The Costs of Under Pricing Your Design Services
Posted in Design ServicesMay 15, 08 | 12:55 am
Steven Snell
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Many web designers fall into a trap by pricing their services lower than they should, which can have a serious impact on their business. Here is a quick look at the many different ways that under pricing your services can hurt you.
Lower Income
Obviously, charging lower prices will mean that you’ll make less from each project. Of course, the mindset of many designers is that they can ultimately make more money by charging lower prices and attracting more business. While that can be true in some cases, it will require you to work considerably more hours to earn the same amount that you could make with higher rates.
Attracts Bargain Shoppers
Many potential clients will contact designers based on their prices. From my experience, if a potential client mentions that they’re contacting you because your prices are low, this is a very bad sign. These types of bargain shoppers can be some of the most difficult clients to deal with. Sure, I understand that business owners need to be wise with their expenses, and that includes the amount that they pay for a website. However, these types of clients often don’t understand the huge gap in quality and types of services that are available. They want an award winning website for a thrift store price.
If you are pricing your work low, be prepared for clients that are looking for something that is too good to be true. Some clients will expect you to jump through hoops to create a site that is worth 3 times what they are willing to pay. Personally, I’d prefer to work for a client that has chosen me because of my abilities, my experience, or just about any other factor than my price.
Perceived Value from Clients is Lower
I’ve noticed over a period of time that your prices have some effect on the client’s perspective. If a client sees a low price tag it is natural to classify you in the same category with other designers that charge similar rates. Hopefully that is an accurate evaluation in your situation, but if your prices are too low you may be leading your clients to undervalue your work. Sometimes by charging a little bit more you can cause clients to see your work as being a bit higher quality. I don’t think this really applies to the bargain shoppers, but more so to those clients that are a bit more educated on the subject of web design and what it really costs.
Your Own Opinion of Your Work is Lower
How much is your time worth? What price do you deserve? If your prices are too low you may be subconsciously convincing yourself that your work is not worth more. Being able to charge a higher rate and having clients that are willing to pay that much may be a positive boost for your confidence. As a creative art, web design can be affected positively or adversely by your mindset.
Your Work Suffers
If you are not making very much from a project you may rush through it so that you can finish and move on to something else. I know I’ve found myself in this situation before. It’s easy to say “I’m only making $X for this work, I don’t need to do any better than this.” As a result, your work will be less than your best. If you’re making a reasonable amount you should be able and willing to do your best work.
Attracts Tire-Kickers
Potential clients that aren’t serious or dedicated to actually going through with a project will contact designers with low prices 9 out of 10 times. You’ll spend your time talking to them about what you can offer, how much it will cost, how long it will take, and every other detail they want to know. Then they still won’t go through with it. Of course, not every potential client will choose you, that’s just the nature of being a service provider. However, you can eliminate some of these potential clients that really aren’t that serious by quoting a higher price.
You Wind Up Competing Based On Price
Competing based on a low price has worked well for Wal-Mart, but it’s not a good idea for most designers. If your main selling point is that your price is lower than your competition, you will attract clients that you probably wish you hadn’t attracted, and you’ll really never be able to raise your prices unless all of your competitors do. If someone comes into the market and undercuts your price, then what do you do? Instead, focus on providing the highest quality work and the best service possible. You may even want to specially if that gives you an advantage, but avoid making price your main selling point.
What’s Your Opinion?
Do you have anything from your experience to add to the conversation?
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inspiring commentary
May 15th, 2008 at 2:55 pmjulien
oH my God,… it is exactly the kind of problematic which I find difficult to regulate…
Lower or Higher, have a new client or loose a swindler
sometimes is very hard to do the good estimate…
May 16th, 2008 at 6:08 amrob
I needed to read this artcle right at this moment in my career. Just after taking on a couple of cheap jobs… it just soaks up your personal life! and yes the work you produce is only 90% as your trying to get beyond it and onto the next proj. lets all make a promise together… “dont under charge ever again”
May 16th, 2008 at 7:13 amMel
Very good article - i have in the past fallen victim to some of these. Thankfully we learn with experience!
May 16th, 2008 at 10:00 amDave
I think you have nailed it with this article. IN particular ;Perceived Value from Clients is Lower, Attract Tire-kickers and You Wind Up Competing Based On Price. None of these are advisable for a serious and professional freelancer. You should be getting work based on your ability, skillset and professionalism. Do not sell yourself short. At the same time do not overcharge either. there is surely a happy medium.
May 16th, 2008 at 1:52 pmDevelopment Notebook » Blog Archive » Note 05.16.2008 1:52 PM
[...] The Costs of Under Pricing Your Design Services by Steven Snell most inspired - blog If you are pricing your work low, be prepared for clients that are looking for something that is too good to be true. Some clients will expect you to jump through hoops to create a site that is worth 3 times what they are willing to pay. Personally, I’d prefer to work for a client that has chosen me because of my abilities, my experience, or just about any other factor than my price. [...]
