The Price Is Right

Scott Wills

Original Resource: Freelanceswitch

(Note that any figures quoted in this article are purely for demonstrative purposes, you must consider your industry, country, expertise and other circumstances to determine a rate for your work)

IMAGE FROM ISTOCKPHOTO

Price your services too high, and you lose the gig. Price yourself too low, and you wind up feeling resentful about the project, which in turn may ultimately culminate in an inferior result. So what then is the best way to price a freelance project, win the contract, and make both you and your client happy?

Your Break-even Baseline

To begin, you have to establish your hourly baseline. What is the minimum amount of money you need to charge as your hourly fee? What is the minimum amount of money you need to cover your overheads without making a profit? This, fellow freelancer, is your break-even baseline. Once you establish a baseline and start to understand that earning anything less than this equals a bad, unprofitable business, it will make it a lot easier to determine how much profit you then want to make. In turn, this will ensure financial viability for your ventures, and can help price your projects more competitively in the current market.

Above all else, establishing a baseline is about being honest with yourself. If you are unrealistic about how much to charge a client, you are only fooling yourself and in the long run you’ll probably get hurt doing it.

So to start then calculate your minimum baseline by finding that price point where anything less, will kill your business. This can involve some guess work, but the best way to do it is to estimate how many hours a week you think you can bill, then find how much money you need to survive and divide that by the number of hours. For example if you must have $600 a week coming in to pay the rent and you think you can bill around 20 hours a week, then your hourly baseline would be $600/20 = $30p/hr. When calculating your bottom line, remember things like holidays, time when you are sick, weeks when you might not have any work and so on.

So now you have your bottom line. Your objective of course is not to merely break-even every month, rather you should be aspiring to turn a profit.

Turning a Profit

IMAGE FROM ISTOCKPHOTO

Profit is not about over-charging a customer. Profit is about reward because your work or your services create value for your client. Additionally consider that they are different to anyone else’s. This could mean your customer service is better than anyone else, you are faster than anyone else, or perhaps the quality of the end-product you produce surpasses that of other competitors.

Profit is simply a percentage on top of your hourly baseline. The profit can be anything, but you have to justify it to yourself in order for it to be realistic. Sure, you could try factoring a 100% profit on top of your hourly baseline, but the freelancer who decides to go down this route is in danger of minimizing long-term profitability.

For example, a freelancer wishing to make 100% profit is likely to establish a high price for their services, but over a given period of time they may receive fewer offers for work as a consequence. The freelancer who factors a more realistic percentage on the other hand, will receive more project offers resulting in more money long-term. Unfortunately there’s no magical figure here and you will need to find the price point that works best for you.

Always account for how unique you are or how unique your services are as a freelancer. You don’t have to be in the top 3% of your field to be unique – one of your positive traits could be your customer support, or the fact that you turnaround projects faster than anyone else. For unique services like this, you can afford to increase your profitability slightly since you are offering something that someone else might not offer.

Just how long will this project take?

The final ingredient we need to add to our formula is an accurate calculation of the number of hours needed to complete the project. The key to successful project estimation is to create a requirements document with your client. A requirements document is simply a vehicle for the client to outline what they want, but simultaneously, it is a way for the freelancer to police those requirements and establish rules and regulations. It is in other words a very structured brief of the job.

A requirements document should clearly outline what the client wants and the freelancer should charge accordingly based on what is spelt out in that document. If at any time the client changes a requirement or asks for extra work which is not in the requirements document, then the freelancer has every right to charge a secondary fee for any extra work required.

The requirements document will not only help you assess the number of hours needed to complete a project, but it will also be your insurance policy should the client intentionally or unintentionally try to change the original requirements. This is often referred to as scope creep, and it’s something you need to be aware of as a freelancer, as the consequences of scope creep can be traumatic both personally, and financially.

Having a thorough requirements document will allow you to accurately calculate how long a project is going to take you to complete. Knowing what the project fully entails in advance, will then assist you to more accurately predict the amount of time it will take to complete.

So you now have your hourly baseline, your profit margin and the number of hours the job is going to take.

The moment of truth… The magic formula!

(Hourly Baseline + Profit Margin) x Number of Hours to Complete Project = the Price is Right!

So to use our example from earlier, let’s say your hourly baseline was $30 p/hr and your profit margin was 50% = $15 p/hr, and you had a project which would take 100 hours. Then the price for the job is going to be: $30 + $15 = $45 x 100 hours = $4500.

