Determining Your Web Site Design Company Rates

A Web Hosting Article Contributed by Frances Rhea

How to Figure Your Web Site Design Company Rates

Making your Web site design company rates competitive is important. Before you can charge a client, you must know how to figure out what to charge for a project. There are several ways. The Graphic Artist Guild's Handbook of Pricing and Ethical Guidelines (PEG) can help. Another way is to charge the 'going rate'. You can also guess at what the client is willing to pay and charge that. Which is best?

The Guild's PEG is a good source but may be a bit too general. The 'going rate' is is not a good solution. Guessing what you think the client will pay is stupid. The idea is to figure out whether you can make any money on the project.

Know the Costs to Your Web Site Design Company

Figure out your bottomline. That is what price you need to charge to really make money. Go below this and you can sell yourself out of business. Go too high and no one will hire you.

The place to start your calculation is you. What is your target salary? If you have employees, add up all the salaries. Add other costs like taxes, FICA, insurance, etc.

Now you need to determine how many billable hours there are in a year. For an individual it is usually about 1,428 per year. Now divide your billable hours into the salary you want. This will give you the amount you must charge to get your salary and any associated costs (such as vacation, sick time, and hours for administrative stuff).

The next step is adding up your overhead. You have to charge for overhead otherwise how will you ever pay your bills? Divide the overhead by the salary. Take that figure and add it to the base rate calculated earlier.

By using this method, you will not only know what you need to charge per hour, you will know how many hours you need to work to make that goal.

What about a Profit for Your Web Site Design Company?

Oh, yeah! We forgot to figure in profit! We need to make a profit.

The amount of profit you need is up to you but as a general rule, do not go below 10%. Twenty percent is better. After you establish your base rate, add your profit amount to the top. Your final rate, to recover salaries, overhead and a healthy profit, is then determined. Round this amount up slightly just to sound better and add a mistake factor.

This final rate is the number you use to do estimating. It's the fee you can't afford to go below.

If you can't find a calculator, there is a spreadsheet at http://www.tortorelladesign.com/calc that will do all the figuring for you. You can find it in either Mac or Windows versions.

Now you are armed with all you need to determine the rates that your Web Site Design Company will need to charge.