The Pricing Problem | November 15, 2003

Working out a price for a website can be an extremely stressful exercise. If my experiences are anything to go by, most people will email you (and 100 other web designers) asking for a quote with very little or no information to go on.

Usually they simply ask...

"How much do you charge for a 20 page website."

Which is about as helpful as somebody walking into a car dealership and asking, "how much do you charge for a car with 4 doors". If you are lucky they may also throw in a few titbits like...

"We'd like something like xyx.com"

Where xyz.com is either the worlds worst website, or something so huge and expensive you just know they don't have the funds.

or

"It has to have a flash intro/news ticker/frame based navigation"

However you're a professional so you struggle on. You'll try to open a dialogue to extract a few more nuggets of info until you have enough to go on. Then you work up some prices and put together a proposal which can take anything from a few hours to a couple of days. You spend the time because you're a professional and because you want to let your potential client know as much about the web design process and what you do as possible.

You'll wait weeks and then if you're lucky you'll get an email back saying...

"Thank you for the proposal. Unfortunately we have found another designer who will do the job for x"

Where x is 5-10% of what you quoted. In fact it's about what you'd have charged for the time you spend putting together the prices and the proposal in the first place.

If you're unlucky you'll wait for weeks expecting an email and eventually, when one doesn't arrive, the memory of this proposal will fade into all the others.

These situations are really down-heartening. You've put a good deal of time, energy and creativity into your proposal and at the end of the day all your time was wasted. If you'd have known the potential client was speaking to lot's of other designers and that all they wanted was the cheapest price, you wouldn't have spent as much time on the proposal. Next time somebody approaches you for an estimate you'll be much more cautious and at the end of the day it's your potential clients who will suffer.

This seems to be an increasingly common event. There are so many web designers trying to eek out a living, many designers are willing to work for peanuts. It reminds me of the famous "will code for change" photo that was kicking around when the dot com bubble burst. Also there are so many web designers entering the industry who have never worked in a creative/IT sector before and have no idea how to set rates. I'm amazed by the number of freelancers who email me asking how much they should charge.

Combine this with clients ever increasing demands for cheaper over better websites and the ability for them to contact an ever wider number of designers, and you've got big problems brewing for the industry.

In Kevin Potts's excellent "The Pricing Woormhole" article, he points out these, and many more pricing related problems facing the web design industry. He agues that educating clients about the value of design is extremely important. This is something I've been arguing for some time.

However we work in a large and complicated marketplace and it's just not feasible to educate every client who comes through the door. In fact trying too hard to educate clients can actually backfire on you. People come to web designers for a website, not a market awareness course.

Kevin also points out that globalisation and the nature of the web is starting to have a big influence on our industry as well. I regulaly get emails from outsorcing companies from India and Russia selling low cost IT skills. Companies are starting to move their IT support departments off shore. How long before web design services follow the same suite?

The future of our industry is in the hands of it's practitioners. We need to develop sensible pricing policies and then stick to our guns. We also need to learn from other sectors and hone our business skills as well as our design and coding skills. We need to meet our clients needs more efficiently, but we also need to know when to walk away.

Fundamentally we need to distance ourselves from the image of the bedroom web designer/frontpage cowboy and brand ourselves firmly as professionals. You wouldn't choose you're doctor or lawyer based on the cheapest quote, why choose your web designer this way? What we need to do is make sure people use the same critical judgement the use when selecting our services as they do when selecting any professional service. How we manage this is another question.

Posted at November 15, 2003 7:55 PM

Comments

David House said on November 16, 2003 1:49 PM

Overkill has killed as ever. Even water will kill you if you drink too much of it. Too many web designers have simply pushed the industry pretty much over the edge, so you have to be really good, or really cheap, or preferably both to survive.

Dammit.

Steve said on November 16, 2003 10:46 PM

Excellent article, I’m more concerned than ever with the offshore web developers. Many of whom never had to purchase their IDE’s, or apps, that produce revenue work. I know of one Flash developer, whom lurks on one well known Mac DWMX list, that charges rates that we in NAmerica can’t touch. :(

Scrivs said on November 16, 2003 11:23 PM

Too be honest I can see how all of this is a good thing because the weaker designers who are Frontpage kiddies will probably weed themselves out because really they are going to compete against themselves. However, my experienced designers can charge the price they feel clients should pay for their expertise and in turn will survive.

jon said on November 17, 2003 1:26 AM

The Pricing Problem | November 15, 2003

spot on article …. made me laugh/cringe at the truthful refelection on my chosen vocation.

