StylizedWeb

Subscribe to our updates:

A Design, WordPress and Tutorials Blog.

Dedicated to helping you learn the art and science of the web.

How to Double Your Billable Rate

I am going to go out on a limb and say that almost everyone reading this article is charging too little. Our industry, as a whole simply undervalues our time and expertise. If you are an SEO consultant, web strategies, front end / back end developer or web designer you posses skills that very few people do. In fact there are very few colleges or universities that can educate you in these areas enough to qualify for anything more than an entry level position. The industry is simply way too new and moves way too fast.

Rate Deflation

Typically what I have seen happen is that while people improve their abilities, gain experience and become more established their rate increases but at a slower and slower pace. I think this happens for several reasons, although none of them are an excuse to undervalue your time. I would venture that one of the most common reasons is that an appropriate billable rate simply sounds like a lot of money. When working for "the man" you are probably used to making somewhere between $8 - $20 an hour... some people may reflect upon their previous wages and be unable to justify charging almost 10 times what they were previously told they were worth.

The truth is that even if you are a small time freelancer you have expenses that you probably are not acknowledging. Business development, marketing, training, vacation, health care, equipment, software, etc, etc, etc... previously your employer covered this but now the burden is on your shoulders. What I mean by this is that you were actually getting a higher wage (in theory) with your previous job than you may realize.

Additionally with inflation and efficiency improvements (over time you will get faster and more efficient) you actually make less money over time.

It may sound like I am digressing, but I have a sneaking suspicion that before anyone actually doubles their rate they will need to be convinced that they should in fact double their rate.

Why Double Your Rate

Rather than rant in paragraph format that I am sure no one would actually read (I know I wouldn't) I will just do the whole list thing... that way I will satisfy the list people out there and get mad digg traffic.

  1. You can do a better job on your projects by focusing on less at one time
  2. You can better serve your clients by giving them more attention
  3. You can work less and achieve the same amount
  4. You will have more time to learn, practice and improve your skills and adopt new ones
  5. It will increase your perceived skills and value (people assume that more expensive means better)
  6. People will place higher value on your time and bug you less
  7. At best you will probably bill about 60% of the time you are working, you have to cover the other 40% (however it is more likely 50/50 or worse)
  8. You will be able to be pickier about the types of projects you work on, vs having to find the next 5 - 20 projects
  9. If you ever decide to go back to a normal job, being able to prove that companies valued your time so high will be a compelling reason to have a higher salary
  10. If you keep doubling your rate you can put all your cash into a room and swim through it Scrooge McDuck style

How to Double Your Rate

This is where fear typically sets in. I will admit that I too worry about that e-mail saying "guess what your gonna be paying me more," as my mind is filled with dreams of rioting clients, my competitors snatching them all up or a stack of unpaid invoices. However the truth is that yes, some of your clients may say "We can't afford it" but plenty of them will understand and be OK with it. The balance will most likely cause a balance in revenue if not increasing it.

But what type of post would this be if I didn't give you some hints and tips on how to smooth out the process? A shitty one, that's what type of post it would be.

Set Yourself Up For Success

One of my favorite authors Tim Ferris writes about the importance of making yourself irreplaceable in your job. There is no reason you shouldn't be doing this with your business or freelancing career as well. The truth is that if you do such high quality, critical, knock it out of the park type of work you can charge what ever you want. You will be added so much value to your clients they would be foolish not to pay your rates. This means you need to go above and beyond in every project you do, but it will also make it really easy to significantly hike up your project rates.

Do it Gradually

I don't mean over a period of five years, but there are several ways to let clients adjust to it. There are a few different approaches to this:

  • Give them a few months of grace before you increase your rate
  • Increase your rate by 25% per month for four months
  • First increase your rate for new clients, inform your existing ones they are getting a deal for awhile
  • First start by increasing your time estimates so they are used to paying a slightly higher rate (probably mildly dishonest, use with discretion).

