It’s a familiar situation for any freelancer — you open your email inbox, scan through the day’s spam and auto-responder messages, and come across a request for proposal.
It’s the same as the other design requests, aside from one small detail — instead of the standard “we can pay [this much]” message, there’s a line at the end asking how much you think the project will cost.
Being asked to name your own price might seem like a miracle situation, but it’s rarely a relaxing experience for freelance designers, particularly those without a solid and secure price structure for their services.
That one request can end up triggering anxiety and worry, as even the most skilled designer begins to wonder just how much their work time is really worth.
I’ve been in that situation before. We’ve all been in that situation before. It’s not easy, and it’s not the type of situation you want to find yourself in without solid pricing guidelines.
These seven tips can help you give an effective, accurate, and clear project quote that’s neither a sales killer nor a risk to your freelance longevity. Give ’em a shot.
1. Always Remember How Much Your Time is Worth
There are two ways to price projects: by time, and by output. Both are frequently used by freelance designers and other service workers, although the two are typically employed for different reasons.
Quoting by time (as in an hourly rate) is the preferred option for projects without a clear time requirement and level of scope. Large projects are often impossibly complex and difficult to provide a set price for — what may look simple in an email can often end up being a Herculean effort requiring several weeks of dedicated work.
Prevent your time from being undervalued and give a quote that accounts for your hourly rate, not a per-project quote that eliminates any time-based security.
On the other hand, small projects and one-off requests might require very little time and be largely process dependent. Prevent minor projects and thankless tasks from becoming a cost drain by using a pricing structure that’s built around output. With clear requirements and no need for revisions, a project-based pricing structure can end up saving time for you and stress for your clients.
2. Consider Long-Term Income Potential and Return Business
Retailers have perfected the loss leader concept — the art of luring buyers into stores with a discount product, special service, or sale in the hopes that buyers will purchase other things in the store at regular price. It’s a classic marketing method that’s rarely used by service businesses, perhaps due to the amount of wasted time it can attract. Thanks to relative anonymity, online loss leaders can be a major time-related risk for designers.
But they’re also a risk that’s worth taking, provided you’re reasonably certain of a project’s potential for long-term growth and development. If a major prospective client approaches you with a one-time request for a project, treat it like the introduction to a major project and you could end up winning their business.
Quote with long-term potential in mind.
3. Factor in Administrative Work Time
Sit down and grind through work and you’ll quickly find yourself worn out and lacking ideas. It’s a situation that all creative workers find themselves in, and it’s one that’s rarely accounted for in most billing structures. Accounting for downtime in your billing structure can be difficult, particularly if you’re accustomed to working on a per-project basis.
The simple truth is that any project is going to attract busywork such as emailing, organizing, filing paperwork, and so forth, be it a design project or one that’s built around coding a new application.
Factor for this time in your per-project pricing guidelines and you’ll end up with a more scalable and effective billing structure — one that doesn’t result in wasted hours and time that’s spent endlessly fine tuning small details.
4. Highlight Extra Costs
If you’re a new designer, giving a quote can sometimes be a little scary. There’s a feeling of power and ability, but for most, it’s paired with a small tingling of nervousness and a fear that your pricing might be a little too high, a little too low, or just wrong in some immeasurable way.
It’s a fear that’s present everywhere online — with no face-to-face contact, judging small details can be difficult.
Beat the fear by being completely transparent and straightforward about your pricing. Include every extra cost, quote clients for every possible situation, and provide a quote that’s as close to your final price as it possibly can be.
Clients rarely reject proposals based on their price, but they can and will reject your proposal when it’s loaded with ambiguity. Be clear, be courageous, and price on exactly what you can deliver.
5. Convey the Concept of Value and Quality
There’s an unspoken rule amongst contractors when it comes to large projects: no one judges the quality of applicants, providers, and design firms by the price that they’re bidding.
Low-cost bids aren’t instantly rewarded, high-price providers are rarely penalized, and mid-range designers just don’t operate at an advantage to the big guns. It’s not about price — it’s about what they get for that price.
When the difference between a high-end provider and the cheaper alternative is a better result, any large business is going to spend the extra cash.
If you’re given the opportunity of placing a bid on a major project or multi-stage corporate design deal, go out of your way to explain how you can add value to the project, not how you can help save money.
Ability is rewarded, frugality isn’t.
6. Know Your Competitors and Understand Market Rates
There’s a slight danger in pricing yourself according to others in your industry, particularly when your design services are focused on a particular geographical area or online niche.
When you let other people control your pricing, you’re inevitably forced to compete with them, battling for the same clients and bidding endlessly on the same projects.
However, it’s important to know how much your competitors are charging, even if only to best them in quality and offer a premium service.
Keep in contact with other design agencies in your field or area, understand their pricing and ensure that you can offer a greater deal of value at the same rate.
Don’t let the market dictate your pricing, but do let it create guidelines for what you can offer.
7. Always Consider Growth and Overheads
Great branding goes beyond having an attractive website, a clean business card, and a portfolio of clients that are remarkable at what they do. It’s a discipline that’s steeped as much in pricing as it is in visual identity, and without a price guideline that reflects your ability, it’s unlikely that you’ll be able to grow, both as a designer and as a business.
Factor growth and overheads into your per-project or per-hour quotes, and always think of projects with opportunity costs in mind.
Grinding through every possible project at a laughable rate will lead to short-term success, but it’s almost always at the expense of long-term growth and progress.
If you want to bid on major design projects and truly grow your design business, think of low-cost projects and one-off assignments as a stepping stone, not as a destination for your business.