I should have been a gardener or accountant … but we struggle on as each and every so called ‘web designer’ knows best!

jon

herman said on November 17, 2003 2:59 PM

professionally trained (schooled in design) designers MUST stick to their guns.

i agree that we can’t provide that ‘market awareness course’, but educate we must, GAG (Graphic Artists Guild) provides us (w/membership) with the Pricing and Ethical Guidelines and it is pretty comprehensive. clients will appreciate the fact that we are not just giving them a rate or fee off the top of our heads, but rather an industry set standard. it will also ‘weed out’ those ‘frontpage cowboys’ that irk us so.

if a client wants ‘cheaper over better’…steer clear of that client, it will probably end in you doing a ton of work for half the rate.

staying away defines how professional we really are…the ‘Frontpage kiddies’ will take anything and everything.

Michael Pick said on November 17, 2003 5:13 PM

Been there, done that. It’s depressing to go through that dance and then have someone tell you how shocked they are at your quote, even if you have told them that, for example, the project will take x weeks to complete.

It’s like they can’t equate that you need x dollars/week to live, just like they do.

The problem is that people really have no idea what goes into the work, and the end product, while cool maybe, is really not that much. Haven’t you ever sat with a client and clicked through the final result in say 5 minutes? The process needs to be more exposed in order to justify the rates you want to charge, I guess.

Michael Pick said on November 17, 2003 5:15 PM

Been there, done that. It’s depressing to go through that dance and then have someone tell you how shocked they are at your quote, even if you have told them that, for example, the project will take x weeks to complete.

It’s like they can’t equate that you need x dollars/week to live, just like they do.

The problem is that people really have no idea what goes into the work, and the end product, while cool maybe, is really not that much. Haven’t you ever sat with a client and clicked through the final result in say 5 minutes? The process needs to be more exposed in order to justify the rates you want to charge, I guess.

john said on November 17, 2003 7:56 PM

Having come from the software industry where we learned some lessons long ago, it’s important to address some fundamental questions up front with your prospect on any labor-intense project. These include:

1-What is your budget? How much can you afford to invest in a new or revised site?

2-What is your expected return on the investment (planned or hoped for)?

3-What are the business drivers (or critical success factors that must be met) for achieving your goals)?

These questions may seem heavy or inappropriate at first to ask, but answers often reveal where the prospect is coming from and how you may need to qualify the requirements and differentiate your response from your competitors.

jimmedee said on November 17, 2003 8:27 PM

Your article really hits home. Ever since 9/11 I have seen a shift in client pricing expectations. Maybe because budgets have been cut is a reason why the client would rather settle for cheap vs. quality. Our company has slashed rates to the bone and are still having a tough time being awarded new work because they can find some “bedroom” designer to do it for cheap. My worry is that this trend will continue. I agree with Mike that we may not be explaining the process as well as we should.

jake said on November 17, 2003 8:59 PM

I have a full time job, but do some work on the side when I can take it. I did more work when I was in college.

My favorite back then was when someone approached you with a prospective job and a budget of around $200 bucks interested in accepting credit card orders. I just loved to see the look on their faces when you told them that, at least back then, it cost roughly the same amount of money as in the off-line world. They would expect to just pay the upfront design cost and let it sit there sucking in money.

Keith said on November 18, 2003 3:27 AM

This is so true. What you describe has happened to me on quite a few occasions.

I don’t know what the answer is, and believe me, I’ve spent lots of time thinking about it. You’re right on about education, but I feel like that is easier said than done.

Educating the client is always a challenge. Even if you can get to them, there are times when they will still want to go with something cheaper. I know I’ve heard from potential clients who assumed, based on the quality of my own Web site, that I’d be too expensive (which turned out to be true) and were reluctant to contact me in the first place. How do you get around that?