Explain with Care

Rate increases go bad when they are not properly explained. If it comes off as a "stick it to you" sort of decision, guess what? Your clients will be pissed. However if you explain it in a way that it sounds like a benefit to them you can even end up in a situation where they would be ecstatic. What a concept, you can charge more and your clients will be excited about it! Here are some things to mention:

  • You want to focus on their company, this is a way to cover your expenses with out as many projects
  • You can now provide faster turn around
  • You can now provide more detailed work
  • You can now spend more time on learning the latest changes which will help their business improve
  • You can spend more time becoming efficient so the overall price per project doesn't have to change

It also doesn't hurt to explain your situation and how you are being fair to your own business as well, such as:

  • You have acquired experience
  • You have acquired skills
  • You have more expenses associated with proper service
  • Inflation has over time, reduced your effective rate

Pick Your Medium

There are a variety of different ways to deliver your message. The more personal the better, which means typically e-mail is out of the question. Instead you could consider the following:

  • Letter with a follow up phone call
  • Letter with a follow up meeting
  • Phone call
  • Meeting
  • Basket of flowers with a note
  • Basket of cheese with a note (who doesn't love cheese?)

Go Forth and Concour

I hope that most of the people reading this do actually increase their rates today. When I see surveys like this in which the average hourly rate is less than $50 it frustrates me. This clearly shows that people are undervaluing their time as well as creating a perception that skilled web professionals and agencies are not worth more than $25 - $50 an hour.

Thoughts, strategies, approaches are all welcome.

Leave a comment on Stylized Web Have some feedback? Leave a comment

23 Comments So Far

  1. By Gerard posted on February 19, 2010 at 11:27 pm

    I couldn’t agree with you more, the $500.00 for a website guys cheapen the whole industry. Of course most of these people are not professionals at all but rather amateur “templaters” who throw up crap sites in their spare time. My advice to them is that if you can’t get more than that for a site then you should get the hell out of the business and leave it to real professionals. Anyway, I decided to make that work for me though by demonstrating what I do that they can’t that makes me worth the $90.00 per hour or so that I bill. I make thousands for a website (versus hundreds) because I sell myself as the professional that I am and have been from the very first day I started my business. Clients love it when you know what the hell you’re talking about and will pay a premium for knowledge, professionalism and professional work.

  2. I am currently a senior and I especially like the point about how schools cannot quickly educate students on Web Development and Design because it is moving so quickly. I have spent one year teaching myself, as well as attending another college to learn Web Design and Development. All that effort put into learning the programs, I have many times felt that when I get out of school, I will need to consider how much my hourly wage should be…It was definitely not easy to get to where I am now, and even at this point, I still have so much to learn~ however, that comment has made me realize how much I could be worth because of the skills that I’ve learned and practiced over time..I didn’t think this way before because I just thought it was a given that Web Designers don’t make a lot of money..I just stuck with it because I enjoyed it so much. Thank you for opening my eyes and giving really great advice. Love the cheese.

  3. By Sophia posted on February 21, 2010 at 11:24 am

    I agree with Gerard. it makes no sense to me trying to compete with people who create those cheap websites.

    I am often trying to show web developers how much their hourly rate actually is when they take on a job for cheap and then spend the same amount of time and effort on it that they would on a site for twice the cost. it is just not worth it.

    I say that if a client wants a cheap price on a site, either give them equivalent to what they want to pay or let them find someone else who will create a site for them for that money.

  4. By SuperGateTraversal posted on February 21, 2010 at 12:41 pm

    I wish I could agree. I wish clients were more understanding of how this field works. But at present, I charge the same as I made at my last job. When people ask my why I cost so much, telling them I held the title of “web developer” for a known company and saying they paid me that much is usually far more convincing than anything else I could say. I usually charge $15/hr, not much for a guy who has a BA, but even then I usually lose potential clients who say I am too expensive. Charging more than $20 an hour? I’d never get clients…

  5. By Vaidy posted on February 21, 2010 at 2:07 pm

    These tips are awesome! Thanks

  6. Thanks for the tips. From where I come from, people in the industry get even less than $5.00 per hour, it’s almost humiliating. I mean, that doesn’t even cover the cost of just the most basic of our equipment. What about all that self-study that we did? At the rate that the industry is moving forward, I could only hope that people start to realize we’re worth a lot more than they think.

    I’m going to take up this challenge and follow these tips. I just hope not too many of my clients get snatched up by everyone else charging cheap.

  7. Glad to hear all of the positive responses, and shocked to hear that less than $5.00 an hour is the rate in some places.

    @SuperGateTraversal – The first problem is that you are don’t seem to believe you are worth more than $15/hour. I know of freelancers that charge $150/hr and have plenty of clients, so price is not what will cause you to get / no get clients.

    Secondly you probably need to look for higher quality clients. Those with established businesses will be used to spending adequate money on contractors or employees.

    @Jeff You will find success. The great thing about charging more is that people will associate that with higher quality and you actually need less work to make the same amount.

