billing clients?

janey · Aug 22, 2007

Self explanatory topic, I'm afraid. Somehow through word of mouth among friends/family/acquaintances, I've gotten a whole slew of people interested in having me do some web development work for them, and while I've dealt with this in regards to computer repairs, I don't know what to do now.

Do I bill at a flat rate, or by the hour? And how much should this change depending on the job? Or does complexity inherently require more time, hence I should just have a standard rate at which I'd like to charge?

While there are some that would take an hour at most to install wordpress and throw in some training too, there are others that involve a lot more, like creating a custom CMS from scratch according to their specific directions...or those people that are so insanely vague yet picky about what they want, so they waste a lot of time and effort going through a gazillion changes to meet their requirements...

Hell, how much do I even begin to determine what I want to be paid? I've had one that gleefully paid $60/hour for all the backend work (i'm a code monkey, not a designer), and another that tried to whittle it down to $10/hour or so for creating a site for her business (ah, screw her, I pointed her in the direction of other devs).

And how would I bill by the hour anyway? Sometimes what one thing takes a few hours to do one day would take an hour on another for whatever reason, or what if I did increments of time, like 15 minutes?

Any tips on this and related topics would be much appreciated

tomoisyourgod · Aug 22, 2007

if someone is paying you $60 an hour (which is approx £35 in our money) sounds about right for freelancing.

That's the rate you should charge, just don't actually tell the client your on $60 an hour - if say, a job will take you 20 hours, then the charge $1200

Always get a contract of agreement signed, that way no one can screw you.

TheChillPill · Aug 22, 2007

I agree with tomoisyourgod, work out your estimated time period for the job, and quote a full price. Developers always have days where productivity is zero, and days where you could do the full job in one hit - average those out to reach a figure you're happy with.

I don't do client work anymore, but from the time I did I would offer these tips as critical -

- Create and agree on a functional specification. Clients will always try to squeeze something extra out of a job. 'Can you add this' (where 'this' is another 3 days worth of work). Remember, clients rarely know what makes something happen - and if you're doing your job well, it should be made to look easy. Do the work on the spec and agree that anything beyond that will be chargeable separately.

- Get a payment upfront. I always aimed for 50%, but never took anything below 30%.

Getting both of these will make sure they are serious and they are less likely to try to screw you over.

miniConvert · Aug 22, 2007

Good advice, here. I too think you should quote for the full job, the specifics of which should be confirmed and agreed in writing, but base your quote on an hourly rate and a number of hours needed to complete the spec.

Clients always request changes, and that's fine - they're the client. Just make sure you agree how many hours any changes will take, and so how much extra they will cost.

janey · Aug 22, 2007

Thanks folks!

Yes, I knew about some of those - partial payment upfront, contract with specifics, etc., I've done that for other work I've done...I'm just totally stuck on the how-much-is-my-work-worth part

Part of me is thinking that $60/hr is outrageous for some of the things I do, even though they take time. I absolutely don't do this as a living, I'm far from being cash-strapped despite being a student, but some of this work, particularly the more difficult/higher-profile/long term work, would go nicely on my resume and what have you.

There really isn't a nice average or example of how people reach the numbers they reach, and I'm uncomfortable with something as much as $60/hr..I don't know. I'm stuck

It's not like I can do this for free either.

Knox · Aug 22, 2007

<begin ramble>

Ah, the eternal question of how much to charge and the worst part of freelancing IMO

When pricing jobs I will usually estimate how long I think it's going to take me to do the actual work then add an percentage for the enevitable situation where it takes longer (plus all the other time you spend on the project in meetings etc.).

Multiplying that hours figure by a semi-standard hourly rate I then have to work out whether it's reasonable for the particular client. I do work for clients ranging from multi-million pound companies to one person home businesses - what is reasonable for one would be way out for the other. So, that means I work out a minumum amount I would be willing to do the work for, then depending on the client the actual amount I ask for will be somewhere between those two figures.

Although more complicated work does take longer and so is inherently more expensive, I think you should be charging more per hour anyway as it tends to require greater knowledge/skill/experience.