I think they’re lots of folks out there, like Jake pointed out, that feel like they can throw $200 at the Web with no plan and the money will come rolling in. It’s too bad there are so many unprofessional Web folks out there that let their clients keep thinking this way.

Then there is the DYI aspect of Web design. My own dad decided to do his site on his own. Not because he couldn’t afford to hire me, but because, despite my best attempts to explain (educate) that he needed a professional to do it right, he wanted to do it himself. There are lots of folks like that out there.

Sadly too many clients can’t even tell poor design from good design. They don’t even know that what they’re getting when they’re getting (or creating) a poor quality site. Their site fails and they write it off as a bad business decision, never knowing that if they’d hired someone that knew what they were doing and took the time to understand the clients goals and work out the best possible solution they would have a successful site.

As far as educating yourself on the business aspect of Web design, that is also a challenge. I already feel strapped to the limits with all the continuing education I need to do as a Web professional.

Then again, I have a full time job. I imagine if I went 100% freelance I’d manage. Having said that, it’s situations like you mention here that will probably keep me from ever trying to go solo.

Andy Budd said on November 18, 2003 9:13 AM

To avoid having to spend too much time working out prices and putting together proposals before I’m certain the prospect is genuine, I use a client survey form. It’s basically adapted from the survey form in the New Riders book, “Web Resign Workflow that Works”. When somebody asks for a quote I send them an email thanking them for getting in touch, explaining that to put together a good proposal I’ll need more information about the project, and asking them to fill in a survey.

The survey is about 3 pages long and generally only the serious prospects fill it in. If they don’t fill it in I figure they either haven’t thought about the project and don’t really know the answers, or are simply emailing loads of web designers for a quote and can’t be bothered to fill it in. In either situation it probably means they are not worth following up.

This may sound a bit harsh but I’ve had to deal with so many time wasters in the past, I’ve had to erect barriers to protect/insulate myself from the loss of time and stress involved in responding to these requests. It’s a shame I’ve had to do this, but I really can’t think of a viable alternative.

If anybody would like to share their methods for dealing with clients and filtering out genuine prospects from “Cheaper over Better” clients, I’m all ears.

Chris Dawson said on November 18, 2003 5:25 PM

i usually bounce back a questionnaire too. we call ours a “project definition document” and it asks questions about the scope of the project, the target audience, competitors etc.

it does weed out the serious from the “quote spammers” and many clients appreciate the professionalism at this stage.

at the end of the day you need to have confidence in your prices and what makes you unique. you won’t win in this industry on price alone. educating clients is important to get over this hurdle. i often ask new clients if they have they thought about marketing their site once it’s up and running (and if have they set aside any budget for this). explaining that spending x on a website isn’t much use if nobody gets to know about it really makes them think.

a couple of little nuggets like this (without giving too much away at the early stages!) helps clients to begin thinking about more than just the price of the design and build.

give them a hint of “added value”.

Gary Cooley said on November 19, 2003 3:30 PM

I don’t agree with much of what Mr. Budd says in his excellent article. In my opinion if you are having the problems Mr. Budd so clearly defines you are: 1.) not a good salesperson and you should hand over the lead to someone who is; 2.) over-rating your skills, which so many “pros” tend to do.

Okay, now that I have insulted the egos of all the pros reading this, let me explain.

I am a “Front Page Kiddie” a “Front Page Cowboy”. My wife and I have supported ourselves for 9 years now as “Front Page Kiddies”. While we are not rich, we clear about $75,000 a year, which if I read correctly is about the average gross pay of a “real pro” using “high standards”. As far as she and I “self-destructing” due to a lack of pro skills, I bet we have been at it longer than half the people on this list, and I bet we will be here in another 9 years.

It has been 7 years since we have made any sales calls, and we have never spent a cent on advertising. All our work comes to us by word of mouth. We do not even have a Yellow Page ad. No doubt part of this was simply the good luck to get in the business back in early 1995. But since that time many competitors have come along. We compete daily with some of the best talent in the Web developing industry. They constantly try to take our accounts away from us, but after several years have not been able to do so. They produce sites that LOOK much better than ours, but we out-produce them in terms of RESULTS for the client.