But wait a moment; that’s completely obvious, right? Wrong. There are many freelancers out there, who whether they are writers, designers, programmers or musicians, continually fail to create business rules when it comes to pricing a job correctly.

All too often, and this is especially true for new freelancers, there is a tendency to under-price a project; maybe because they have no idea what they should charge, maybe because they are too concerned with potential competitors and feel that the lowest price is the best price (this is not necessarily true at all and is a common faux pas with new freelancers…), but more-often than not, it’s because they have not assessed their baseline, the profit they need to make, and the number of hours a project will take to complete.

So now you know. Create your own personalized baseline and profit margins and never offer a price for a contract/job that is lower than how much you need to break-even and/or make a profit – it’s a bad and self-abusing habit that freelancers must avoid at all costs. Do these simple things, and the price will always be right!

Web Design Services - Making a Career as a Web Designer

by Spinx Web Design

Original Source: AWDP

With the demand of Web design services on the rise, there are many companies and freelancers offering the web design services. This does not mean that every one that offers these services is qualified enough to offer these services. There are many people who have just jumped on the band wagon to make money till the demand lasts.
In these kinds of circumstances many people would be tempted to make a career in web designing.
Career cannot be built overnight. It needs patience, dedication and concentration of mind and excellent guidance. If someone says that that the career in web designing is very lucrative, there could be two inferences. Either the speaker is having a lot of experience and already created a niche for himself in the market or he/she knows the paucity of expert professional web designers.
Web designing is not just an extension of desk top printing or graphic designing. It also involves technicalities especially the coding and programming languages and the art of making the website appealing.
There are many aspirants thinking of making a career in web designing and pursue full time or part time courses on web designing and web development. There are many web designers and web developers in the market but all are not successful mostly because they do not offer quality service or lack experience to make the website a successful venture.
If you want to become a professional web designer it is better to work as a trainee web designer in an organization of repute, at least till you are not confident about the web designing technology. Experience makes a man perfect.
Web designing career does not stop at getting educationally qualified and getting employed. If you want the development of your career as a web designer you need to constantly update yourself with the latest technical developments. The coding and programming languages go on changing and you need to have knowledge about those that are mostly in use.
The web design of the websites developed earlier may be unique at that time. This type of layout may have already been copied a lot many times and it would not be long before you realize that the website layout seems to have become very common. This aspect of web designing and developing is vital for web designing career.
A good web designer is not only confident about the technology to be used but also aware of other aspects like search engine optimization and web content. Initially when you start the career as a web designer, the road may be a bumpy but later on with experience the road is going to become smooth.

Staying Safe and Secure as a Student Freelancer

Amber Leigh Turner

Original Resource:Studentsthatfreelance

Being a student freelancer provides a great amount of flexibility and freedom, which are some major pulling points for those starting their freelancing careers. However, being a student and being a freelancer brings about some serious security issues that no student freelancer should forget. Without scaring away any student freelancer, this article is meant to be one of awareness and one to help you protect you as you are dealing with clients.
Some student freelancers are probably freelancing from either a college dorm or an apartment in which they live. For me, I am freelancing from my home, where I live with my parents. No matter where you live, an amount of security is always nice to have. For those on their own, probably the desire to be safe and secure is more than if you live with your parents, but nonetheless, the following tips will help protect you in your freelancing.

Get a Post Office Box

Growing up, my family always had a post office box. We never really had a mailbox at the street until we moved when I was days from turning 18. Ever since I moved, I never really used our address for anything other than shipping packages. Some of the benefits that I liked about using the post office box are that my mail was always safe, secure, and dry. These were the main reasons I now use the same P.O. Box address for my freelancing.

It makes me feel safe knowing that my address of where I live is not online anywhere (my website, LinkedIn, etc) and no one in the general public can come knocking on my door, which is a relief! Also an added bonus was that I always knew client checks would be safe in the P.O. Box, and that my client’s checks weren’t floating around, could get wet by being in the elements, and someone couldn’t easily steal it out of my mailbox either.

For a student freelancer, finding a way to mask your address will help to protect you wherever you are living because your clients or anyone else who has your address can’t come and find you. Also, as mentioned above, always having a secure feeling about checks coming to you and will be in good hands behind lock and key at the post office is also a huge perk.

