The cost price of your development time

GP

Hey all

I've been quite amazed recently at the "hugely" varying prices in development costs. Ignorein things such as hosting and omaina name re.g etc. which ra epretty close wherevrr you go, I was wondering how some of you calculate your cost of sales on a web development job.

If for example one charges 800 or whatever for x sized website, is that figure just plucked out of the sky or is there actually a formula?


gp

mneylon

Professionals calculate prices based on how long they expect to spend on a project and how much they will need to make from that time.
Fly by night amateurs seem to just throw prices about.

kstanl

GP wrote:

Hey all

I've been quite amazed recently at the "hugely" varying prices in development costs. Ignorein things such as hosting and omaina name re.g etc. which ra epretty close wherevrr you go, I was wondering how some of you calculate your cost of sales on a web development job.

If for example one charges 800 or whatever for x sized website, is that figure just plucked out of the sky or is there actually a formula?


gp

There's no real formula to be perfectly honest. It's really a matter of educating yourself as to the quality of product and service that you require and whether you will be getting value for money from your vendor. Does your site need to be accessible to users with differing abilities? Will it be built using Web standards (if not, it should be)? How much and what level of actionscripting is required? Do you need a system to manage the content yourself and how powerful will this be? Who is working on your site - are they experienced and do they have a strong portfolio of previous work that impresses you or are they just amateurs chancing their arm?

I work full time for an agency but on the odd occassion that I do freelance work, I charge around €60 per hour (€450 per day). This could include anything from design (outsourced to my designer friend) to XHTML/CSS markup, Flash and RIA development, development of bespoke content management tools, etc. Having said that, you'll find people a lot cheaper - even some who will work for next to nothing. It really depends on the quality you're looking for but remember: the cheap option usually works out more expensive in the end!

For anything other than a simple brochure site or static site, I'd generally recommend making sure that you employ the services of a designer AND a developer. There are exceptions to the rule of course, and I wouldn't want to stand on anyone's toes on the boards who both design AND develop. However, from my experience, you'll get best value if you have specialists in both disciplines pitching in on the job and you stand less chance of getting a 'Jack of all Trades' cowboy type.

The Corinthian

As has been suggested you look at your rate and apply it to everything you do in the course of that project - from scoping and workshops, to prototype and actual development and finally onto deployment, testing and documentation.

If they want an estimate you give them one based upon an agreed list of deliverables (defined during the scoping process). If they want a set price (not recommended if you’re inexperienced) you do the same and add a margin.

Bare in mind that most of your time will actually be used up not developing or designing but waiting on materials from the client, changing things around for them (not change requests - that should be dealt separately) and generally hand holding. Factoring the level of hassle a client will be is essential in you calculations (you could be chasing them for months to get paid, for example).

And this is before, as a business rather than a nixer, you factor in your overheads, admin, marketing and presales.

Conversely, if you base your quote on development time alone you'll essentially end up working for free 70% of the time. It’s scary to watch those bottomless pit projects.

GP

kstanl wrote:

I work full time for an agency but on the odd occassion that I do freelance work, I charge around €60 per hour (€450 per day).

thanks everyone for your ideas. I can fully grasp how a company can work out a cost price (labour / rent etc) but as per your example kstanl how did you get to the figure of €60 / hour. Does that mean then that taking a rough markup of 30%, 1 of your hours in the day costs you 45 euro?

I assume you take your monthly fixed costs / divide by days / hours etc ?


I would love to do some comparison if I may ask this question here. I recently got a quote for a 5 page static website with roughly 5 images. Would you in the profession be able to give me a rough idea of what this would cost ?

I will pass on the price I got, to you all afterwards if you like.

Of course I got all the sales speak of "includes contact form", "custom design" etc etc.

thanks again

kstanl

GP wrote:

thanks everyone for your ideas. I can fully grasp how a company can work out a cost price (labour / rent etc) but as per your example kstanl how did you get to the figure of €60 / hour. Does that mean then that taking a rough markup of 30%, 1 of your hours in the day costs you 45 euro?