If someone is happy to pay you $60/hr and is pleased with the results then don't worry about charging that. When I charged one client $60/hr for really basic PHP work they actually questioned the amount and offered to pay more.

Another ancedote, it depends on what other people might charge for similar things (finding that out is a bit harder I'll admit). The last job I invoiced was to change text within a video. It took me maybe 3 hours to do, although it should have been very simple I didn't have the original video files and I'm not a video editor so had to learn it first. For that they were charged $200/hr. Huge amount right? Not when you consider that the original production company was going to charge $2,500 for what would have been a 10 minute job for them.

So, list of things I try to consider:

Time required to do the work
When the deadline is
Skill required
Size of company/willingness to pay
How much I need the work
Industry average in your area

BillyBobBongo · Aug 22, 2007

janey said:
There really isn't a nice average or example of how people reach the numbers they reach, and I'm uncomfortable with something as much as $60/hr..I don't know. I'm stuck It's not like I can do this for free either.

Why don't you ask them what their budget is?! Reach a price that you're comfortable in taking and they're comfortable with giving, since your not really in it for the mega-bucks. You might be surprised with what they offer!

Matteh117 · Aug 22, 2007

I have he agree with Billy there. Ask them their budget for the project and the ideal ammount they would want to pay. From this, you easily say that exact price (without having any doubts, as THEY suggested it) or work up a bit higher, now knowing their max.

As a 17 year old, I haven't really done much work, but I do know how you feel about what you think is overcharging.

ac6789 · Aug 22, 2007

AIGA 2007 Salary Survey

AIGA has a salary survey that can help you figure out what to charge. I find it really useful and have based my own rates on these surveys. They break down earnings by region and metropolitain areas and further breakdown for freelancers, studios and different positions from art director to web designer & Copywriters. So it's very detailed and a fantastic resource to guage the rates of your area so you remain competitive and ensuring you get compensated for what you're worth.

http://www.aiga.org/content.cfm/salary-survey

Hope this helps.

zimv20 · Aug 22, 2007

janey said:
Part of me is thinking that $60/hr is outrageous for some of the things I do

that's just something you need to get past. at a minimum, you should charge what it takes so you don't feel you're wasting your time or being taken advantage of.

now here's the 2 things i learned about rates in some 15 years of consulting:

1. if you want more work, raise your rates
2. the higher your rates, the more you'll be taken seriously

if you price yourself out cheaply, people will treat you badly. sad, but true.

also, maybe this was mentioned but i didn't see it, if you're going to quote a rate for the entire job, first work out a detailed list of requirements. it can't be too detailed. once you deliver that, and get paid of course, you can do changes on either an hourly basis (make it high) or you can put together a quote for groups of changes. but don't get yourself into a situation where you're being screwed by scope creep.

janey · Aug 23, 2007

Knox said:
Ah, the eternal question of how much to charge and the worst part of freelancing IMO

yep!

I'm not the first, nor the last, unfortunately. And this reply is full of indecision

Knox said:
...I do work for clients ranging from multi-million pound companies to one person home businesses - what is reasonable for one would be way out for the other...Although more complicated work does take longer and so is inherently more expensive, I think you should be charging more per hour anyway as it tends to require greater knowledge/skill/experience.

If someone is happy to pay you $60/hr and is pleased with the results then don't worry about charging that. When I charged one client $60/hr for really basic PHP work they actually questioned the amount and offered to pay more.

That's sort of where I'm stuck. The person who paid me $60/hour did so saying she didn't have much of a budget, and I daresay she would have offered more if I asked, despite being on a budget. Now I wonder just how big that budget was. There's just so much to consider, and so much to guess at...

Knox said:
Another ancedote...Huge amount right? Not when you consider that the original production company was going to charge $2,500 for what would have been a 10 minute job for them.

If finding out was easy, I wouldn't be stuck in this problem

I don't want to overcharge nor undercharge, but I don't even know how to begin to really define those. I have absolutely no problems whatsoever charging for computer repairs...people will willingly offer me geeksquad-level payment, and that in itself is overpriced, but at least I have some reference point as to how much something I do there is worth, throw in a bit for whatever other expenses there are. And then not charge anything or accept some sort of trade as payment when they can't afford too much. But like I said, there's no nice reference point, so

Thanks for the great tips though

BillyBobBongo said:
Why don't you ask them what their budget is?! Reach a price that you're comfortable in taking and they're comfortable with giving, since your not really in it for the mega-bucks. You might be surprised with what they offer!

