I have no hard-and-fast rules about pricing freelance jobs, other than trying to figure out what the client wants. In my experience, most clients prefer project pricing to hourly rates, assuming the same overall cost. At the same time, there are subtleties in how you convey a project estimate that can make the difference between getting the job and having your prospective client seek out another freelancer. So let's break things down a bit.
The most basic type of project estimate is the firm quote. You run the numbers based on the project scope and tell the prospect what it's going to cost. It's easy to convey and the client will understand the budget impact. The disadvantage, and it's a major one, is that you've committed to a target that can only be negotiated down.
The second variation is the not-to-exceed estimate. It's similar to the firm quote, but you price a little higher to give yourself leeway, telling clients the most that a project could cost them, while implying that it could come in lower if the process goes smoothly. Psychologically, that means you're less likely to have to negotiate and you've got more leverage if you need it.
The third, an estimated range, takes that principle one step further: a detailed line-item quote that says a project will cost between $X and $Y, and will not exceed $Y. That approach to project estimates has several key benefits:
What does that look like in practice? Rather than quoting a flat fee of $2,000, you give an estimated range of, say, $1,750 to $2,250. When the project is complete and the final tally comes in at $2,100, you’ve made $100 more than you would have with your original flat-fee calculation. Woohoo! Meanwhile, the client’s perception is that you’ve come in $150 under their budget, so they're happy.
Successful pricing isn't just about the money, it's also a matter of persuasion. Using an estimated range can give you an advantage on the front-end negotiation as well as your back-end profitability.
Jake Poinier blogs regularly about freelance topics at DoctorFreelance.com and owns Phoenix-based Boomvang Creative Group and More Cowbell Books. He has written several books on the business of freelancing, including The Science, Art and Voodoo of Freelance Pricing and Getting Paid, and he presented on the topics of "Persuasive Pricing" and "Beyond the Basics" at the 2017 ACES National Conference.
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