To be honest GP, it's a relatively arbitrary figure. Generally I'll look at the amount of work to be done in details and come up with a time estimate. I can afford to work this way as I only charge this rate for nixers - as I said, I have a full-time job. Generally I'll break the job down into number of hours required, multiply by 60 and come up with a final figure. Sometimes it's too much, sometimes clients agree. It's about half of what some of the larger agencies charge so I feel it's fair enough (seeing as you're getting the same quality essentially) and, as I said, it's not really work that I need as such so I wouldn't be inclined to lower my costs. The freelance market could be a lot more competitive though!

Figment

I wrote a rough guide to this a couple of years back.
http://www.dgi.ie/index.php?id=2

GP

Figment wrote:

I wrote a rough guide to this a couple of years back.
http://www.dgi.ie/index.php?id=2

cool. I will take a look.

rsynnott

blacknight wrote:

Fly by night amateurs seem to just throw prices about.

*waves*

dahamsta

rsynnott wrote:

*waves*

I was going to do that yesterday, and I thought: No, that's way too immature.

Seth Brundle

GP wrote:

kstanl how did you get to the figure of €60 / hour. Does that mean then that taking a rough markup of 30%, 1 of your hours in the day costs you 45 euro?

I assume you take your monthly fixed costs / divide by days / hours etc ?

The hourly rate cannot just be plucked from the air though of a project cannot just be based on x hours @ y rate/ph.
I may do the project (hypothetically) twice as quickly as kstan who does it twice as quickly as yourself.
However, if you charged the same rate as kstan then your client would end up paying twice as much. Similarly, If I charged the same rate per hour as kstan I would under price myself.
In other words, what is your time worth realistically?

You have to figure out how much you need per week. Then figure out how many hours you are likely to be working [does boards surfing time get included here? ].
Once you have these two, you can work out your hourly rate but you also need to check if it is still competitive.

[All this may have been already said but anyhow!]

Tezcat

kstanl wrote:

However, from my experience, you'll get best value if you have specialists in both disciplines pitching in on the job and you stand less chance of getting a 'Jack of all Trades' cowboy type.

I agree with you on this 100%, being a designer and I believe strong in the ways of flash I love to work on front ends GUIs and portfolio type sites myself, anything bigger I hook up with a colleague of mine who works on the back end stuff, together we produce a better result, imo, I hate the thought of.
a. Shambling something together and not delivering the promised article or somehting i believe to be a complete package.
b. Trying to learn something new to meet a new project's needs, adding pressure to the project and making your design suffer.

However, of late I seem to be hitting a brick wall. People want a top class website for next to nothing, go back a couple of years and people were paying through the nose, many thousands, for sub standard crap, now they want a top class site for a 10th of the price... You get what you pay for, they also would prefer to go with one stop shops, someone who is going to provide the lot, which ads pressure when they see, "Get a 6 page website a years hosting and domain registration for €600!! FTW" or some such. when they have this on one hand and you charging "professional rates" for a quality job on the other. Yes it's handy to have them all offered under the one company, but last time I bought a car, it wasnt my local petrol station that I bought it from, and when we bought a house this year, AIB didnt provide our electricity gas and phone line as well as the mortgage.

Back to my point, I only took on web design as a self employed venture recently, I have was working in company situations until then, and it's tough, I find myself pitching much lower than I'd like, and my criterea is nolonger "what is my time worth, overheads etc" but how much myself and my partner need to pay the mortgage, I'm hoping once I get established it will pick up and it isn't the state of the market. needless to say, I work long hours still trying to produce good work, for way less than it is worth, thats only my opinion tho.

I'd be happy to get your daly rate for a week rate net tbh.

The Corinthian

Tezcat wrote:

However, of late I seem to be hitting a brick wall. People want a top class website for next to nothing, go back a couple of years and people were paying through the nose, many thousands, for sub standard crap, now they want a top class site for a 10th of the price...

That’s largely the fault of the industry itself. There was a glut in Web development firms about in 2000 when the bubble burst. Most of this was fuelled by Dotcom start-ups, which dried up as the VC’s got spooked with the effective meltdown on NASDAQ. To stem the burn rates that many of these firms had, they began discounting, often offering to do Web sites at rates that were simply not profitable - anything to get the cash flow necessary to pay everyone’s salaries another month.