Now laugh all you want at our sites. I’m sure they would never meet your standards. But when you get your breath back, remember this. Our little unprofessional sites produce on average some $10 million in combined direct annual sales for our 84 customers. We obvioiusly work for small businesses, which is what most of America is.

Yes, our rates are low. Why? Because we do not have the bloated office expenses of a large agency. Our biggest problem is we are turning work away because we cannot handle all the production. We have tried to hire “pros”, but since we can pay only $40-$65 per hour, that is not enough. The truth is, we can crank out our typical “brochure ware” web site in about 6 hours. If we can do it, a pro sure should be able to do it in 6 hour or less, what with all their superior abilities! We pay $400 for those sites, which brings the pay to about $66 an hour. But that is not enough! Okay, there is why we use Front Page.

So there you have it. Your high-powered skills are pricing you right out of work. Fact is, that in many cases one does not need a “killer” site to produce results. Each year we get many calls from those who have paid $5,000 for what we charge a $1,000, and they have not gotten the results, so they come to us. We produce more results for less money, with lower standards!

If you spend a day working up a quote before talking to the prospect, naturally you will lose the account, and you deserve to. I never quote by email, and I never work up a quote until I talk to the prospect. If I can’t get the prospect to talk to me, I forget them. I don’t get serious unless they are.

Now in all fairness, I will say this. I do not have the skills that many reading this post do. I could not hard code a site if my life depended on it. But that is where so many appear to make their mistake. It is the results that clients want. It makes no difference to them how you do it. Argue all you want about the fine points of design, but none of it makes any difference unless results bring profits to the client. That is all they care about. They could care less about correct tags.

And we produce great results for our clients without using anything more than basic Front Page generated html. Certainly that will not work in many large business sites, or those requiring data bases, etc. But not so many sites need that level of skill.

When I am asked by email what we charge to “do” a site, I respond by saying, “Call me and tell me how much you want to increase sales over the next six months and I’ll make you a quote. Our sites currently produce several millions of dollars a year for our customer base, and we have been producing profitable sites for (x) years now. None of our customers complain about our rates. Therefore I am qualified to help you, but I can’t do it by email”.

Guess what? I get plenty of calls, and I lose one job in 10. It takes me about 5 minutes to send that message. The problem is that most “pro” designers are generally not also salespeople based on what I see. I don’t mean that as an insult. But if you aren’t getting business it simply means you are failing to effectively communicate what you offer, or that what you offer is not effective. It is that simple. It is not the prospect’s fault you failed to interest her!

If you compete with me by using all your high-tech babblespeak, I’ll win every time. And part of that is because I know when NOT to compete with your skills. If a Fortune 1000 called me I’d say “I can’t do it”. I know my limits and work within them.

If you need to educate your prospects, you are doomed to begin with in most cases. That is why us “Front Page Kiddies” are erroding your turf. The fact is most of you have a skill leveled needed by a very few companies - maybe 5,000 firms in the United States. The rest of the business world is made up of small and micro-businesses. The fact is, like it or not, that us Front Page Cowboys can produce results just as good as you can for a hell of a lot less money. Lower your standards, lower your pride, and you’ll have all the work you can handle. If you use increased sales for your clients as the standard by which to measure your level of skill, not how great you are with graphics, code, and the like, if you focus more on how to tell time and not how to make the watch, you will have all the business you can handle. And if $65 an hour is not enough, you are in serious trouble for all except the very high end. Too many of us Front Page Kiddies are out here producing results for less than $65 per hour.

I made this long post because this group has helped this Front Page Kiddie with many issues. I wanted to give back. I know it was not pleasent. But then, over time, I have put up with reading posts which constantly insult the Front Page crowd and it is time for some to realize that high standards do not automatically mean high profits. Get as disgusted as you want with us Front Pagers and our lousy sites, but remember we stay in business because it works. Remember that it is the American Consumer or the purchasing agent at some company who makes the final choice, not you and me.

Based on my experience Consumers do not give two hoots about anything except easy navigation and accurate information. We have one site that produces $2 million a year in sales for the client and it is a horrible site. We keep asking them if they want to “update” it. No, they say, it works and therefore they don’t want to change a thing. That site costs them $2,880 a year. It takes me 12 hours a year to maintain it. Want to talk ROI? Do the math here, then realize the results are about the same for all our customers percentage wise. And there my friends is your lesson about why us Front Page Kiddies are ruining “your” industry.

