I was trying to explain this to my roommates a few days ago. I just finished rebranding my personal brand and we got into a conversation about how much I'd charge for that if I was doing it for a client. I casually tossed out $2,000 as an off the top of my head estimate and they were really surprised, saying it was a lot of money. They started asking about the amount of time it took me to create the brand assets, which looked pretty minimal. "You'd charge $2,000 for a square with your name in the middle of it?!" It was rather difficult to convince them that it's not about the amount of time, it's about the value you bring to the client. Thanks for sharing your perspective Ran!
This is probably too late to the game, but I believe the real difficulty with validating hourly rate to non-designers is the word "value". I think this creates the impression it is just people's opinions about how much work costs. I think "experience" is a better word to replace "value".
It is understandable WHY people who have only been employees cannot understand why any commissioned work costs so much for the hours put in. From an employee's perspective, the more hours you put in then the more they get paid; the less hours you work then the less you get paid. What employees forget is that commissioned work with great value requires years (thousands of hours) of non-paid practice and trial-and-error (at personal expense). This we call "experience" (and hopefully a lot of wisdom to go along with it). Clients are paying for the experience (that is, speed) to deliver a "product" (the commissioned work) in a timely fashion. Smart clients realize that high hourly rates usually correspond with higher experience (= minimizing chance of amateur mistakes in the product). I think employees should realize that a "high" hourly rate is only to compensate for the years of unpaid hours. In the end, it balances out.
GREAT!! For I finally got someone that doesn't see the hourly rate as "The Best Option" I thought I was crazy for judging against hourly rates, because everyone is all for it. Also your calculating tip helps on both hourly and per job basis, so great post on that point.
Thanks for sharing. I think fixed prices jobs work with professional clients, big companies that have enough resources to develop complex and structurated projects with adequate budgets. But if you work with first time clients with a few money (young people, tightfisted people etc.) working on hourly base will grant you to be paid for the infinite followup and revisions they will ask for, because of they do not realize properly what the creation process needs and how many steps may request to deliver a proper final product. If you do not do this they'll ask for 10 revisions to be includes in their 70$ logo design fixed price job. So if you have big clients, fixed price is ok. But hourly rate will save you from unexperienced an low-budget clients with unreal claims.
I want to say thank you for making this video and making them direct and to the point, not beating around the bush. I will not name anybody but when I asked people in the past they were very vague with the advice and dint want to tell ,me what they were charging and there strategy for them charging that.
I find this idea very intriguing and somewhat scary as a person who has never worked anything but hourly. I think I might take some of your ideas and apply them to what I would ask for in a salary situation. It take confidence in your work to ask for a lot of money I feel. Thanks for the insight, man!
What I do is, I just simply quote my clients two prices, i.e my hourly rate and my estimated hourly rate that I show as "Piece Rate", and my Piece rate is usually a bit higher, and I tell them to pay whatever is lower in the end. This usually lands me my Hourly Rate,
Nice breakdown here! Pricing is something I have great struggles with as I'm not a full-time designer (would love to be, but some life factors such as full time job are a bit of a roadblock at this time...working to correct that!). Thanks Ran!
I have always worked with hourly rate and I find it very difficult to go the other way. What happens when the customer makes you work more than the estimated time because he wants to change things, want more options etc. But I agree with you that we have to charge for value not time. This is a very interesting topic, thanks for sharing!
Excellent video content! Apologies for butting in, I would love your initial thoughts. Have you ever tried - Canackenzie Astounded Cure (probably on Google)? It is an awesome one of a kind guide for building better sheds and master woodworking minus the normal expense. Ive heard some super things about it and my cousin finally got great success with it.
With selling my services its the same issue; if you're talented and they want your talent - charge what you want, if they refuse, on to the next. They'll realize they want your help and pay you. So simple.
I always describe this situation with car repairs. They charge for labour and that's usually a ballpark rate depending on the project. Sometimes it'll be $15, other times it'll be $500. At the end of the day, you paid for the diagnosis, parts, and labour which can total from $300 to $5000. Just depends on the project.
hourly rate = how much $ you need to live in 1 year. take that amount divide by 50 (50 work weeks in a year - 2 for vacation) - then divide that by 50 (50 hours per week - you work for yourself so you probably work more than 40 hours) - that final amount is your hourly rate. Projects are value based - if you need to do extensive changes or edits then you charge the hourly rate (on top of the project fee).
I thought there would be more. Kinda disappointed, because you didn't really go into the spendings and what to consider there? Fix costs and variable costs, contrubution margin and all that shit. There was nothing of that sort.
I was trying to explain this to my roommates a few days ago. I just finished rebranding my personal brand and we got into a conversation about how much I'd charge for that if I was doing it for a client. I casually tossed out $2,000 as an off the top of my head estimate and they were really surprised, saying it was a lot of money. They started asking about the amount of time it took me to create the brand assets, which looked pretty minimal. "You'd charge $2,000 for a square with your name in the middle of it?!" It was rather difficult to convince them that it's not about the amount of time, it's about the value you bring to the client. Thanks for sharing your perspective Ran!