When the economy improved, the surviving Web development firms found that the price levels were not as elastic as they’d hoped, and clients had come to expect the best for next to nothing.

I'd be happy to get your daly rate for a week rate net tbh.

If you can come across as a professional and not a tradesman you can charge what you want. Why do you think marketing reinvented itself as a profession?

kstanl

The Corinthian wrote:

Why do you think marketing reinvented itself as a profession?

Tezcat

The Corinthian wrote:

If you can come across as a professional and not a tradesman you can charge what you want. Why do you think marketing reinvented itself as a profession?

You are 100% correct, I am a poor self marketer, and as u say it is a profession, the clever thing to do would be to hire a marketing firm, its their job to market me, right now that an overhead I can't even consider.

I'm not being smart but, you maybe right, I may be coming across as a tradesman rather than a professional, this is not to say my work ethics and practices are not very professional, any pointers on how to come across less as a tradesman?

Also should a web designer be a good marketer? As this is what a lot of companies are doing when they set a site up, marketing themselves on the web? If yes then this is something I really need to wok on.

The Corinthian

Tezcat wrote:

Also should a web designer be a good marketer? As this is what a lot of companies are doing when they set a site up, marketing themselves on the web? If yes then this is something I really need to wok on.

You misunderstood my example. I wasn’t suggesting that it was a simple question of employing a marketing strategy; I merely cited marketing as an example of an industry that re-branded itself as a profession and so was able to charge a lot more money for their time.

If you’re a tradesman, then you’re easily replicable. Indeed, a couple of school kids can replace you at a fraction of the price. If, on the other hand, you’re in a profession, then you can’t be replaced that easily and as a result you can demand higher rates - not least of all because people believe that professionals can demand higher rates in the first place.

Unfortunately getting Web ‘professionals’ to actually become a profession is akin to herding cats, in my experience. However, in the mean time, if you at least look and behave like a professional that will push up what you can demand. Behave and dress in the way that a consultant from IBM, KPMG or Accenture would and you’ll already be able to add another €100 to your daily rate without doing anything really different.

Yes, people are that shallow.

rsynnott

This sort of thing is exactly why I don't myself solicit business; that is I tend to do backend stuff for others only (Another reason for this, of course, is that I am very, very good at backend stuff, while my visual design skills are approximately those of a dead bishop. Actually, for preference, I prefer to steer clear of website stuff entirely, but there is a lot of it about compared to everything else).

evilhomer

The Corinthian wrote:

However, in the mean time, if you at least look and behave like a professional that will push up what you can demand. Behave and dress in the way that a consultant from IBM, KPMG or Accenture would and you’ll already be able to add another €100 to your daily rate without doing anything really different.

Another point about looking professional is less people are going to try to screw you over. If they think that you will take no sh1t then they are less likely to try and pull a "fast one".

Looking the part will always get you more money from larger companies and reassure smaller ones.

The Corinthian wrote:

Yes, people are that shallow.

I don't think that its a shallow thing for most people. They just like to believe that because you are dressed better and act better, you are better at your job. It's not shallow they are just blinded by a flashy suit and a nice logo.

rsynnott

evilhomer wrote:

I don't think that its a shallow thing for most people. They just like to believe that because you are dressed better and act better, you are better at your job. It's not shallow they are just blinded by a flashy suit and a nice logo.

So, erm, they're not shallow, they're just stupid? Hmm.

evilhomer

rsynnott wrote:

So, erm, they're not shallow, they're just stupid? Hmm.

I would say that most business people out there would be more likely to hire a nicely dressed individual with the right manner about them, then some guy who turns up in a pair of jeans and a t-shirt.
Even if the guy in the Jeans and T-Shirt is actually better at their job.

It's more to do with social perception then stupidity.

Tezcat

/agreed, (sry I did miss your point completely there. )

Whilst I don't have a tin of fruit that fits anymore, I always wear good shoes slacks a shirt and tie to a meeting, i agree completely about being well presented, it goes along way, however you can be well assured that the package guys are just as well togged out.

Anyhow, to get some o' those meetings.