Pricing for design and development work has two main schools of thought:
- Hourly pricing, work for hire. Upside is that this is simple and easy to figure out, and you can ensure that we are making a profit so long as we are charging for every hour we put in. Downside is that our work may be worth much more to the client, but we never capture that value. The classic example is the Nike logo. That is a billion dollar logo in terms of value generated. The designer charged hourly and she made $35 for it. She eventually got compensated properly but they didn’t have to do that.
- Value pricing. This is the approach where we figure out what our work is actually worth to the client, and we charge according to that. If we don’t think the project provides value, we don’t have to take the project. The upside here is that we capture more of the value you create. The downside is that we have to argue more compellingly at the outset why we are going to provide this value. It is harder to quantify the price you are putting on your labor, so the client will ask more questions. Another downside is scope creep.
Our pricing strategy is that we write a detailed estimate for the project we are quoting, then multiply that by a sensible hourly rate to determine a final flat cost. For a larger projects, we reduce our standard hourly rate by 10-20% or so. As of writing this our normal hourly rate is $250, so a reduced rate leads us to $200-225. The original $250/hr cost and the reduced cost should both be shown on the proposal.
Therefore we do ultimately charge fixed costs a lot of the time but we tend to orient them to match a reasonable hourly for the company multiplied by the hours we expect a project to take. We do understand that value pricing makes sense but we tend to see the value as reflected in our rate rather than just arbitrarily pinning a project cost to what we perceive as the value. The market for web design is very competitive and we believe it’s important to be transparent and clear.
We generally do not negotiate on our hourly rate. When the client wants to reduce cost, we try to reduce scope as well. Sometimes we accept work for a lower hourly rate but some additional compensation like stock or future benefits. We have to really have a strong relationship with the lead in order for this to be a good idea, though.
- Our standard a-la-carte rate is $250/hr. We provide "bulk discounts" down to $200/hr for long-term engagements and retainers. We also provide some other discounts as appropriate.
- One-off projects tend to be $25k and up.
Some agencies act as brokers between clients and studios like ours, charging a finder’s fee for connecting you with a client. We don’t like to do this and avoid it if possible. We prefer to keep the referral chain clean of influence on either side. When firms we trust refer work to us we are always eager to reciprocate, though. We have some key referral partners we have sent lots of work to as well. It is great to build that kind of relationship within the industry, where we know the other party does great work and are not motivated by any kind of cut.