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.

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?
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
29. $*T+E Hourly Rate * Time + Expenses
30. $*T+E Hourly Rate * Time + Expenses
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?
38. TRACK YO TIME, FOO’
41. PAPER LEAF: BASE RATE: $78/Hr OVERHEAD RATE: $97/Hr HOURLY RATE: $120/Hr
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