A handy formula to decide what to charge a client

Cafe Society
1

I’ve had a couple of students, a Mac guru’s pal in this thread, and myself dealing with this question lately. And it’s easy to feel lost when someone asks you “So, how much would you charge me for this?”

My first reaction is “Golly, ma’m, I’d like fi’ty-leven bajillion and a Snickers.” And my second is “Golly, I’d love to do this – I’d do it for just the Snickers.” But I’ve found that neither getting cocky or getting too humble is good for your bottom line.

Now, I’ve had to estimate a number of different sorts of jobs: graphic design, handmade books, photography, design, carpentry, even fine art (“What would a series of large paintings for our new offices run?”).

So, here’s what I’ve come up with:

**“SHOULD hours” X “Fudge Factor” X “Base Rate” = MINIMUM QUOTE **

In English: A very helpful guideline is to figure out how many hours the job’ll take (then double it for fine-tuning and client changes … and, if there isn’t clear direction or it’s an otherwise problem client, TRIPLE it).

Then decide on a minimum, a Base Rate. For instance, if you could be making $20/hour cleaning pools with your brother-in-law instead, then maybe that’s your Base Rate. if you’d feel taken advantage of if you went below $30/hour, then that’s your firm bottom end. You can ask for twice that, but be sure to use the phrase “negotiable”.

So when someone asks you for ANYthing, you can say “Let me crunch some numbers, and I’ll get you a written estimate.” (Don’t EVER just spout off a number, even to a friend). Then do some research and self-assessment to figure out how long it’ll take, including brainstorming, organizing, errands, and client meetings.

Now, my estimate often shows a “discount”. I’ll total the hours, then put in the “standard” rate (say, $75/hour) and then I cross it out and make a note that I’ll do the job for $50/hr (“Discount for Interesting Client” or “Fun Job Rate”).

I appreciate honesty between artists and clients. I’ve said “Well, industry standard would be $1800-2000, but because this is a cool, creative assignment, and I like the people involved, I could go as low as $1500. Would that be doable? I can be flexible, but I shouldn’t go below 1500.” I’ve communicated that I’d be glad to do it for less, but I’d rather not. Knowing, in the back of my mind, that my absolute minimum would be $1200.

But hopefully you can find out what they can afford. As an Art Director (ad agency) I’ve also hired a lot of freelancers, and I never minded when they’d ask me what the budget would allow. If they’re talented, professional AND NICE, then I’m trying to pay them as much as I can, and we’re both on the same side.

Does this help anybody? Does anyone have a better or different method? Anyone been burned, or made out like a bandit and gotten that fi’ty-leven bajillion (and maybe even a Snickers)?

2

Works for me, I estimate my charges for programming like that. My fudge factor isn’t called that - in software - it is almost guaranteed that your first time estimate is half of what it will actually take. So I double the hours and add in any time I’ve already put in researching the project.

3

So, lexi, you’re saying that in the software world, things are even MORE out-of-control… hmmm, does Dilbert work in the next cubicle?

Much sympathy, though it sounds like you’ve come to recognize the inherent loosy-goosyness.

4

Depends on the job and the overhead.

A shop is $60 hr regardless of what the job is, 1 hour minimum relative.
You try not to do a bunch of little jobs for different people, even if you can make $20 every ten min.
You would rather want to have a few customers with several jobs lined up and add em all up over time. So the work can be spread out.

Time+Mateirials x2.5 or 125%'ish over physical cost is another method.
Computer Repair isn’t quite the same, replace drive or vid card ect…you have to contend with charge-offs/returns and otherwise stupid shit that creeps onto the bottom line, so they tend to use 250% over cost to diminish it.

Programming is a different monster, unless you know exactly what your gonna be doing and have a real good idea of time frame, it’s best to keep that open ended with a good guestimate of $20-$30 per hour flat rate, depending on skill level.

So, if you have 30 days to complete a project it’s $3200 @ $20 per 40 hr.wk., of course you’ll probably work at home too, but that shouldn’t affect much.
You don’t have any overhead but time in this case.

TECH SUPPORT should be **extra **after your done and they are all set up.
They can an WILL eat up a lot of time after the fact with this. You should write a separate invoice for support.

5

Nope, no Dilberts, but in the programming world, it is more or less an axiom that how ever long you think it is going to take, that you should double it. There are whole books dedicated to managing software projects and doubling the time is often an entire chapter.

Sometimes you are pleasantly surprised and so it the client that the job only took, X hours, instead of X times 2, but most of the time you thank your lucky stars that you have the additional time built in, and sometimes you go over your doubled estimate.

The thing is without the time to thoroughly research the problem, you are making a guess, albeit with experience, it is an educated guess. You can not gauge the complexity of a problem until you fully explore the problem, and the exploration of the problem is an in depth process that goes hand and hand with the development. Sometimes you are working along, and have no issues, until you hit a certain point, when you realize that you’ve underestimated the complexity of a certain feature. The multiple processes of developing a program are not linear steps, and are often blended together into the development phase no matter how well you scope out a problem, and how well you plan. Even the best programmers will tell you, often, when you are programming, there will be a point when you are developing where you must take a step back, and rethink a portion of your project.

I have a full time job currently, and in the office world, the project manager often adds his own fudge factor to your doubled time for scope creep, QA (testing for bugs & usability) as well to account for meetings, communication and other non-coding aspects of a project before a quote goes off to a client. When I contract, I do sub-contracting, so other than being given requirements for the programs, I am left alone, but if I was to both manage, and develop a project I think I would estimate my time with meetings, email, and other communication as well as scope creep - It would probably be about 3 or 4 times the hours I initially guess.

6

Great suggestions.

A fellow designer pointed me toward:
http://designpepper.com/2009/01/30/the-ultimate-list-of-freelancing-resources-51-75/

I just spent a little too much time exploring the articles referenced on the site. The “Calculating Hours - the Client Factors” link was very appropriate.

It even had a chart! I love Left-Braining The Messy Right-Brained Stuff.

I’m going to pass that (and Nathan’s Handy Rule*) along to my students and Designer friends.

*Nathan: “I thought the time-tested formula was to give the client your quote and then slap them in the face. If they are more upset at the latter, then you didn’t price high enough.”