Charging for work - pricing strategy thoughts.

Discussion in 'SEO, PPC and Online Marketing' started by Baz Watkins, Jan 12, 2011.

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  1. Baz Watkins

    Baz Watkins UKBF Enthusiast Full Member

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    Hi all,

    I run a new small web design and marketing firm, and I was wondering if you believe in the idea that charging a higher rate will guarantee you a better client, or whether by charging that higher rate, you actually restrict your client options?

    The reason I ask is that I have been considering upping my prices slightly, but as a new business I am very wary of resricting my earning potential. As an example I charge £350 for a basic cms web design, £800 for a more complete package, and £25 an hour for elements such as ppc management, prices I consider reasonable for the current climate.

    Am I wrong, or is the whole 'correct pricing strategy' just a question of charging what you want, and ignoring for the most part what others charge?

    Thanks in advance, Baz.

    PS. This is not my lame attempt at pimping my wares, this is a genuine request for your thoughts on the subject. ;-)
     
    Last edited: Jan 12, 2011
    Posted: Jan 12, 2011 By: Baz Watkins Member since: Jan 3, 2011
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  2. Mystro

    Mystro UKBF Ace Full Member - Verified Business

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    If you have priced yourself on those rates you will have to look at your time spent against current earnings

    if a basic site takes you a whole working day then to me £350 per day is a good wage, if it takes you a week to complete then £350 per maybe not Viable

    As for pricing for the future will get a better client if he pays more, i doubt it, but he may expect more

    I see people charge £600 to set up a PPC campaign others charge £250 to set up the same campaign, i would work out your fees on how long they take to do, once you have a client base and regular money comming in you can decide then if your work is good enough to charge more.
     
    Posted: Jan 12, 2011 By: Mystro Member since: Aug 20, 2009
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  3. akirk

    akirk UKBF Newcomer Free Member

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    Those fees are low.

    roughly speaking (and generalising) you can divide the market into:
    - trainees / students / do it at night bods / etc. at around £10 - £30 p/h
    - single man bands with no overheads running a lifestyle business - £25 - £50 p/h
    - multi-bod companies / agencies with overheads - running a more commercially structured business - £60 - £150 (usually +VAT)

    you have to work out what you want the money for - if you are wanting to grow / buy kit / have an office / etc. then you need to charge more - if you are happy you can earn enough doing that - fine.

    charging low fees attracts clients for who cost is everything
    charging high fees doesn't attract bigger / wealthier clients, but the side-effects of higher fees - more staff = staff always available / more skills - more experience - better kit etc. may be the things that those bigger companies are looking for and they don't mind paying the extra...

    Alasdair
     
    Posted: Jan 12, 2011 By: akirk Member since: Jul 1, 2010
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  4. Kingdingle22

    Kingdingle22 UKBF Newcomer Free Member

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    If you are any good at what you do, you are way too cheap.


    Consumers perceptions of quality are very closely related to the price of a good or service. If you are at low-end of the pricing scale for what you do, people will think your a bit crap.
     
    Posted: Jan 12, 2011 By: Kingdingle22 Member since: Jun 29, 2010
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  5. saxondale

    saxondale Banned

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    spot the web designers ............




    the market decides the price, I would expect to pay between £199 and £299 for a simple 5 page site but even then it had better be better than the one I made for free.
     
    Posted: Jan 12, 2011 By: saxondale Member since: Jul 23, 2008
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  6. BusinessRookie

    BusinessRookie UKBF Newcomer Free Member

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    For £250 I expected and got some basic template things for my site. I then had to spend significant time re-designing. To be fair, for a quality 5 page site with some basic SEO added, I'd expect to pay circa £399-£499. I've paid £250 for a cheap option and frankly I did something better myself.
     
    Posted: Jan 13, 2011 By: BusinessRookie Member since: Mar 25, 2010
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  7. Baz Watkins

    Baz Watkins UKBF Enthusiast Full Member

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    Bumped. I hope its ok.
     
    Posted: Jan 13, 2011 By: Baz Watkins Member since: Jan 3, 2011
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  8. saxondale

    saxondale Banned

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    surely you got a free basic template with your hosting, and if not - why not?


    about time the webby guys realised they don`t actually have a skill like a brickie, we can all "paint by numbers"
     
    Posted: Jan 13, 2011 By: saxondale Member since: Jul 23, 2008
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  9. DesignerNick

    DesignerNick UKBF Big Shot Full Member

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    Anybody can get a free template and stick a site up. The same as I can get some materials and put a wall up, doesn't mean it will be any good though does it?

    I don't agree with some of the pricing though. I would love to charge stupid amounts for a simple website but at the end of the day for a simple 5 page website with CMS that is SEO optimised will be aimed at small businesses who don't have a massive budget.

    The people who I have dealt with if you quoted near on 1k for something like that they would have a heart attack.

    I think with Web Designers mostly being online it is harder to judge people so you can't tell what you think their budget might be if you were something like a Car Salesman (unless you went to meet them or were canvassing).
     
    Posted: Jan 13, 2011 By: DesignerNick Member since: Apr 22, 2009
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  10. cmcp

    cmcp UKBF Newcomer Free Member

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    what market? camden market?

    you won't get much for 4 hours design time.
     
