Knowing how much to charge

By Ricky O’Neill

The most basic thing to establish when it comes to pricing are your hourly and daily rates. I used to get confused about why there were hourly AND daily rates and actually, I still can’t get a sensible answer out of anyone, even people who’ve been Freelancing for decades! The way I view it is My hourly rate is 1 x Y and my Daily Rate is 10 x Y, because I work long hours (and usually if you’re working on a day rate, you might have to travel to and from the place).

Freelancing “on the clock”:

So, how much should you charge per hour? Some would say, “whatever you can get away with”. And while there is an element of truth in that, it’s more about your confidence in your ability to do the job. If you are just starting out from University/College and decide to charge your first ever client a fairly premium hourly rate like £35 per hour, for example, you are setting the bar fairly high and setting an expectation with the client that they are going to be getting a high standard of work. This could go wrong, and you could end up looking stupid. This means no repeat business from that client and possibly a bad reputation for you within that clients network of contacts (“Oh, him. He ripped me off and the work wasn’t great”). Bad times.

Sticking my neck out: I think if you’re a Graphic or Web Designer just starting out (I mean literally starting out, your first ever real clients), but you believe you can do a great job for your client, you should be charging in the region of £12-£16* per hour for the first 6 months. Once you’ve got some great portfolio jobs under your belt and a few happy clients, I think you can start to increase your rate every 6 months or so. After a year or so, you should be aiming to charge c.£20 per hour. Then increasing each year by around 20% + inflation.

Other factors to consider:

Geography plays a part – London designers tend to work with clients that expect (or have learnt to expect) to pay higher rates. The same goes for other major cities but generally speaking to a lesser extend than London. I will often charge / price differently according to region (usually because of travel costs etc, but also because in some cases (like London) if you under-price, the client might wonder if you’re up to the job).

Economic climate has become a factor too, and it’s worth taking a look at the latest industry news to see how rates (or expectation of rates) is being affected. (Design Week is a great place to start for this info)

There is also a variation between rates across different disciplines. A top-end Flash Animator or 3D artist would tend to command more than a Print or Web Designer, for example. Some skills become “fashionable” and so become in demand and attract higher rates. I think Ruby on Rails Developers would be an example of this right now. They are not easy to come by and in much demand.

Pricing for “Projects”

Of course, pricing becomes more complex when you are pricing a “Project” (where you may be working with a sub-contractor or partner) as opposed to simply Freelancing for a certain amount of hours or days. Project pricing is something I still learn and get better at every day, but here are some tips I’ve picked up along the way:

  • Don’t forget how much time you put in “either side” of the project. Research, initial meeting, proposal, phone calls, emails, project management and reviews. Estimate all of this time using your hourly rate and build it into the project fee.
  • Add a contingency margin. What’s that? Well, it means if the client is asking for a “fixed fee” quotation you need to expect things to drag on a little bit and build this time into your quote. (I go a bit further than this, but that’s more to do with Scoping and Contracts – which is another issue :0) – If you’re pricing in a sub-contractor, add a margin to their hourly rate. It’s your client, and your project, and you will have to spend time briefing the sub-contractor and being the liaison between them and the client.
  • Be open (but not THAT open). I often break my proposals down into Consultancy, Design and Development. I sometimes even make it clear the Contingency I have added in. This sets up an honest and open relationship. It also re-assures the client that you know what you are doing and have not just plucked a figure out of the air.

Of course, if you can – ask what the client’s budget is. Most clients will have some idea, some won’t want to let on. It’s worth asking. If they ask why you want to know, just be honest and say “There are probably a few different approaches / technologies we can adopt for this project… your budget will determine which one we take and allow us to deliver as best we can for the budget available”.

I base this on the following:

Junior Designer jobs tend to pay between £13,000 and £16,000 on a PAYE Salary. This is an average hourly salaried rate of 7.55 p/hr. If you take this rate but add to it:

  • your own self-employment tax contribution and National Insurance payment (around 27% of everything you earn)
  • your time to find more work (you’re trying to make a living after all)
  • time spent proposing on, winning and managing the project
  • misc costs for running your business

Then, £12-£16 per hour is a fair equivalent freelance rate for a Junior Designer starting out in the industry. Later you can start to charge for your experience, knowledge and flair too. :0)

Ricky O’Neill

Knowing how much to charge

Ricky is the Founder & Creative Director for the design and marketing company Look Touch and Feel.