5 things you must consider before pricing your next project

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Let’s get one thing clear – even if you think you ace pricing your service, there’s always room for improvement.

You don’t want to keep pricing your projects similarly as your gain more experience and boost your status in the industry, do you?

Freelancers choose different methods for pricing their projects and all of them have their pros and cons.

Here are 5 key things you should consider before putting a price on your next project.

Sidenote: Once you finish, read how 4 freelancers built recurring revenue models that changed their business. You'll love it.

1. If you’re a pro, reconsider charging per hour

You can only get so far when charging per hour. As you gain experience, you can increase your pricing, but it will always have a limit.

No client will be happy with the prospect of paying $200 per hour, but they would be okay with paying $600 for a job that takes you three hours to complete.

It’s a matter of perspective, really – clients don’t care whether the project takes you 2 or 20 hours to complete. All they care about is a job well done.

Charging per project, you can potentially earn more in less time – which is something that happens as you gain experience and become more efficient.

You'll also enjoy this episode of our new podcast...

2. Make sure you’ve got a time tracking tool

If for some reason you decide to charge per hour, you need to properly track your time. You don’t want to be undercharging, right?

Using a time tracking tool also helps to estimate future project pricing.

There are many tools out there which help to precisely track your activity, like Paymo, Freckle, or Planscope.

3. Rethink weekly project billing

While weekly pricing gives that valuable focus on deliverables, it also comes with certain price.

Just consider what happens when Thanksgiving and Black Friday roll around and you’re forced to work a 3-day workweek.

Your client will inevitably request a discount or roll over these two days to next week. And you don’t have time for all that.

You need to be building relationships with your clients and taking care of administrative tasks.

Now you see why weekly billing can be tricky.

4. If charging per project, agree on improvement rates

It happens to every freelancer. You deliver a project and get some feedback. You correct it, send it to the client once more, and the same thing happens.

Going through several iterations is normal, but sometimes improvements on a project can become an entirely new project of their own.

And it’s not like you’ll get paid for them – they’re part of your agreement with the client.

That’s why it’s worth it to add a clause to your contract which suggests an additional pricing system for improvements.

You don’t want to spend hours improving your own work just because the client’s instructions weren’t clear, especially if you’re not being paid for it.

5. When constructing your pricing, focus on deliverables

By making deliverables your sole focus, you won’t be ignoring all that it took to get there. Rather, you’ll be able to accurately estimate the amount of hours and effort it takes you to complete a project.

Billing for the final product that contains a specified amount of deliverables is easily the most secure pricing strategy.

Still, don’t expect yourself to be able to do it at the beginning of your freelancing career.

It simply takes experience to correctly estimate a project and avoid getting yourself into something that isn’t financially satisfying.

Final Advice

Setting up a pricing system isn’t a one time thing.

Obviously, the more experience you gain, the better idea you’ll have about how much time a project will take you and how much you can charge for it on the basis of your market knowledge.

How do you price projects? Tell us your ideas in the comments.

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About David Grover

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Comments

  1. I love the idea of charging improvement rates. This happens to me all the time! Can you suggest some specific wording that we can add to our contracts to cover this?

    • This is something I have used in my contract for a while now, and while a lot of clients ‘Skip over it’ they aren’t upset by the terms when I show them (I also explain this to them on the first meeting I have with them, so they 100% know it’s there).

      Changes and revisions
      We know from plenty of experience that fixed-price contracts are rarely beneficial to you, as they often limit you to your first idea about how something should look or function. We don’t want to limit either your options or your opportunities to change your mind.
      The estimate/quotation prices at the beginning of this document are based on the number of days that we estimate we’ll need to accomplish everything you have told us you want to achieve. If you do want to change your mind, add extra pages or templates or even add new functionality, that won’t be a problem. You will be charged our normal rate of $x per hour or we will give you a separate quote depending on the size of the extra project. Along the way, we might ask you to put requests in writing so we can keep track of changes.
      We will be using a project management tool to manage your project. At every stage of the project, you will be asked to sign off the work completed. If after signing off any stage of the project you request further changes, this is no problem – we will simply charge our normal rate of $x per hour to make the extra changes requested.

  2. Babalwa Majikijela says:

    Thanks, I find this to be very helpful, I am not that serious about my freelance business, it’s not my main thing but one and again people ask for a project to be done here and there.

    I haven’t been serious because of exactly this pricing thing, I just couldn’t get it right and to be honest people think art should be cheap, which is very funny cos it’s so expansive to study the thing.

    Thank you so much this article has really boosted my confidence.

    • People don’t think art is cheap, they just need to see that YOUR art is worth the costs.

      You will always have people who expect gold from nothing, and this rarely happens more than once per person.
      I develop websites myself, and when people come to me only to say ‘Oh, that’s really expensive, so-and-so from India/Bangladesh/Bulgaria can do it at [40%-70%] cheap’, I simply tell them that while their prices are cheaper, their work quality is also sub-standard.

      Client laughs at me, goes and builds their project with the other company and comes back a month later saying ‘My website is terrible; it loads really slowly, parts of the website are skewed, design is not what I wanted, etc.’ and that’s exactly when they realise that Web Development (or art, in your case) IS worth something, and that’s when you make some real money, simply because now you don’t have to try and sell your service, you simply offer them a better experience than what they previously had, and that’s worth a lot more than money to them.

      Of course, there are people who are just cheap and will always be…

  3. We use the improvement rate concept by building in a fixed amount of amends from that start. We keep these quite tight but never actually enforce them, they are mainly there to give us a stick if we need to.

  4. Helpful article David! Definitely sharing this one.

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