That's awesome David, keep at it!
This is probably too late to the game, but I believe the real difficulty with validating hourly rate to non-designers is the word "value". I think this creates the impression it is just people's opinions about how much work costs.
I think "experience" is a better word to replace "value".
It is understandable WHY people who have only been employees cannot understand why any commissioned work costs so much for the hours put in. From an employee's perspective, the more hours you put in then the more they get paid; the less hours you work then the less you get paid.
What employees forget is that commissioned work with great value requires years (thousands of hours) of non-paid practice and trial-and-error (at personal expense). This we call "experience" (and hopefully a lot of wisdom to go along with it).
Clients are paying for the experience (that is, speed) to deliver a "product" (the commissioned work) in a timely fashion. Smart clients realize that high hourly rates usually correspond with higher experience (= minimizing chance of amateur mistakes in the product).
I think employees should realize that a "high" hourly rate is only to compensate for the years of unpaid hours. In the end, it balances out.
GREAT!! For I finally got someone that doesn't see the hourly rate as "The Best Option"
I thought I was crazy for judging against hourly rates, because everyone is all for it.
Also your calculating tip helps on both hourly and per job basis, so great post on that point.
Thanks for sharing.
I think fixed prices jobs work with professional clients, big companies that have enough resources to develop complex and structurated projects with adequate budgets.
But if you work with first time clients with a few money (young people, tightfisted people etc.) working on hourly base will grant you to be paid for the infinite followup and revisions they will ask for, because of they do not realize properly what the creation process needs and how many steps may request to deliver a proper final product. If you do not do this they'll ask for 10 revisions to be includes in their 70$ logo design fixed price job.
So if you have big clients, fixed price is ok. But hourly rate will save you from unexperienced an low-budget clients with unreal claims.
good point, although I never price hourly - for follow up fixes I do have an hourly rate.
I want to say thank you for making this video and making them direct and to the point, not beating around the bush. I will not name anybody but when I asked people in the past they were very vague with the advice and dint want to tell ,me what they were charging and there strategy for them charging that.
I find this idea very intriguing and somewhat scary as a person who has never worked anything but hourly. I think I might take some of your ideas and apply them to what I would ask for in a salary situation. It take confidence in your work to ask for a lot of money I feel. Thanks for the insight, man!
Good luck Richard!
What I do is, I just simply quote my clients two prices, i.e my hourly rate and my estimated hourly rate that I show as "Piece Rate", and my Piece rate is usually a bit higher, and I tell them to pay whatever is lower in the end.
This usually lands me my Hourly Rate,
Nice breakdown here! Pricing is something I have great struggles with as I'm not a full-time designer (would love to be, but some life factors such as full time job are a bit of a roadblock at this time...working to correct that!). Thanks Ran!
Sure Gary.. are you working to become a full time designer?
I have always worked with hourly rate and I find it very difficult to go the other way. What happens when the customer makes you work more than the estimated time because he wants to change things, want more options etc. But I agree with you that we have to charge for value not time. This is a very interesting topic, thanks for sharing!
I usually calculate this time into my estimate and price.
thanks :)
The link for the break even calculator is down, is there another calculator we can use?
Excellent video content! Apologies for butting in, I would love your initial thoughts. Have you ever tried - Canackenzie Astounded Cure (probably on Google)? It is an awesome one of a kind guide for building better sheds and master woodworking minus the normal expense. Ive heard some super things about it and my cousin finally got great success with it.
With selling my services its the same issue; if you're talented and they want your talent - charge what you want, if they refuse, on to the next. They'll realize they want your help and pay you. So simple.
Would you have any tips for how to politely and professionally transition your clients from hourly rates to set pricing?
Another great video! Would you be able to go more in depth about retainers and getting retainer clients?
Thanks Jenelle! I actually have a video about retainers, look it up
this site is not accessible anymore :/ do you know another one?
So how do you respond to the client if they ask you how many hours will you need to complete let's say a landing page?
Just give the client a deadline.
They never ask "how many hours", they ask "when will it be ready?" and I answer: "next week / next month".
You had me until you used the calculator to do 4 x 5 x 4. 😝
I always describe this situation with car repairs. They charge for labour and that's usually a ballpark rate depending on the project.
Sometimes it'll be $15, other times it'll be $500. At the end of the day, you paid for the diagnosis, parts, and labour which can total from $300 to $5000. Just depends on the project.
hourly rate = how much $ you need to live in 1 year. take that amount divide by 50 (50 work weeks in a year - 2 for vacation) - then divide that by 50 (50 hours per week - you work for yourself so you probably work more than 40 hours) - that final amount is your hourly rate. Projects are value based - if you need to do extensive changes or edits then you charge the hourly rate (on top of the project fee).
The link to the calculator is break.
Hi Ran,
When you setup a hourly rate. Do you include web design and coding/programming together or is that separate price altogether?
Thanks, Tom
same fee
I thought there would be more. Kinda disappointed, because you didn't really go into the spendings and what to consider there? Fix costs and variable costs, contrubution margin and all that shit. There was nothing of that sort.