Starting out, how much to charge for development, hosting and maintenance?

Question

I live in New York City, and am hoping to go around and sell my service as a contract job. I'll be making static websites with good design and a contact form for clients, but I won't add advanced features (administration panel, blog, members-only area, shopping cart, etc).

This will be my first time doing real work like this. I can set up a domain and hosting, create the design and write the site within a week.

I am thinking of charging as follows:

• $350: Whole static site (custom-made, no template)
• $50: Hosting and 1 hr/month of maintenance
• $80: SEO
• $150: Social site setup

I discussed this with a professional developer that I know, and he said that would usually go for something closer to $5,000 instead of the $400 that I'm thinking of getting. That sounded absurd to me, but he said that once you get into the industry, you will understand.

So, is he right? I am entry-level, but I know how to get things done.

Answer 1

You're pricing yourself into the ground. @ChrisForrence has great points and I'll add a few more...

You will NEVER and I repeat NEVER profit from charging $350 for a site. Let's break this down from the first meeting...

1. First meeting. Needs assessment - 1 hour
2. Contract writing - 2 hours
3. Concept development (for a basic site) - 2 hours
4. Second meeting. Present concept to client - 1 hour
5. Make changes to concept (yes, the client WILL make changes) - 1 hour
6. Third meeting. Client buy-off on concept - 1 hour
7. Begin design - 16 hours
8. Fourth meeting. Show client progress - 1 hour
9. Make requested changes - 2 hours
10. Wait for copy and images from client....
11. Get some half-baked copy and insert into HTML pages - 1 hour
12. Edit the copy when the resend the "final" copy - 1 hour
13. Prep the server, DNS etc. - 1 hour
14. Fifth meeting. Client sign off (bu not really) - 1 hour
15. Make requested changes - 1 hour
16. Last pre-launch meeting - 1 hour
17. Upload files and make sure the site is functioning properly - 1 hour

Also, don't offer SEO service. You're not really doing anything for $80. You'll just piss off clients when the "don't appear at the top of the Googles" for every search term imaginable.

So, let's do the math:

Total price = $350 Total hours = 34 $350/34 = $10.29/hour

McDonalds pays about $8 - $9 per hour and it's consistent money.

Answer 2

Your friend has good reasoning. Here's a few reasons why charging more will be better for you:

1. Slow periods: One reason to charge more is to be able to live off of past earnings. If you have four projects this month and none next month, that second month is going to seem pretty darn lean, especially for living in New York City!

                  Charging $400  | Charging $5000
   ----------------------------------------------
   5 Projects   | $2,000         | $25,000
   0 Projects   | $0             | $0
   ----------------------------------------------
                | $1,000/month   | $12,500/month
   20% Tax(*)   | $800/month     | $10,000/month
   
   (*): Please note that this is purely an estimate, although it does look to be at least
        15.3%.
   

   That's neither taking late payments into account, nor times where you aren't working (sick days, vacation). It also shows you how you can better spend your time; you'd have to complete twelve $400-projects to approach the earnings that you would for completing one $5,000-project.

2. Overhead: When you're freelancing, you're essentially running a business. That means that you have taxes to pay and equipment to buy, at the very least. You absolutely need to keep those in mind, since that's money that's directly coming out of pocket. There's also time spent doing administrative work, such as billing/invoicing, following up on leads, etc. While it's not money directly coming out of your pocket, you are having to spend time on it.

3. Perception: A common perception is that a site will either be cheap or good, but not both. Even though the perception may not hold true in all cases, you would have to think: would you want to be the cheap designer or the good designer?

Here's a good exercise for you to undertake: figure out how much you want to earn in a year, then break that down and figure out how much you would have to earn per hour (assuming a 40-hour work week). Use that to help determine your rate.