If you live in the United States, your local USPS office should have available lockers on hand for you to rent, at reasonable rates. I have a fairly small box and I believe it is around $35 a year (but don’t quote me on that). Of course, they have various sizes, but more than likely the starting student freelancer only needs the smallest and basic box. For more information on renting a post office box (for United States residents) visit the USPS website.

Open a PayPal Account

A method of getting paid as a freelancer that is becoming rapidly popular is online money transfers. In some countries, the standard to pay anyone is through a bank transfer, but in the United States, businesses still write checks. However, for those that want to pay you online, PayPal is a great option.

I have a PayPal account that I use to accept payments from clients. This helps me stay safe and secure knowing that my bank information is not out for anyone to get (you do know that someone can get your account information easily off of a check, right?). PayPal also offers the convenience and timely receipt of payments if your client uses it.

I highly recommend getting a PayPal account if you plan to send money to other freelancers or anyone who is not a major organization. Although proper precaution in any online transaction should be taken into consideration, PayPal offers the way to send money while masking all of your personal information and only identifying you by your email address to others. Chances are that if you are freelancing, you have your own email separate for freelancing only, so it is ok if that email is made public.

For more information on how to open a PayPal account, along with reading all of their benefits, check out their website.

Google Phone Number

One of the recent additions to my security arsenal, you can say, has been a Google phone number via Google Voice. I didn’t really like the fact that I was giving out my cell phone number to clients, and I really wanted to post a phone number on my website, just not my cell phone.

Google Voice number is basically a phone number you can register for online for free that can be used to mask your current number. Originally designed to consolidate all the numbers that people tend to be tethered to, it is a great way for student freelancers to mask their cell phone numbers or any other personal number from clients and the general public. You can still use your cell phone (matter of fact, you have to have some sort of existing phone to use Google Voice), but no one will know your cell phone number.

I use a Google Voice number to act as my business number that I can give clients and feel safe about my personal cell phone number not being given to the masses. It is also great because if I ever needed to get a new cell number, I can easily just move my Google Voice number to another phone; a great feature for student freelancers who may be constantly changing their number.

Learn more about the benefits and security potential a Google Voice number hashere.

Lesson of the article: Take the time to protect yourself as a student freelancer as you start your endeavor into the business world.

What are some other ways as a student freelancer that you can protect you and your identity?

Hourly vs. Fixed Pricing

Mathias Meyer

Original Resource: Freelanceswitch

Work isn’t free. Well, for the most part. It should be common sense that if you do work for a client, eventually you’ll get paid for it. No matter how much it is in the end, it is often a question of how you charge your client, or on what basis you do it.

There’s a lot of dispute about what’s the right way to charge, and doing it wrong can lead to unwanted situations between you and your clients. In this article I’m going into the most common ways to charge and how to make them work successfully for you.

Getting Paid By The Hour

This should be a no-brainer. You work a certain amount of time and get paid for the time spent working. This usually means keeping a time-sheet and billing your client the result of (hours x hourly rate).

It clearly has advantages. You get paid for what you’re actually doing in terms of time spent on a specific project. This kind of charging surely is in favor of you, the freelancer, since you also get paid for those extra hours you put in.

What this means for your client is that they usually get a bill and a time-sheet by the end of the month and have to pay for whatever you charge. It also means a higher risk when it comes to cost calculation. It’s not easy controlling hourly work from the client’s financial point of view. It’s also tempting to add some hours here and there for extra profit. The latter is, of course, a matter of trust, and it’s up to you to raise the bar here by always billing only the time you really spent working.

What some clients also like to argue about is the work that constitutes a work-hour. Do you have to substract small talk with people on the team? What about a short break by the water cooler? Getting a coffee? The list adds up. Don’t get me wrong, I have nothing against working for an hourly rate, especially when I’m working on-site as additional man-power. In that situation it’s the working time that really counts. A project has to get done, and your brain, energy and skills are required to finish it. The problem is that it’s not always goal-oriented. It’s easy to slack, and your payment isn’t bound (mostly) to something finished. If the project gets out of control, then you’re in the same boat as the rest of the team: you have to put in extra hours. That’s a punishment by itself, but then again, you get paid for it.

IMAGE FROM ISTOCKPHOTO

Fixed Pricing

Fixed pricing simply means you charge your client for finishing a specific task or project, no matter how much time, energy, paper or sweat you invested. The price is usually agreed on up-front, with a quote for example. When the project is done and your client is satisfied you bill him. That’s the simple story.