    Posted: Jan 13, 2011 By: cmcp Member since: Jun 25, 2007
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  11. akirk

    akirk UKBF Newcomer Free Member

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    :D :D :D :D :D

    I might just send that out to all my customers - fortunately none of them would agree with you ;) lets just think of some of the things we have done recently:
    - artworking
    - Flash coding
    - restructuring businesses & their processes into online systems
    - php / asp / ajax / javascript / vb / etc. etc.
    - setting up complex servers
    - interfacing web & 3rd party hardware
    - and then a whole load of stuff that even I don't understand (but fortunately employ people who do!)

    and that is just a bit of what we do...

    whereas a brickie - hardest part is keeping it in a straight line and I think my iphone has a spirit level on it ;)

    there really are some people on here who talk absolute tosh :D

    Alasdair
     
    Posted: Jan 13, 2011 By: akirk Member since: Jul 1, 2010
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  12. akirk

    akirk UKBF Newcomer Free Member

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    Some good points...

    but not all markets are the same - there is a group of people / businesses who don't understand web enough to value it - they expect to pay £20K for their company van, whereas a second-hand one might cost £10k, yet don't wish to spend serious money on their website - despite the fact that it can transform their business... any web business has to decide whether that is their market or not - in the same way that a car manufacturer targets specific market sectors...

    part of the problem is that businesses often fail to look at the cost of not doing a decent website / the gain that they can make on the internet - as always the web is a part of the equation - the rest of what the business does is also important, but the web is a part of that and needs to be costed accurately

    I am always amazed at people who wish to set up an online shop and spend next to no money on it - and then lots of folks on here and elsewhere encourage them to minimise the spend... yet if setting up a physical store those same people would be warning them to budget £20 / 30k+ to do so - an online store can be as expensive as a physical one - so why the belief that you can do it with a couple of plugins and wordpress - if it were that good, how come very few successful online stores are using it?!

    As for meeting customers - well, even in an online world this is not a bad thing to do - makes a difference...

    Alasdair
     
    Posted: Jan 13, 2011 By: akirk Member since: Jul 1, 2010
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  13. cmcp

    cmcp UKBF Newcomer Free Member

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    Some people are masters at what they do, some people are jack of all trades.
     
    Posted: Jan 13, 2011 By: cmcp Member since: Jun 25, 2007
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  14. DesignerNick

    DesignerNick UKBF Big Shot Full Member

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    Very true, a lot of the people I deal with can't see the point of a website or how it will help them. They don't understand that paying £750 for a basic website will pay for it's self after maybe 10 or 15 leads for a plumber or electrician.

    I think that is where the sales pitch comes in. :)

    I agree about meeting potential clients but some like to just work over the phone or email even when offering to go to see them.

    At the minute I have a lot less overheads than a company like yourselves but with this it means less staff / less expertise / less time so I think being cheaper than a big company may be good in some ways but bad in others.

    Swings and Roundabouts...
     
    Posted: Jan 13, 2011 By: DesignerNick Member since: Apr 22, 2009
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  15. akirk

    akirk UKBF Newcomer Free Member

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    true - though overheads need not be too high - if you look at staffing costs - you find that the more people you have the more redundancy you have and therefore sales pitches / customer care / all the soft stuff for which you don't charge is carried against a greater work load so is proportionally cheaper

    it also gives the ability internally to write our own code to automate things so our system invoices automatically / presents the VAT return for us / etc. - I know one web company where the MD would spend between 5 and 15 nights a qtr after work doing his VAT return... ours takes 5 seconds (and then the logging it on the HMRC site) - so the size gives the ability to save time / costs as well...

    the thing is that a one-man band doesn't usually factor in the cost - they do their accounts etc. in the evening and only count their day time towards hourly income rate... so they think that they have less overheads, whereas in reality they are nto including them!

    It does also allow holidays / sickness / etc. with cover - another company I know where teh person works in the evenings only was hit by Webfusion's outage this week - he couldn't do anything about it until that evening - not good customer service...

    so there are lots of good reasons for a bigger company - the reason price is usually a bit more is not that it costs more, but that we actually bring all the figures into the equation...

    Alasdair
     
    Posted: Jan 13, 2011 By: akirk Member since: Jul 1, 2010
    #15
  16. DesignerNick

    DesignerNick UKBF Big Shot Full Member

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    Oh, don't get me wrong I would love to one day have a big company :)
     
    Posted: Jan 13, 2011 By: DesignerNick Member since: Apr 22, 2009
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  17. akirk

    akirk UKBF Newcomer Free Member

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    and that is where we go full circle on this thread... ;)

    to do so you need to get over the financial hump when employing the next person - having to pay them before you have ramped up the amount of work to the level which will pay them...

    this requires cash in the bank - which means ensuring that you charge enough on an hourly rate to get there...

    most web companies are run as lifestyle businesses - the owners enjoy what they do and earn enough to put food on the table - however that is not a growable model - so you have to decide the destination you want - choose a model that fits and then go for it...

    Alasdair
     
    Posted: Jan 13, 2011 By: akirk Member since: Jul 1, 2010
    #17
  18. DesignerNick

    DesignerNick UKBF Big Shot Full Member

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    That is very true. At the minute I compare the earnings to my previous full time job all of the time rather than looking at 2x, 3x, 4x which hopefully will change as the business develops (still only really 2 months in, full time).
     
    Posted: Jan 13, 2011 By: DesignerNick Member since: Apr 22, 2009
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  19. saxondale

    saxondale Banned

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    you actually think you`re worth £50.00 an hour? ................ I`m laughing so much it hurts.
     
    Posted: Jan 13, 2011 By: saxondale Member since: Jul 23, 2008
    #19
  20. saxondale

    saxondale Banned

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    usually with too many smillies and web "designer" at the bottom of their posts.
     
    Posted: Jan 13, 2011 By: saxondale Member since: Jul 23, 2008
    #20
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