Inside the Black Box of Web Design Pricing

Be47c213d584412f2dc86e47887a88a6?s=47 Jeff Archibald
December 07, 2016

Inside the Black Box of Web Design Pricing

Web design costs come in a huge range of shapes & sizes. Thanks to that range, clients can struggle with understanding why websites cost what they do, and freelancers/shops can struggle with how to price their services. That’s what this talk uncovers: the thought processes, variables, logic, and math that goes into pricing custom web design & development from the perspective of someone who’s grown from a two-person home-based business to an award-winning design firm.

Be47c213d584412f2dc86e47887a88a6?s=128

Jeff Archibald

December 07, 2016
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Transcript

  1. INSIDE THE BLACK BOX OF WEB DESIGN PRICING JEFF ARCHIBALD

    @jeff_archibald
  2. WE HAVE A PROBLEM. Freelancers/web shops don’t know what they

    should be charging. Clients don’t know where the numbers come from.
  3. HERE’S THE SOLUTION. Pull back the curtain on how to

    accurately & sustainably price web projects & put everyone on the same playing field.
  4. HI. I’M JEFF.

  5. WHAT WE’LL LEARN. How project quotes are calculated Why quotes

    vary so widely How to understand & calculate your hourly rate How to unpack features & estimate properly How to put it all together
  6. HOW IS WEB PROJECT COST CALCULATED?

  7. None
  8. $*T+E Hourly Rate * Time + Expenses

  9. WHY DO WEB QUOTES VARY SO WIDELY?

  10. 100 HRS @ $60/hr VS 100 HRS @ $120/hr

  11. UNDERSTANDING HOURLY RATE. Commonly based on: 1. how established the

    shop is 2. the quality of work they do 3. good ol’ supply and demand 4. whatever number popped in their head
  12. A BETTER WAY: SUSTAINABLE, ETHICAL, AND JUSTIFIABLE.

  13. I WANT US ALL TO BE RESPECTED AND GET PAID

    FAIRLY AS AN INDUSTRY.
  14. THE MAGIC* FORMULA *May or may not contain magic.

  15. TOTAL SALARY. The salary you pay isn’t the total cost

    to the business.
  16. TS=(S*1.4) S = Salaries (cumulative for team) TS = Total

    Salary
  17. BASE RATE. Figures out what you need to charge just

    to cover your salaries.
  18. BASE RATE=TS/(H*0.6) TS = Total Salary H = Hours (estimate

    1725/year/person) 0.6 = Shop utilization (will vary)
  19. OVERHEAD: RENT, EQUIPMENT, SOFTWARE, SUPPLIES, ADVERTISING ETC.

  20. OVERHEAD % = OH/TS OH = Overhead TS = Total

    Salary (Salaries*1.4) OH% = Overhead Percentage
  21. ROUGH OVERHEAD ESTIMATE: TOTAL SALARY * .35

  22. OVERHEAD RATE. Charging this will cover salaries and overhead costs.

  23. OVERHEAD RATE = (OH%*BR)+BR OH% = Overhead Percentage BR =

    Base Rate
  24. HOURLY RATE. This covers total salaries, overhead, and profit to

    the company – aka everything you need.
  25. HOURLY RATE = OHR*1.2 OHR = Overhead Rate 1.2 =

    20% profit
  26. TS=(S*1.4) BR=TS/(H*0.6) OH%=OH/TS OHR=(OH%*BR)+BR HR=OHR*1.2 S=Salaries TS=Total Salary H=Hours BR=Base

    Rate OH=Overhead OH%=Overhead Percentage OHR=Overhead Rate HR=Hourly Rate
  27. BIT.LY/WHATS-MY-RATE

  28. None
  29. $*T+E Hourly Rate * Time + Expenses

  30. $*T+E Hourly Rate * Time + Expenses

  31. None
  32. TIME (OR HOURS) TO DO THE WORK IS COMPRISED OF:

    features / requirements the complexity of them, and the personnel resources needed to make them a reality.
  33. “WE JUST NEED A SIMPLE CLIENT LOGIN AREA.”

  34. UNPACK FEATURES & ESTIMATE ACCURATELY.

  35. UNPACK FEATURES & ESTIMATE ACCURATELY. 1. Write assumptions / solutions

    into your proposal. 2. If possible, do a proper Needs Assessment.
  36. BUT HOW CAN I ESTIMATE TIME ACCURATELY?

  37. None
  38. TRACK YO TIME, FOO’

  39. None
  40. None
  41. PAPER LEAF: BASE RATE: $78/Hr OVERHEAD RATE: $97/Hr HOURLY RATE:

    $120/Hr
  42. None
  43. PUTTING IT ALL TOGETHER: A REAL WEB DESIGN PROJECT ESTIMATE.

  44. BIT.LY/PROJECT-ESTIMATOR

  45. SUMMARY IT’S ABOUT SUSTAINABLE BUSINESS.

  46. SUMMARY IT’S ABOUT HONESTLY PAYING YOURSELF & YOUR PEOPLE.

  47. SUMMARY IT’S ABOUT BEING ABLE TO DO GREAT WORK.

  48. SUMMARY IT’S ABOUT MUTUAL CLIENT- PROVIDER KNOWLEDGE AND RESPECT

  49. STEPS TO TAKE 1. FIGURE OUT YOUR HOURLY RATE. bit.ly/whats-my-rate

  50. STEPS TO TAKE: 2. START TRACKING YOUR TIME.

  51. STEPS TO TAKE: 3. ASK A TON OF QUESTIONS IN

    ORDER TO UNPACK SCOPE.
  52. SUMMARY 4. ESTIMATE ACCURATELY & EXTENSIVELY. bit.ly/project-estimator

  53. SUMMARY 5. MAKE SOMETHING GREAT.

  54. THANKS. Jeff Archibald @jeff_archibald