{"id":80939,"date":"2021-12-09T10:27:13","date_gmt":"2021-12-09T10:27:13","guid":{"rendered":"https:\/\/elementor.com\/blog\/?p=80939"},"modified":"2021-12-09T10:27:13","modified_gmt":"2021-12-09T10:27:13","slug":"how-increase-project-pricing","status":"publish","type":"post","link":"https:\/\/elementor.com\/blog\/how-increase-project-pricing\/","title":{"rendered":"How I Increased My Project Pricing From $3K to $20K+ Using Value-Based Pricing"},"content":{"rendered":"\n

The year was 2009, and I\u2019d been freelancing for just over three years, working part-time to support my growing website development side-gig business, living in Scotland. My website business had grown steadily, and so had my skills and experience.<\/p>\n\n\n\n

As most developers do, I had created my own simple content management system (CMS<\/a>) where clients could log in and create their web page content, however, I struggled to keep up with the feature demands from clients and soon was on the lookout for an \u201coff-the-shelf\u201d application.<\/p>\n\n\n\n

I reviewed several CMS\u2019s available at the time: Drupal, Joomla, WordPress, Silverstripe, ExpressionEngine, Magento<\/a>, and Django. I ended up choosing Joomla as my go-to CMS and WordPress for a few smaller sites.<\/p>\n\n\n\n

My clients were mainly local solo businesses, gardeners, painters, electricians, plumbers, personal trainers, artists, photographers, and the like. I found most of my early clients through friends and family or by word-of-mouth from completed projects.<\/p>\n\n\n\n

It soon became clear that the current version of Joomla had some severe user interface (UI) and user experience (UX) issues which made training very difficult.<\/p>\n\n\n\n

Towards the end of my third year, my biggest client was a publishing company that wanted three websites to complement their monthly glossy publications. It took me longer to train the staff how to use Joomla than it took me to create the three websites in the first place!<\/p>\n\n\n\n

At the same time, the clients to whom I delivered a WordPress website<\/a> seemed to create and update their website intuitively with minimal training. I dropped Joomla and decided to use WordPress for future projects exclusively.<\/p>\n\n\n\n

During the first three years, I raised my prices accordingly, starting at $500, then $750, $999, $1,200, and finally $2,500 in 2009.<\/p>\n\n\n\n

My price increases were in line with my competitors and based on my time to create a customer\u2019s website. However, over the next couple of years, I struggled to get customer acceptance on projects I priced over $3,000.<\/p>\n\n\n\n

Website feature requests were increasing, as was integration with social media sites. I stepped into the ecommerce world, creating simple online shops with the WordPress plugins that existed before WooCommerce<\/a>.<\/p>\n\n\n\n

I was spending longer creating websites, so I wanted to increase my pricing accordingly to reflect that. However, my $3k+ proposals were being rejected.<\/p>\n\n\n\n

There seemed to be a $3k project ceiling that I could not break through, but I knew others were charging $10k+ and I was determined to find out how.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Stuck In A Pricing Rut!<\/h2>\n\n\n\n

When I first started out creating websites for customers, I didn\u2019t give much thought to pricing. Of course, I wanted to make a profit. After all, a business that doesn\u2019t make money is just an expensive hobby. <\/p>\n\n\n\n

I had already decided I didn\u2019t want to position myself at the bottom of the market nor charge a premium and price myself out of the industry.<\/p>\n\n\n\n

The cheeky \u201cfake\u201d quotes I had sent my competitors from a temporary Hotmail account had confirmed their pricing strategy was based on how long it would take them to create a website for their customers. I received quotes for websites with 5, 10, or 10+ pages, priced accordingly higher the more required pages.<\/p>\n\n\n\n

This pricing strategy is \u201ccalled cost-based pricing\u201d, or \u201ccost-plus pricing\u201d, not that I knew what that meant back then. Still, the pricing strategy was familiar to me and others, such as accountants, lawyers, and similar professionals.<\/p>\n\n\n\n

For the websites I was creating, cost-based pricing was working very well. As websites became more complicated, I increased my prices towards $2k, thinking that the price-point justified my increased development effort.<\/p>\n\n\n\n

However, as I would soon find out, you can only stretch cost-based pricing so far.<\/p>\n\n\n\n

My average project completion time was six weeks from project conception to delivery, and this time had pretty much stayed constant from when I had started creating websites for clients. The website requirements were getting more complicated, but I became faster and more adept at making them with WordPress.<\/p>\n\n\n\n

My most significant accepted project price at that time was $2,500 for a 6-week project, so for a 37-hour working week, the project worked out about $11 per hour, which, if the client were hiring me at that price-point, would work out to be an annual salary of $21k.<\/p>\n\n\n\n

The client was a legal professional and was pretty desperate to get a website launched in time for an expensive TV and radio ad campaign they had already paid. They had already been burned by their current developer, who had disappeared.<\/p>\n\n\n\n

For the client, my price was affordable because I had convinced them I could deliver what they needed when they needed it, and that was a good return of investment (ROI) for my client, given their current situation.<\/p>\n\n\n\n

The Problem With Cost-based Pricing<\/h2>\n\n\n\n

When I started pitching $3k+ proposals for other clients, I immediately started to get knocked back. Those clients were doing the same math, but their situation was different. They had no urgency; therefore, their perceived ROI was lower. <\/p>\n\n\n\n

A $3k project over six weeks costs $14 per hour or an annual salary of $27,000. In 2009, that salary was comparable with a mid-level software engineer. Bump the project price up to $5k, and your annual salary works out to be around $43k, more than a senior-level software engineer would expect to make in the UK at that time.<\/p>\n\n\n\n

Cost-based pricing does not scale because the only metric the client can measure ROI is on your <\/em><\/strong>time.<\/p>\n\n\n\n

The Classic Freelancer Pricing Strategy<\/h2>\n\n\n\n

Most freelancers set an expectation of revenue each year, based on the cost of living and the lifestyle they would like to live.<\/p>\n\n\n\n

Let\u2019s set a revenue expectation of $100,000. <\/p>\n\n\n\n

Consider a situation where you have two clients who want an e-commerce website with comparable complexity and features. Both clients currently sell their products in brick-and-mortar stores and want to grab a slice of the online market.<\/p>\n\n\n\n

Client A is a startup company with an angel investor and has been selling products in their single store for three months with monthly sales of $10,000. Client B is a well-known brand and has sold products in their stores for over ten years with monthly sales of $300,000.<\/p>\n\n\n\n

With cost-based pricing, you will be charging by the hour based on how long it will take you to develop an e-commerce website. As the requirements from both clients are pretty much the same, you price them similarly:<\/p>\n\n\n\n