How to Set Your Fees as an Independent Web Designer - dummies

How to Set Your Fees as an Independent Web Designer

By Lisa Lopuck

Knowing what to charge as an independent web designer is always hard. You can use any one of various formulas to arrive at an hourly rate that takes into consideration your annual expenses, profit margin, and salary, but you can arrive at this number through simple common sense:

  • Ask around to find out what other designers are charging. This information can give you a good reality check as well as a range of prices. You may find that freelance designers in your area are charging between $50 and $150 an hour.

  • Be honest about your level of skill and experience. If you’ve been around for a while and you have a range of high-profile sites in your portfolio, you probably know exactly what you should charge for your freelance services, and it’s probably toward the top end of the range. If you’re new to web design but are an old hat at print design, your fee may be somewhere in the middle.

  • Estimate your salary and expenses. As an independent consultant, you have to calculate what it costs you to run your business each month, how much you want to make, how much time you can honestly bill in each month, and taxes.

  • Think of all the things you need to buy in order to run your business. Electricity, office supplies, computers, software, fonts, an Internet connection, trade magazines, memberships in industry organizations, and so on all add up. Think of a monthly budget for all these things, and then think of what you’d like to make on top of that. For example, if it costs you $4,000 a month to run your home office and you want to clear $6,000 a month, you have to figure out how to make $10,000 a month.

  • Figure out how many hours you must bill each month. Billable time is all the time you actually spend doing client work. Ideally, this is at least half of your time; but more often than not, checking e-mail, writing proposals, and performing other activities cut drastically into your available time for working on specific projects.

    For example, if you assume that each year has 50 workweeks (leaving two for vacation), you have 4.1 weeks in a month. At 50 percent billable time, that leaves 83.3 hours of billable time. To make $10,000 a month, your hourly rate needs to be $120.00.

A freelance hourly rate oddly corresponds to an annual salary. Notice that $10,000 a month is $120,000 per year, and the hourly rate is $120.00. The same phenomenon occurs in the workplace. For instance, a creative director who is paid $150,000 a year in an agency can probably charge about $150.00 an hour for consulting work. Similarly, a junior designer who makes about $50,000 a year for an agency can charge about $50.00 an hour for freelance work.

When you bid on a project, use your hourly rate to come up with an estimate of what the project will cost, but ultimately quote clients a fixed bid (a single flat fee). It’s better to charge clients a flat per-project fee than to charge them hourly. Firstly, most clients expect a fixed bid so that they know exactly what the project will cost.

Another reason to charge a fixed bid is that if you work fast and zero in on the design quickly, you are paid for the value of your work, not just the few hours it took you to knock it out. Make sure that you’re paid for using your brain, not your hands!

The hardest part of charging a flat rate is accurately estimating the amount of work and the time it will take you to complete the project. Spend time thinking through each step of the proposal, gauging the work, estimating how long each step will take, and putting a dollar figure next to it. Include any subcontractor’s estimates, and then add up all the steps. Add 20 to 25 percent to the budget for good measure.