One of the biggest issues with freelancing and consulting is pricing. There are all kinds of people with different opinions on what is best. After years of design there seems to be three main types of pricing: Flat, Return On Investment (ROI), and Need Based. It is hard to determine which is really best. Below I will give you some of the pros and cons of each, and you can ultimately decide which is best for your business.
flat rate:It’s like the post office. You charge one price each client’s package of service(s). Pricing tables are good examples of this, Typically it’s used for bundle packages through websites. Flat Rate pricing is tricky because it has to incorporate many aspects of design including: Design ,Several rounds of changes (the number of rounds should be in your contract),Client meetings, Travel, Project research, Email and phone communication, Dealing with outside vendors, Dealing with subcontractors, and other needs that may arise.
- Quick Pricing
- Easy Tracking Pricing
- Tables can be used
- Inaccurate Price for Amount of Work
- Strict Budgeting
- Little concern for client needs
Return On Investment:Return On Investment (ROI) is the tricky one to present. this is where you have to let your marketing professional side shine. It is based around lead generation for a business. Say a client gets 30 leads from the site you are going to make. Each lead is worth $3,000, if the lead is completely processed. Of those 30 leads, only 10 come through. Client makes $30,000. So the client made $30,000 from the site you charge $5,000 to create. That’s a $25,000 profit. That is a worth while investment, right? That is five time the return on the client’s investment.
- High return
- Investor Understanding of Return
- Financial Monitoring
- Create Complete Picture
- A lot of Time Consumed
- Lengthy Analysis
- No Guarantee of Return
- Extensive Knowledge of Clients
Need Based:Need based is my preferred method of the three. Very simple but highly effective. What does the Client have? What does the Client need? What does the Client want? What other goods and services might the client benefit from that you can offer? It is a moderate challenge to make an assessment, but very effective.
- Room for Expansion
- Very Client Specific
- Nothing Unnecessary
- Client has Options
- Long Meetings
- More Time in Material Gathering
- May Require New Skills
- Longer Refinement
That’s are the basic system fundamentals most designers I know use to determine pricing. However, I have noticed that all three start to bleed over into one another as time goes on. I my self use a checklist of services and options to determine and record everything a client has, needs, and wants. Then each item on the list has a price, add those prices, apply any discounts (bundles service, referrals, etc.) and you have your client’s price. Take time and experiment. Figure out what works best for you. Remember as fast as things change, no one’s single method is 100% correct. It might work for their business, but not not yours. Let me know what you think and what method you use.