Setting a price on your work can be an incredibly hard thing to do as a designer. Price your services too low, and you’ll make less than what you’re worth – and may even start to resent the work you’re taking on because of how little you’re receiving. Price your work too high, and you might have difficulty finding customers. So how do you find that sweet middle ground to charge your clients?
There are two primary ways most designers charge their customers: by the hour, or by the project. Keep reading to determine which way you should charge – and how much!
By the Hour
Having an hourly rate for your design services is great for large projects or projects where you’re unfamiliar with your client’s needs and feedback process (we’ve all experienced the client who is never satisfied!). The benefits to this pay style is that the pay directly corresponds to how much work you do, and is easier for potential clients to shop around for the best rate.
One drawback to charging by the hour is that you might not work as efficiently as you would if you charged on a per-project basis (think: the proverbial lawyer is billing me per phone call). And since there’s only 24 hours in a day, by charging per hour you might be capping your maximum earning potential. For example: if you charge $50/hour and it takes you only 5 hours to build a website, you’ve made only $250 – a project that usually costs between $1,500 to $10,000, depending on the complexity. Of course, you can always increase your hourly rate, but that might scare off potential customers.
How to set your hourly rate:
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Determine what you want your yearly salary to be
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Divide that number by 2080 (number of working hours in a year: 40 x 52 = 2080)
Example: $75,000/2080 = $36/hr
Want to know the average market rate for a designer with your experience? Check out Payscale’s Salary by Occupation calculator – which takes in consideration your job title, location, and years of experience!
By the Project
Charging per project is a more contemporary approach and can ensure you’re reaching your maximum earnings potential. By charging per project, you are incentivized to work more efficiently than you would if you were hourly, so you can wrap up your project and move on to the next one. However, if you’re not great at multi-tasking, or the client continually sends your work back with revisions, this can limit how much you’re actually earning.
How to set your per-project rate:
There are two approaches to developing your per-project rate:
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Find out what the going market rate is for that project, and base your rate based on where you feel you fall on the experience level.
For example: while there’s plenty of ‘free’ logo design sites online, the average cost for a logo design project is between $150 to $1500 – which is a pretty big range. Are you a new designer looking to build a client base? Then maybe you want to charge in the $150 – $300 mark. Have more years of experience under your belt? Charge more for your expertise. Remember: Nike paid only $35 for their logo, while others have spent up to $100M; how much you charge is entirely up to you.
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Determine how long the project will take you to complete, multiply that by your hourly rate, then double it. Since per project approaches tend to be more daunting for businesses who are hiring your services, you can expect some negotiation. By starting high, you are ensuring that you’re making at least your hourly rate on the project and setting the expectations for future projects.
The Happy Medium
Your designs aren’t one-size-fits-all – so why should the way you bill your clients be any different? Mixing and matching your prices to fit the customer and the project is always the best approach to make sure you’re making what you’re worth. Follow these final tips to start setting your design prices:
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Stay competitive: research your rates by comparing them to other freelance designers to make sure you’re not an outlier (sites like Upwork and Fiverr are great places to start – but remember that you have global competitors on sites like these).
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Evaluate your rates yearly: If you were working full-time at a company, you’d get an annual standard of living wage increase, bonuses, and promotions for your great work. Why should your own business be any different? Remember that you are gaining lots of invaluable experience the same as any other employee is, and you deserve to earn a pay raise – especially in an inflating economic market.
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Be flexible, but know your worth: assuming your clients will be small business owners, it’s important to remember that they’re probably in a similar position as you are, and want the most bang for your buck. Make sure you understand the scope and the expectations of the project before you set your rate (if you’re charging per project), and always make sure you’re looking out for yourself – and know your competition is doing the same thing!