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May 16th, 2008 at 10:01 pmRay
Great observations! We’re in an industry in which anyone with a computer in their bedroom can represent themselves as a designer. Leave the price-shoppers to them and go after the clients who understand that your experience and judgment are worth paying for.
May 17th, 2008 at 8:35 amStevn Snell
Rob,
I also find myself not always doing the best work I’m capable of on those really low-priced jobs. That’s one of the worst things for me I think.
May 18th, 2008 at 12:10 pmRobert
I could not agree with your more in regards to perceived value. We we make every effort to keep the standards of our work high, this can only occur when project have the correct budget. Very good a topic most!
May 18th, 2008 at 8:45 pmJ. Jeffryes
That’s an excellent way to frame the problem. If you do cheap work, you attract cheap clients. It’s like shopping at Wal-Mart vs. an upscale store. People that are only willing to spend pennies will argue over every cent, while people willing to spend whatever it takes care more about the result than the bill. The trick is figuring out how to get that kind of client. Just setting your prices high probably isn’t enough.
May 19th, 2008 at 8:54 amRamon L.
I think that one of the most god-awful aspects of quoting someone for a web site is when they want an upfront price. I’ll have someone come up to me and say: “I need an 8 page website made. How much would you charge me for that?” I cringe. I hate to do it, but then again, I can’t afford not to. But then again, its never been pleasant specially when I find myself trying to work miracles for a miserable amount of money. I will take this article into consideration every time this kind of situation presents itself.
P.S. What do you say to people that want discount prices in exchange for promotion? I don’t need the promotion (for the time being that is) because I feel that my work speaks for itself. How do I turn it down without giving off the “hollywood” attitude?
May 19th, 2008 at 5:29 pmSteven Snell
Ramon,
To answer your question, I think if someone offered to exchange some promotion in place of money I would just simply state the truth, like you said above. In my opinion there’s nothing offensive about saying that you currently have more work than you can handle, and the extra promotion just isn’t needed at this time. I would thank them for the offer, but state that at this time it’s not the best fit. I think if you thank them and you don’t brag on yourself for how much work you get, there’s no need to feel like you have a “hollywood” attitude.
May 19th, 2008 at 9:27 pmAndrew
This doesn’t seem to be the case for most designers. A hand full of the “good” designers I’ve contacted rates start at $75 to $100 an hour. I find this quite funny because at one point and time designer and programmer income was pretty equal. Today you see programmers working at $10 to $25 an hour. As a experienced programmer I get quite a few clients expecting my rates to be that low. The most I have been able to charge is $50 an hour. It’s quite sad because I want to endeavor my own project but can’t afford a damn designer to work along side me.
May 27th, 2008 at 12:17 amPerchè non sottovalutare il proprio lavoro : cssblog.it
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May 28th, 2008 at 8:33 pmBryan P
What is a good method for pricing a site design? Since, I have been working a on few sites, I generally just create an amount. I believe that I am really undercharging, but these are introductory people and they have been friends.
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May 29th, 2008 at 9:10 amMike Haynes
Don’t forget the “Opportunity Cost” of quoting low projects: If you are working on several projects that you have underpriced, you have less time to work on high profit margin projects that may come along. It is not fair to your clients who are paying full price to have your work suffer as a result of being spread too thin!
May 29th, 2008 at 12:05 pmVR
SO ON POINT!!
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August 1st, 2008 at 1:56 pmspinelli
Great!
That’s what really happens!
you got to made the choice.
Always be fair!
success
spinelli
From Brasil
http://www.occammidia.com.br
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October 7th, 2008 at 2:42 pmdiarmuid ryan web design
I have undercut my price in past to win contracts and regretted doing so as projects run over budget. It is good to guage what a client is willing to pay and pitch for that, then decide whether or not project is worhtwhile
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December 8th, 2008 at 8:01 pmHatchThat Entrepreneur Interviews and Advice
I agree with the “your work suffers” point. It’s hard to make something high quality when you feel you are being underpaid, in saying that, if the client understands they are paying you less and that you can only work for X amount of hours then they get what they pay for.
April 15th, 2009 at 9:23 pmNick Norris
This is specifically why I no longer advertise on sites that attract bargain shoppers (ie. Craigslist). Back when I was building my portfolio, I felt as though I HAD to charge lower prices, because I didn’t have a lot to show prospective clients. I offered my BEST designs for less than $500, and I was able to build a solid portfolio.
Now, I wouldn’t think of cutting my prices, because higher prices show that you are confident with your work, and confidence sells a lot more effectively to QUALITY clients - more-so than price. It also sets a positive tone and they will be impressed no matter how many features their site has, they think of it more as an investment than a purchase.
June 8th, 2009 at 7:51 pmNick Yeoman
I don’t see why people need to be told this. I’ve seen this article in many forms. Maybe take some business courses before you go into business where they would teach this in the first 10 minutes.