In reality fixed pricing is always a matter of dispute. I know freelancers who even refuse to work on projects based on fixed pricing. They have their reasons I guess, and when you’re only working as man-power on-site this might not even be an issue to think about. But if you prefer working on a project basis, then you’ll have to deal with it sooner or later. But let’s start from the beginning.

It all begins with a client having a need for something, a new logo, a new website, a new tool for his intranet, you get the gist. I won’t go into the details of how the client got to you, since this has already been done in other postings. You both settle for what has to be done. It’s always a good idea to throw in a basic timeline and an estimate so that your client knows what he’s up to. The important thing is to specify what has to be done and what the finish-line is. Otherwise it will be harder to settle when you can bill the client. You heard the stories, I heard the stories: A client wouldn’t pay because in his opinion a task wasn’t because of .

If you agree upon what’s to be done before signing anything it’s easier to avoid situations like this. Work costs money, you know it, and your client knows (or at least should know) it too. Fixed pricing projects usually involve more paperwork, but in situations where the client isn’t willing to pay, it’s important to have it, especially if the worst case happens, and you have to settle the issue in court. I haven’t been in a situation like this, but a friend of mine has, and besides time it costs a lot of energy and is in general frustrating. Of course you shouldn’t treat your clients as criminals, if questions come up explain why you’re doing it. Trust is a matter of transparency. If you don’t trust a client, you shouldn’t do business with them, which is also true if the client doesn’t trust you.

So how do you get the pricing right? There’s no right answer here, and you won’t get it right the first time. It doesn’t matter if you’re offering your service to multiple clients for the same price (e.g. designing a logo) or if you’re creating something based on custom requirements. You need a baseline, and that baseline for me is based on the time I estimated. I look at the requirements or specification and determine what’s to do and how much time I’m going to need to finish the tasks. That’s the tricky part, and it’s important that you track how much time you needed in the end. That way you can refine your estimates over time. In the beginning you might be tempted to calculate in some extra days for security. I’m not going to advise you on that, I just know the temptation, and I did it too. If you do it, don’t let it turn into a habit. If you do, at least be honest to your clients. Make it clear to them, how the price adds up. And if you’re really honest, and love your clients, you won’t charge them for the time you didn’t need. But I’ll get to that later.

A big issue is longer-running projects. Developing something over a time-frame of six months or more isn’t easy to estimate as a whole up-front. If it’s possible try to agree on milestones. A milestone is defined by a specific set of features. After you reach a milestone you agree on the next one. Why the effort you’re asking? It’s simple, it reduces risk on both sides. Your client can react to schedule slips at an earlier point in time, even if that means not doing any more business with you. The same goes for you, the contractor. Identifying possible schedule slips earlier reduces your risk of investing a lot more time than you originally estimated. The milestone way of doing fixed-price projects is usually a good idea even for projects shorter than six months.

From the last two paragraphs you can come to a conclusion: The risk is on your side. And it is. It’s your responsibility to make correct estimates, to track the time you needed, and to specify what needs to be done. There are nice clients out there who are happy to pay you when you’re done, but there are clients who don’t, so I’d rather be on the safe side.

Writing down what needs to be done also gives your clients more transparency, especially if they’re not sure yet about the specifics. If that’s the case you can always start by offering to write a specification on which you build the next step. You let your client sign off the specification as final, and start working on the real thing. But this brings up new questions. What if your client changes his mind over time, or a specific feature doesn’t turn out that useful and must be implemented differently? That part is totally up to you. Requirements change over time, that’s part of the game, especially in the world of software development. If a client needs extra features, then it’s no big deal to charge him extra for them. If it’s just small things that won’t take much time, but will make your client happy, then it’s up to you to put in a little extra-time, especially if there might be follow-up projects in the pipeline.

Fixed pricing has a lot of pros and cons, and for good reason. As I said, you won’t get it right the first time, but there’s no reason to fear this kind of payment. You’ll get better at estimating, if you keep track of the time you needed and try to incorporate that in future estimates. Over time your pricing will close in on the work you invest.

IMAGE FROM ISTOCKPHOTO

The Honesty Model

There is a way you can have the somewhat best of both worlds. You offer your client a specific amount of days to finish a task or project. The baseline is the same as for a fixed-price project, you need requirements and you need to agree on what needs to get done. Based on this you do your estimation which you present to your client. In the end you only charge him for the time you really needed. If it turns out you needed less time than estimated your client pays less, and you can move on to the next project. Of course, if your working schedule slips you’d still have to work overtime to finish the task or project. But this way it’s a little easier and transparent to calculate in some days to reduce the risk. If you don’t need them, your client doesn’t need to pay for them. In all the financial risk is calculateable for your client. However long it takes you to finish the project (hopefully on time) your client knows what he’ll have to pay and runs the chance of even paying less for the same outcome. You, on the other hand, can move on to the next client and earn money on a different project.

