime i do my research, and then i explain what is my idea and i charge a reasonable price for it. Usually the client understand and happy.

    • Josh

      February 11, 2011 at 12:14 pm  •  Reply

      Josh says:

      Thanks Ivan…

      It is a common problem but one that, more and more, I’m realizing that it’s our job to solve. The worst thing we can do is push back on people by geting them to conform to a particular system or by changing how the project needs to be built because the pricing gets in the way.

      I think pricing becomes an issue with people that are looking for a deal. I want to give people value but I don’t want to be the cheap option out there. If someone isn’t ready to spend what it costs to build what they need, that’s totally fine, there are so many other providers out there. I want to make great things that people are excited about and I want people to be happy to write that check. If I can find that balance with most of my proejcts, I’ll be a happy man!

      Good luck out there… definitely get in touch if you’re interested in talking about this stuff further or want to collaborate on something.

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