Thanks to all,
The Front Page Amateur Hour Kid

Andy Budd said on November 19, 2003 9:30 PM

Thanks for taking the time to post your comments. It’s always good to hear conflicting viewpoints, especially from somebody working in a very different “sector” of the web industry than I am accustomed to.

You definitely raised some interesting points although your tone was a little too vitriolic for my liking. I totally agree that as an industry, web designers need to develop their business skills and in particular their sales abilities.

This lack of business experience is understandable as most web designers come into the industry because of a love of design, an interest in IT or a fascination with the web. Few people become web designers for pure commercial reasons such as yourself. As standards in the industry continue to increase it’s often soft skills and business skills that make the difference between professional services.

To succeed, each business needs to focus on what it does best. For most people in this industry it’s their creativity or their programming knowledge. For you I’m guessing it’s your ability to create sites cheaply and quickly.

One also has to decide on the type of sites you wish to produce and the type of clients you wish to work for. You obviously know your skill level and your market and have chosen well. However it sounds like you have little pride in what you do, something which I personally find a little sad.

I agree that many web designers aim their sights too high and are far more interested in the art of web design than what can actually sell. However this doesn’t mean that people have to design for the lowest common denominator. They just need to get the balance right. I’d love to be doing design for cool sexy brands but realise that the M side of SME is probably more viable.

However I feel it’s dangerous to design for the bottom end of the market. Over time consumers and markets tend to mature. What was acceptable in terms of quality 10 years ago is much less acceptable now. People are much more design conscious these days and directly relate the quality of your marketing material to the quality of your offering. If you’re design skills stay static (as they sound like they have), eventually you’ll run into problems.

As more people enter the market and it begins to get saturated, good web designers will start to settle for less. You’ll find it increasingly hard to offer your $1000 websites when somebody can produce a well designed yet equally effective website for a similar price. You’ll also be one of the first to suffer from globalisation. If you’re in the budget market why pay $1000 for a website when I can go onto elance and have a similar quality site made in India for $200? If you’re in the budget market, there will always be somebody willing to under cut you. At least if you’re trading on your design or IT skills you’ve got more to offer than just a cheap site.

Keith said on November 20, 2003 7:38 PM

Just a note to all the “Front Page Kids”…

…and this isn’t meant to be insulting, but rather an honest observation to folks are Web professionals in their own right…

…there will come a time when those FrontPage sites of yours get out distanced by technology and break. This isn’t all that far away. Also — As your clients become more savvy, and they will, you’ll have a harder time staying in business.

Andy’s point about having a quality site made in India is very valid and should be a concern.

“Lower your standards, Lower your pride and you’ll have all the work you can handle” doesn’t seem very responsible to your clients.

Unless you feel good about upping your skills and pinching them all again on the come back. Me, I’d rather get it right, for a reasonable price, the first time.

But then again, what do I know, I have a full time job and do freelance work not only for the money, but because I love the work.

Some how $150 to do a 6 page brochure-ware site in 6 hours just doesn’t seem worth my time.

I guess, as far as freelancing goes, that makes me an amateur.

Keith said on November 20, 2003 7:49 PM

Oh and to Mr. Cooley, I fully respect what you are doing, but I think you have a special situation that falls outside of the realm of the general “freelance” Web designer.

It seems you’ve kind of cornered a market for yourself and that’s very commendable. You also have what many freelancers lack (myself included) in a solid sales and business sense.

However — I don’t think the average “FrontPage Kid” has a situation like what you’ve got going on, and I don’t think they ever will. I don’t want to belittle your points, just wanted to say to folks who might read what you’re saying a take it to heart, that if you want to make it on the Web with only your FrontPage skills, you’d better have either some serious luck or a very special situation like The Cooley’s have.

David McDonald said on December 4, 2003 1:32 PM

I have just finished reading ‘The Business Side of Creativty’ by Cameron Foote (ISBN 0-393-73093-X), and I found it to be an excellent resource on how to market a design or communications business.

It slants towards graphic design busineses, but it’s concepts can easily be apdapted to web design.