It will never fail to shock me

And for many of them, it's usually their first experience doing something like this and some of them came to me first without going elsewhere (there's always an up and downside to word-of-mouth I guess), so they're not sure how much to offer me, let alone really understand how much work (or lack thereof) it takes to do what they want. So it's complicated on both sides...I'm not sure what to charge, client doesn't know how much the work would be worth and subsequently doesn't how much he/she should pay. Usually the only things we'll have to work from is the work they want, and how much time I estimate it will take, but even then, offers will vary drastically depending on the person, and it's not necessarily that they can't afford to pay more or don't want to pay less, it's usually that they're expecting something really expensive and don't want to pay that much even though they can afford it and would pay that much if I insisted.

Matteh117 said:
As a 17 year old, I haven't really done much work, but I do know how you feel about what you think is overcharging.

I'm 18

ac6789 said:
AIGA has a salary survey that can help you figure out what to charge.

That's an awesome link, but it only shows yearly salary averages...not knowing anything else but that and the general job description, it's sort of hard

zimv20 said:
that's just something you need to get past. at a minimum, you should charge what it takes so you don't feel you're wasting your time or being taken advantage of....if you price yourself out cheaply, people will treat you badly. sad, but true.

But I get this huge sense of guilt of whether or not my work is actually worth that much if it's a lot...and I don't want to raise them to the point where it's unthinkably overpriced (then again I thought $60/hr was too much..). I'm not exactly experienced or anything...most of the things I do are just little things I picked up from here and there and don't use very often.

That being said, I do have a minimum at which the feeling of being (ab)used goes away, but that's at a measley $15-20 or so.

zimv20 said:
also, maybe this was mentioned but i didn't see it, if you're going to quote a rate for the entire job, first work out a detailed list of requirements..

Yep, definitely. I learned to do that a long time ago.

So much indecision! ack

Thanks for the replies though, they're helpful

ac6789 · Aug 23, 2007

janey said:
That's an awesome link, but it only shows yearly salary averages...not knowing anything else but that and the general job description, it's sort of hard

You can always break down the yearly average and work out your hourly rate. As a starting point at least you know what your minimum should be.

I'm basing this on the average solo designer total compensation figure for the Los Angles area

Assuming they are freelancing/working 7 hours a day (8 hour days, with one hour for lunch)

$68,000 / 12 months / 4 weeks / 5 days / 7 hours = approx $40.00 per hour

Again this is just a starting point. You'll have to adjust up or down according to your circumstances, but I generally will not go below this figure unless there are special circumstances.

I'm from canada, where RGD Ontario (a graphic design association) put out a 2006 survey where they have hourly rates. For a web designer with less than 5 years experience they charged an average of $47.00 (CDN) per hour. With today's exchange rate and seeing as how the survey is a year old, I would expect that figure to rise to about $50 - $55 U.S. per hour. Not sure if this helps but as a comparison that's what GD's are charging up here.

overcast · Aug 23, 2007

ac6789 said:
You can always break down the yearly average and work out your hourly rate. As a starting point at least you know what your minimum should be.

I'm basing this on the average solo designer total compensation figure for the Los Angles area

Assuming they are freelancing/working 7 hours a day (8 hour days, with one hour for lunch)

$68,000 / 12 months / 4 weeks / 5 days / 7 hours = approx $40.00 per hour

Again this is just a starting point. You'll have to adjust up or down according to your circumstances, but I generally will not go below this figure unless there are special circumstances.

I'm from canada, where RGD Ontario (a graphic design association) put out a 2006 survey where they have hourly rates. For a web designer with less than 5 years experience they charged an average of $47.00 (CDN) per hour. With today's exchange rate and seeing as how the survey is a year old, I would expect that figure to rise to about $50 - $55 U.S. per hour. Not sure if this helps but as a comparison that's what GD's are charging up here.

