Two HUGE Myths of Setting Cheap Prices

Posted in Freelance, Tips, Web Design3 years ago • Written by 6 Comments

Going into business as a web designer is tough. You may often see people glorify the life of a freelancer as a utopian life of beach trips, Apple products and lots of money. The truth is, when starting out, it isn’t anything like that and takes years to accomplish that kind of success. I’ve been freelancing for about five years now and have gotten really serious about it in the past couple months and the part that I find the MOST challenging is the pricing.

How do you know what to charge? Hourly or flat rate? What are the market prices? Once you find the answers to these questions, many things will begin to fall into place. I have noticed, however, there are two HUGE myths floating around the design business in regards to setting prices. The two myths are essentially the same, just with two different view points and arguments. What are they you ask?

The designer that prices cheaply says:

“Making my prices so low will attract more customers! And in turn I’ll be making a ton of money!”

Promotion and Strategy Get Customers

This one is super easy to fall into, especially for the newbies. The biggest issue with this viewpoint is the idea of attracting more customers. First, getting customers depends on your marketing and promotional strategy. You may have affordable prices, but if no one knows about them, no one is coming to see you. Make sure you have an all around solid strategy to get and keep customers interested in you.

Take advantage of the many social networks online as well as blogs to keep your name in the search engines. Buy some advertising and create great work so potential customers will come straight to you. Using pricing as your primary marketing strategy is very hit and miss. You MUST be cautious of setting your prices cheap in order to get people in the door (for example, an introductory price). Sometimes when you do this and then try to increase your prices, you leave your customers wanting that cheaper price you started with and you can sometimes dig an unprofitable hole for yourself. Clients can get extremely irritated and you may gain the perception of being ‘sketchy’. If this is your strategy, make it known that prices may increase, and to what they will increase to. You don’t want your clients thinking you’re out to get them!

You Attract What You Are

Second, when your prices are cheap, you generally attract cheap people. And in what I’ve seen, you can attract people so cheap, your cheap prices are too high for them. Not only that, you attract people who have cheaper morals (such as not paying on time, never paying, squeezing the most out of you) and I’m not sure they are worth all that hassle. Dealing with a cheap client can be a total and complete waste of time as well as a big ball of stress and frustration. While (I believe) there is no such thing as the perfect client, the last thing you want in this business is the penny-pinching client.

Affordable vs. Cheap

Your time and dedication is worth more than the pennies you may be charging. Your niche may be affordable graphic design, but affordable (a $250 logo) and cheap (a $50 logo) are two different things! Do your market research and figure out what is best and what is not because in the end, pricing cheaply really ends up going down hill.

The designer that does not price cheaply says:

“Those other designers are so low, they are ruining the market! How will I keep my customers?”

Pay Attention to Your Client Base

To this designer, I want to be clear: mind your own business. The point here is that you are serving a completely different clientele than the cheaper designer; one of which has little to no issue with spending money and another that does. What kind of sense does it make to get all up in arms about what some other designer is doing?

The issue is that many believe the cheaper designers are ruining the market and making it harder to charge so much, but the truth is there are people out there who don’t mind paying the prices. Especially if it translates into quality that is reliable, dependable and consistent. Perhaps you may have to add some more services, like a free consultation or increase the amount of revisions, but don’t fall into the pricing war. Far too many huge companies start off with higher prices and try to lower their prices and they end up tanking. The little guy will always win because he may have a plan to keep up with his prices–you don’t. That’s not your competition and you don’t have to keep up with the cheaper designer. Look into what your peers are doing and try to compete with that.

Customer Service is Key

Keeping your customers is a service issue. I worked for a high-end fashion retailer a while ago and the truth is the stuff we sold and the stuff lower-end competitors sold was pretty much the same. And it wasn’t a secret–many customers knew there wasn’t a huge difference but when you talked to them and asked them why they return and why they purchase from us, it was always because they liked our customer service and the extended warranties and they didn’t mind paying for quality (as a combination of product and service).

Avoid it All: Communicate!

Whether you are the lower priced designer or the higher priced designer, when you get a customer, make sure they know and understand what they are (and are not) paying for. I use a flat-rate, base price system, and when I start to up-sell and add-on services, I make sure I spell it out on my invoices and to the customer. We have to remember that most of our customers are not designers and don’t realistically understand the work we do, so we have to spell it out. And once you start communicating WHY your prices are what they are versus WHAT your prices are, you should have an easier time getting and keeping customers. Try not to fall into either of these myths by focusing on creating GREAT work and providing EXCELLENT customer service–no matter the price!

Having trouble thinking of prices?

Try some of the calculators and guides below. They can help you find decent going rates for your line of work.

Web Design Cost Calculator

FreelanceSwitch Hourly Rate Calculator

HOW Design – Hourly Rates

Pay Me Please: A Freelance Web Designer’s Guide to Billing and Pricing

How Much to Charge for Design Work?

