If you are just starting out as a graphic designer or web developer, you might find it difficult to decide on what rates to charge; as you gain more experience, this is something that you hardly ever think of and you would find yourself pricing your work just right, so that you get enough projects without underselling yourself.

When deciding on your rates, one of the first factors that you should consider is your level of expertise – if you have years of experience as a web developer or designer, and are now moving to the challenging world of freelancing, you should be comfortable with taking more demanding projects, delivering superb quality work, and charging higher rates respectively. If you have little experience, then you might want to start with lower rates and gradually raise them as you build knowledge and skills. In either case, you do not have offer the lowest prices – you should try selling your services based on your strong points rather than trying to compete with the cheapest offers out there. You could still charge competitive prices for some of the services that you offer if you wish to build a new client base quickly – e.g., you could easily offer cheap logo designs and once your clients are satisfied with your work, some of them would start placing larger orders for banners or complete websites as well. If you are a web developer, you can use similar tactics too, but this in both cases this is a rather short-term strategy and not something that you would want to do when your services are sought after.

One of the common mistakes that new designers and developers make is not to take into account the time that is needed to communicate with potential customers. You would have to speak on the phone, exchange emails, or meet face-to-face quite a few potential customers and not all of these contacts would result in actual orders; often, your clients would have little to no knowledge of design or developing work and you might find yourself discussing basic concepts with them extensively. This is a non-productive time, which you should take into account when setting up your rates and prices.

The project specifics are important – do not rush into offering your best rates before finding out more about the project. It might be similar to what you have done many times in the past, but some projects would require more work than others would. If you have to meet a tight deadline, then you would find yourself working long hours and weekends and you would definitely want to be compensated for your time. If the project requires long-term maintenance, then this should be included in the price too, and this is something that you would want to discuss with your clients, especially if you are a developer. Many clients expect you to create their website and might simply assume that you would take care of hosting, maintenance, and other long-term arrangements.

For many of your projects, you would have to either set hourly rates or charge a flat fee and each of these models has its pros and cons. While charging an hourly fee gives you a comfortable insurance that you would be paid for all the time that you spend working, many clients would only settle for a flat project fee since it might be difficult for them to estimate the total cost of the project. Charging on per project basis carries the risks of the work taking longer than expected, but on the other hand, you are guaranteed to be paid the agreed amount even if you finish the project quickly.

Always keep an eye on the big picture – it is generally wiser to start working as a freelancing designer or developer only after you have a few steady clients or when you have adequate savings to live comfortably for at least six months. Then, you could spend the first few months determining what works and what does not, finding your niche, and taking your small business off the ground. However, as the time passes, you need to look at the bigger picture – calculate how much you are earning per month and see if this translates to an annual salary that you are comfortable with. Setting up your target annual salary should be done after considering your fixed and variable monthly expenses and if you find yourself not being able to cover your rent, mortgage, car payments, pension allocation, food, utilities, and other expenses, then you would need to re-think your strategy. Even though you could work from your home office, you would also incur business expenses such as telephone bills, paying for office supplies, legal and accounting fees, and licenses.

You should also charge according to the size of your business and use this size to your own advantage. If you run a rather large design or developing firm, then you have a leverage that enables you to take larger projects and often, charge higher rates. On the other hand, when you work on your own, you are likely to have fewer fixed expenses and are far more flexible, which enables you to take various types of projects and work comfortably with lower rates.

After you have decided on a rate that works well for you, you still have to keep an eye on the competition. If finding new projects is difficult and your skills and quality of work are at par, then your prices might be too high. Stay informed on the current rates that your competitor charge, speak to fellow webmasters, and do not be afraid to ask potential clients what made them choose someone else.

No matter how carefully you prepare your pricing strategy, you would always make a few mistakes down the road. You might take on a project that is taking far longer than expected to complete and you might find yourself underselling yourself every now and then, but it is important to stay focused on your long-term objectives. As long as you offer excellent service at a fair price, you are likely to succeed and prosper even in today’s challenging business environment.