You're missing an entire month of work there. There are 52 weeks per year, not 48.

zimv20 · Aug 23, 2007

ac6789 said:
$68,000 / 12 months / 4 weeks / 5 days / 7 hours = approx $40.00 per hour

more accurately, there are about 2000 working hours in a year. so figure $40/hr to be $80k/yr.

zimv20 · Aug 23, 2007

janey said:
But I get this huge sense of guilt of whether or not my work is actually worth that much

short answer: get over it.

longer answer: you're being paid for your expertise. if it takes you (say) 20 minutes to accomplish something, you're not taking into account all the time it took you to get to the level you're at. that has value and you shouldn't feel guilty about that allowing you to charge a higher rate.

further, you can also take into account how long it would take that person to accomplish what you can in a short time. that's what makes what you do a value to that person. a business person can say, "heck, i can solve my problem for only $600 -- what a bargain!", compared to the several months/years it's been an issue.

werther · Aug 23, 2007

the number of working hours in a year I have always been told to use is 2080. I have never bothered to actually do the math myself, but my momma told me so, so it must be right.

shecky · Aug 23, 2007

i have to disagree a bit with the 2080/year figure as a way to get your rate. quite often an independent consultant/freelancer/contractor will bill less than 40 hours/week x 52 weeks/year - even if working "fulltime" due to a significant portion of time spent doing non-billable work relating to running/managing/marketing/etc. your business.

so if you base your rate on that you will probably shortchange yourself.

as an aside, a good blog to read regarding freelancing and working for yourself is http://www.freelanceswitch.com

zimv20 · Aug 23, 2007

werther said:
the number of working hours in a year I have always been told to use is 2080.

yeah, 52 weeks x 40 hours/week is 2080. i use 2000 as just a guideline. so if your hourly is $25, and you work a full year, you can say "i make about 50k a year," because the math is easy.

if you want an exact figure, you have to do more math. and for those who don't get benefits (like vacation, paid holidays, etc.), you can't really count on 2080, what with holidays and sick time and vacations and all.

Mac In School · Aug 24, 2007

I've never been a big fan of straight hourly or a flat price, when design work is involved. The design process can get ugly because you never know how many rounds of concepts it's going to take to come up with something the client likes.

I price design/creative and production differently.

First, the job goes through the creative stage. I charge $XXX for each fresh concept they ask me to create. I try to explain during he bidding process that, since they're charged $XXX each time they send me back to the drawing board, the clearer they can be about what they want/need/like/dislike, the less it's going to cost them.

Once they've settled on a concept, it goes to production where I charge hourly. I consider tweaking the design part of production.

CanadaRAM · Aug 24, 2007

A practical maximum number of billable hours for a self employed consultant is 1,000 - 1,200. The rest of the year is spent on non billable items like marketing, accounting, computer maintenance, research, education, pre-sales customer meetings, unbillable time overruns,, changes and corrections, goodwill and volunteer, etc.

So if you want to make $60K, you had better be billing a minimum of $60 an hour. Of course, that's gross dollars. If you want to make 60K net after expenses and tax, you had better be billing $90 an hour.

My rule of thumb is that if I want $60 an hour, I quote the customer a fixed rate based on $100 an hour. It make it easier to estimate, too; 40 hours = $4,000

Of course: Written deliverables, at least 1/3 down payment to start, kill fee if they abandon it after I have done all the prep, drop dead completion date if they never do their part to finish.approve it, change requests outside of scope billed hourly, expenses extra, delivery times contingent on timely client supply of materials/approvals.

zimv20 · Aug 24, 2007

CanadaRAM said:
A practical maximum number of billable hours for a self employed consultant is 1,000 - 1,200.

that's a great point. the 2000 - 2080 figure is for those who are FT (in the US, w-2) employees.

yojitani · Aug 24, 2007

I think the best thing to do is work out what others are charging for the same/similar work. I'm in the midwest and the average around here is about $75 per hour... many of the developers who charge that much are crap too. Like someone else mentioned, webwork is full of unproductive time (especially for me recently working out IE glitches) that I personally would feel guilty about charging for. Thus, I tend to estimate projects based on the amount of productive time it will take to do the site. I think for LA, $60 is about right.

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