  8. @SuperGateTraversal — since you charge $15/hr, you’re dealing with $15/hr clients. Raising your rates is an instant client qualifier. By this I mean that those clients who view your appropriate rate as unreasonable will go elsewhere. If you properly value yourself, you will eventually find clients who see this as a sign of confidence and they will value you appropriately as well.

    I can’t stress enough the value of showing confidence through your rates. In fact, most good design buyers will toss out the lowest bid immediately because it projects a sense of lesser talent, skill and experience. Demonstrate that you value yourself and good clients will reciprocate.

    Stop being a victim and take charge of your clients and your work — show some confidence in yourself. Not all clients are created equal.

  9. I definitely agree with the sentiment behind this post. As a designer/developer working on my own I always think that my clients are getting a good deal out of me as I can offer same level of expertise as an expensive web design agency but they get a better more personal level of service, faster turnaround and at a cheaper cost. I put my prices up bit by bit and I never feel bad if I price myself out of a job. I’m a big fan of Tim Ferriss as well. Nice one, Ross.

  10. I agree that designers and developers are undervalued, and I think that charging more or being payed more would go towards addressing this. But then there are lots of professions that are undervalued also, like teaching, and nursing for instance.

  11. A few years ago I read a book about being a freelance software developer (can’t remember the name off-hand). One of the things they pointed out is if you charge less than a certain amount, you will be viewed as an amateur. Personally, when I do hourly work (rarely, by choice), I charge $150/hour and I get it. As far as project-based work goes, I am currently booked for the next four months and am in discussions for another project which could extend that for another two or three months.

    @Patrick is absolutely correct. If you charge $15/hour you will get $15/hour clients. They will nitpick every detail and end up costing you time and money in the long run. They have chosen you, not because you are skilled, but because you are low-priced. When someone is paying you $100/hour they are choosing you for your abilities and they are going to trust that you know what you are doing. I’ve found that those who pay premium price are actually much less difficult to please.

    My sales coach recommended one of two things if someone complains about your prices. First you can take the humorous route with something like “I know, I know. I’m really below the industry average for this area.” Even better, though, is to just look right back at them and shrug. The one time in the negotiation process that you cannot have compassion for them is when you are discussing money. Many people will just throw up a protest to see if they can get some concessions out of you.

    Stick by your confidence in your own value.

  12. Really it’s good article i’m suggest another one

    Thanks

  13. The point is that if you charge high prices, all your work will be taken by chinese / indian people.
    I understand that not all of us are ultra pro @ this job, for ex i do psd to xhtml/css and jquery work. Good work and proffessional, however i really cant charge more than 15$ else i wouldnt get any clients since indians and chinese work for 2-3$ an hour.

    I wish i could spend huge amount of time to learn new things, the problem is more time i run after clients and do 10-15$hour jobs the less time i have for learning new things ( i do need to spend some time w/ family per day… cant really work 16/24 7/7), me having less time to learn new things means i am progressing more slowly towards getting a higher rate thus it’s a never ending circle.

    And also between working for 10$/h and having stuff to eat this month and not earning anything, really food comes first.

  14. Great article – the tips are really awesome!

  15. Rate deflation? I glad to say I’m able to hold my prices and have increased the rate to customers I don’t want to deal with.

  16. throat cancer surgeries used to be looked at and all of these operations were made more frequently in the larynx was taken. Now for the disease in the early diagnosis can be caught earlier. Laser application, the problem of hoarseness can be treated and residents can go from the hospital the same day. These steps away from cigarettes and alcohol to absent oneselfsumomax
    need to focus.

  17. it was too long but your site is perfect
    im read it Completely

  18. wow amazing i love it….i need this very much..thanks for sharing this…more…

  19. Hi. I wanted to drop you a quick note to express my thanks. http://www.moncler-butikken.comI’ve been following your blog for a month or so and have picked up a ton of good information as well as enjoyed the way you’ve structured your site.

  20. Many people will just throw up a protest to see if they can get some concessions out of you.

  21. ..thanks for sharing this…more…

  22. Those who want to enter the world healthy and permanent form, which is a product of choice for African Mango, now in Turkey. Because people prefer to use a 100% herbal product that helps people to enter the African Mango form a single product.

  23. Thanks for an unbelievable put up, may read your particular others posts. Many thanks for your ideas on this, I felt somewhat strike by this text. Merit again! You make a good moment.

    Coral Springs dog walking

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>