How to Price Your Work as a Virtual Designer
Pricing your work: it’s one of the topics that small business owners often dread talking about. Price too high and you may miss out on a new client, go too low and you could leave money on the table.
Modeled via Chief Architect X11 | Rendered eDesign Tribe Platform
So, how should we price our work as virtual designers? There’s no perfect scientific formula, but there are a few guidelines to consider to make sure that you’re bringing in the hard-earned money that you deserve.
VALUE YOUR WORK, YOUR TIME, AND YOUR EXPERIENCE
The most important factor to remember when pricing your work is that YOU are valuable. Your time is valuable, your experience is valuable, your skills are valuable. Your clients are hiring YOU because you bring something to the table that they need — and they’re willing to pay for it.
We’ve all heard the stories of entrepreneurs bringing a number to the table that they can’t imagine will ever be accepted — and then it is. It can be scary throwing out your first quote, but if we all value our work appropriately and price competitively, it lifts up the entire industry.
Price to reflect your deliverables
In addition to time and experience, you’re best bet is to also really give yourself a critique of your current deliverables. What are those you may ask… well these would be your presentation materials. How well you present yourself, how buttoned up are your graphics, branding, and the overall impression you provide your potential or current clients will be the ultimate first impression. I’ll be going into this a little deeper in a future post, but I do recommend you watching the Virtual Brunch and Banter, hosted by myself, Jenna Gaidusek of Jenna Gaidusek Designs, eDesign Tribe, and eDesign U; and Sarah Durnez owner of Loft Design and Sketchup for Renders.
PRICING BY PROJECT V. PRICING BY THE HOUR
One of the questions you’ll see again and again in the virtual design world is, “Should I price by the project or the hour?” It’s a tricky question and you may have seen some version of a quote floating around the internet that says, clients aren’t paying for the hours worked, they’re paying for the years of experience.
It’s true — a project that took you 5 hours in your first year of business could take you 2 hours now — and you should be paid more given your increased expertise level. That’s the argument for pricing by the project.
Modeled via Chief Architect X11 | Rendered eDesign Tribe Platform
On the other hand, projects regularly run longer than expected — and you want to be compensated for the extra work. That’s a good reason to price by the hour.
It comes down to what you and your clients are most comfortable with. When you work for yourself, you do have the luxury of adjusting your pricing depending on a particular project or client. And, while you may want to have a standard system for ease of accounting, pricing is something that can be ever-evolving with your business.
WHEN IT COMES TO THE NUMBER: WORK BACKWARDS
Regardless of whether you’re pricing by the project, by the hour, by the client, or whatever criteria you decide on, you’ll eventually need to arrive at a number. While there are no hard and fast rules to the number you set, one easy formula is to work backward from your desired annual salary.
Let’s say you want to bring in X dollars per year to live comfortably and you plan on billing hourly. In that year, you plan on working 35 hours a week. 35 x 52 = 1,820. Divide X by 1,820 and that’s almost the number you’ll need to charge hourly. I say almost because you’ll also want to factor in additional padding for taxes, business expenses, non-billable hours, and, hopefully, some vacation time.
How much extra should you factor in? That’s up to you, but 30-40% additional income is a good place to start.
WORKING VIRTUALLY MEANS YOU’RE NOT LIMITED BY YOUR LOCAL MARKET
For those of you in a lower cost-of-living region, working virtually brings it with it a major pricing advantage. You could be working with clients in San Francisco, New York, and other high-dollar areas — and you can charge what they’d expect from someone local to them, even though you live hundreds of miles away.
As a virtual designer, you’re not limited by the expectations of your local market — the sky’s the limit when it comes to pricing!