5 Written ArticlesWebsite

6 Comments Best Comments First
  • Dan

    Thursday, June 2nd, 2011 17:33

    1

    Nice post. When starting my graphic design company, choosing my pricing was one of the more difficult tasks. I found the best strategy was to gather some project specifics before giving the client an accurate quote. This way, I am able to get a feel for how in-depth the project will be. Thus, I am able to give the client a more accurate quote based on these details. On my website, however, I do offer a place for prospective clients to write their estimated budget when obtaining a quote. This works well to weed-out those clients with the “$50 budget for a complete branding package”.

    0
  • Andrea Spikes

    Thursday, June 2nd, 2011 19:51

    2

    “Customer Service is Key” is so true!!

    0
  • Kanchan Rai.

    Friday, June 3rd, 2011 08:14

    3

    Hey, this was wonderful!! Very truly and well explained!!

    I kind of fall in the second category though I don’t charge that high. But I do fear other designers around me who complete a whole website for less than a 100$. But, thanks to you! “You attract what you are”, great!!

    Once I had a client, who wanted a cheap price and I agreed as I knew him personally, I agreed to do it as a goodwill but it really became a pain in the ass. He shifted the payment date time to time, and just paid a quarter of the agreed amount. And, moreover, he never got the other pages except the homepage since I had laid a condition that I wasn’t going to provide him all the files unless the full payment is done!! It was a total waste of my time and effort!!
    But taught me a good lesson. Enjoyed your article! Thanks again!

    0
  • Michael Francis

    Friday, June 3rd, 2011 20:35

    4

    Good article. I like the price estimator tool as well. It is hard to balance cost vs. work on larger projects. I think it is time to start incorporating project time lines, with cost of each milestone to complete. I might even draft up a contract to be signed and agreed upon before the work starts! Communication and professionalism will always work, clients should understand and respect our need to protect ourselves. Keep up the good work…

    0
  • Brandon

    Tuesday, July 19th, 2011 21:51

    6

    An impressive share. I just gave this one to a colleague who was doing a little analysis on this. And he just bought me breakfast because I found it for him.. smile. So let me reword that: Thnx for the treat! But yeah Thnkx for spending the time discussing this, I feel strongly about it and love reading more on this topic. If possible, as you become more expert, would you mind updating your blog with more details? It is highly helpful for me. Big thumbs up for this blog post!

    0
  • Josh Bedo

    Saturday, June 4th, 2011 07:35

    5

    Awesome article!
    I found a lot of information useful, I’ve even found myself having a lower price trying to attract more customers. This gave me a lot of insight and allowed me to view it from a different perspective.

    Thanks

    0
  • Brandon

    Tuesday, July 19th, 2011 21:51

    6

    An impressive share. I just gave this one to a colleague who was doing a little analysis on this. And he just bought me breakfast because I found it for him.. smile. So let me reword that: Thnx for the treat! But yeah Thnkx for spending the time discussing this, I feel strongly about it and love reading more on this topic. If possible, as you become more expert, would you mind updating your blog with more details? It is highly helpful for me. Big thumbs up for this blog post!

    0
  • Josh Bedo

    Saturday, June 4th, 2011 07:35

    5

    Awesome article!
    I found a lot of information useful, I’ve even found myself having a lower price trying to attract more customers. This gave me a lot of insight and allowed me to view it from a different perspective.

    Thanks

    0
  • Michael Francis

    Friday, June 3rd, 2011 20:35

    4

    Good article. I like the price estimator tool as well. It is hard to balance cost vs. work on larger projects. I think it is time to start incorporating project time lines, with cost of each milestone to complete. I might even draft up a contract to be signed and agreed upon before the work starts! Communication and professionalism will always work, clients should understand and respect our need to protect ourselves. Keep up the good work…

    0
  • Kanchan Rai.

    Friday, June 3rd, 2011 08:14

    3

    Hey, this was wonderful!! Very truly and well explained!!

    I kind of fall in the second category though I don’t charge that high. But I do fear other designers around me who complete a whole website for less than a 100$. But, thanks to you! “You attract what you are”, great!!

    Once I had a client, who wanted a cheap price and I agreed as I knew him personally, I agreed to do it as a goodwill but it really became a pain in the ass. He shifted the payment date time to time, and just paid a quarter of the agreed amount. And, moreover, he never got the other pages except the homepage since I had laid a condition that I wasn’t going to provide him all the files unless the full payment is done!! It was a total waste of my time and effort!!
    But taught me a good lesson. Enjoyed your article! Thanks again!

    0
  • Andrea Spikes

    Thursday, June 2nd, 2011 19:51

    2

    “Customer Service is Key” is so true!!

    0
  • Dan

    Thursday, June 2nd, 2011 17:33

    1

    Nice post. When starting my graphic design company, choosing my pricing was one of the more difficult tasks. I found the best strategy was to gather some project specifics before giving the client an accurate quote. This way, I am able to get a feel for how in-depth the project will be. Thus, I am able to give the client a more accurate quote based on these details. On my website, however, I do offer a place for prospective clients to write their estimated budget when obtaining a quote. This works well to weed-out those clients with the “$50 budget for a complete branding package”.

    0

Comments are closed.

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