Do The Right Thing

So now you’re asking: What pricing model should I use? That’s totally up to you and how your client would like to settle it. When I’m working as added man-power at a client’s site, I usually opt for payment by the hour. Around here it’s the normal way to handle these kinds of work, and is agreed upon by headhunters and clients in general. Purely considering the time spent working it’s the fairest payment model for you.

For end-to-end projects I usually opt for the third model, if the client agrees with it. Purely fixed price is the last resort.

There’s no general rule on which payment model to pick in what particular situation. You’ll have to find out what works for you and your clients. Fixed pricing is nothing to be afraid of. If you want to do end-to-end projects it’s usually the way to go, so you might as well become friends with it, and find your own way to handle it. If you take care of the things I mentioned, there’s usually nothing to worry about. After all, you love your clients and they love you.

Nine Factors to Consider When Determining Your Price

Collis Ta'eed

Original Resource: Freelanceswitch

This article has been translated into Italian by Giuseppe at GL SEO Blog, and into French by Céline at NakedTranslations.com

Part guesswork, part experience, part number crunching – how ever you look at it, determining your price is a difficult task. Here are nine factors to take into consideration:

1. Your Costs
If your rate doesn’t include enough just to break-even, you’re heading for trouble. The best thing to do is sum up all your costs and divide by the number of hours you think you can bill a year. Whatever you do, DON’T think you can bill every hour. You must account for sick days, holidays, hours working on the business, hours with no work and so on.

Also make sure you factor in all the hidden costs of your business like insurance, invoices that never get paid for one reason or another, and everyone’s favourite – taxes.

2. Your Profit
Somewhat related to your costs, you should always consider how much money you are trying to make above breaking even. This is business after all.

3. Market Demand
If what you do is in high demand, then you should be aiming to make your services more expensive. Conversely if there’s hardly any work around, you’ll need to cheapen up if you hope to compete.

Signs that demand is high include too much work coming in, other freelancers being overloaded and people telling you they’ve been struggling to find someone to do the job. Signs that demand is low include finding yourself competing to win jobs, a shortage of work and fellow freelancers reentering the workforce.

4. Industry Standards
It’s hard to know what others are charging, but try asking around. Find out what larger businesses charge as well as other freelancers. The more you know about what others are charging and what services they provide for the money, the better you’ll know how you fit in to the market.

5. Skill level
Not every freelancer delivers the same goods and one would expect to pay accordingly. When I was a freelancing newbie I charged a rate of $25 an hour for my design, when I stopped freelancing recently my rate was $125 an hour. Same person, but at different times I had a different skill level and hence was producing a different result. Whatever your rate, expect it to be commensurate with your skill.

6. Experience
Although often bundled with skill, experience is a different factor altogether. You may have two very talented photographers, but one with more experience might have better client skills, be able to foresee problems (and thus save the client time and money), intuitively know what’s going to work for a certain audience and so on. Experience should affect how much you charge.

7. Your Business Strategy
Your strategy or your angle will make a huge difference to how you price yourself. Think about the difference between Revlon and Chanel, the two could make the same perfume but you would never expect to pay the same for both. Figure out how you are pitching yourself and use that to help determine if you are cheap’n'cheerful, high end or somewhere in between.

8. Your Service
What you provide for your clients will also make a big difference to your price tag. For example you might be a freelancer who will do whatever it takes to get a job just right, or perhaps you are on call 24-7, or perhaps you provide the minimum amount of communication to cut costs. Whatever the case, adjusting your pricing to the type and level of service you provide is a must.

9. Who is Your Client
Your price will often vary for different clients. This happens for a few reasons. Some clients require more effort, some are riskier, some are repeat clients, some have jobs you are dying to do, some you wouldn’t want to go near with a stick. You should vary your price to account for these sorts of factors.

Give it Lots of Thought

The more you think about your reasoning behind your price, the easier your quoting will become. Like all these things there is a large amount of trial and error and often you will find yourself constantly changing up your pricing and gauging the ratio of jobs lost to jobs won.