7 Tips for Giving Effective Design Project Quotes

Aug 19 2010 by Mathew Carpenter | 31 Comments

7 Tips for Giving Effective Design Project Quotes

It’s a familiar situation for any freelancer — you open your email inbox, scan through the day’s spam and auto-responder messages, and come across a request for proposal.

It’s the same as the other design requests, aside from one small detail — instead of the standard "we can pay [this much]" message, there’s a line at the end asking how much you think the project will cost.

Being asked to name your own price might seem like a miracle situation, but it’s rarely a relaxing experience for freelance designers, particularly those without a solid and secure price structure for their services.

That one request can end up triggering anxiety and worry, as even the most skilled designer begins to wonder just how much their work time is really worth.

I’ve been in that situation before. We’ve all been in that situation before. It’s not easy, and it’s not the type of situation you want to find yourself in without solid pricing guidelines.

These seven tips can help you give an effective, accurate, and clear project quote that’s neither a sales killer nor a risk to your freelance longevity. Give ‘em a shot.

1. Always Remember How Much Your Time is Worth

There are two ways to price projects: by time, and by output. Both are frequently used by freelance designers and other service workers, although the two are typically employed for different reasons.

Quoting by time (as in an hourly rate) is the preferred option for projects without a clear time requirement and level of scope. Large projects are often impossibly complex and difficult to provide a set price for — what may look simple in an email can often end up being a Herculean effort requiring several weeks of dedicated work.

Prevent your time from being undervalued and give a quote that accounts for your hourly rate, not a per-project quote that eliminates any time-based security.

On the other hand, small projects and one-off requests might require very little time and be largely process dependent. Prevent minor projects and thankless tasks from becoming a cost drain by using a pricing structure that’s built around output. With clear requirements and no need for revisions, a project-based pricing structure can end up saving time for you and stress for your clients.

2. Consider Long-Term Income Potential and Return Business

Retailers have perfected the loss leader concept — the art of luring buyers into stores with a discount product, special service, or sale in the hopes that buyers will purchase other things in the store at regular price. It’s a classic marketing method that’s rarely used by service businesses, perhaps due to the amount of wasted time it can attract. Thanks to relative anonymity, online loss leaders can be a major time-related risk for designers.

But they’re also a risk that’s worth taking, provided you’re reasonably certain of a project’s potential for long-term growth and development. If a major prospective client approaches you with a one-time request for a project, treat it like the introduction to a major project and you could end up winning their business.

Quote with long-term potential in mind.

3. Factor in Administrative Work Time

Sit down and grind through work and you’ll quickly find yourself worn out and lacking ideas. It’s a situation that all creative workers find themselves in, and it’s one that’s rarely accounted for in most billing structures. Accounting for downtime in your billing structure can be difficult, particularly if you’re accustomed to working on a per-project basis.

The simple truth is that any project is going to attract busywork such as emailing, organizing, filing paperwork, and so forth, be it a design project or one that’s built around coding a new application.

Factor for this time in your per-project pricing guidelines and you’ll end up with a more scalable and effective billing structure — one that doesn’t result in wasted hours and time that’s spent endlessly fine tuning small details.

4. Highlight Extra Costs

If you’re a new designer, giving a quote can sometimes be a little scary. There’s a feeling of power and ability, but for most, it’s paired with a small tingling of nervousness and a fear that your pricing might be a little too high, a little too low, or just wrong in some immeasurable way.

It’s a fear that’s present everywhere online — with no face-to-face contact, judging small details can be difficult.

Beat the fear by being completely transparent and straightforward about your pricing. Include every extra cost, quote clients for every possible situation, and provide a quote that’s as close to your final price as it possibly can be.

Clients rarely reject proposals based on their price, but they can and will reject your proposal when it’s loaded with ambiguity. Be clear, be courageous, and price on exactly what you can deliver.

5. Convey the Concept of Value and Quality

There’s an unspoken rule amongst contractors when it comes to large projects: no one judges the quality of applicants, providers, and design firms by the price that they’re bidding.

Low-cost bids aren’t instantly rewarded, high-price providers are rarely penalized, and mid-range designers just don’t operate at an advantage to the big guns. It’s not about price — it’s about what they get for that price.

When the difference between a high-end provider and the cheaper alternative is a better result, any large business is going to spend the extra cash.

If you’re given the opportunity of placing a bid on a major project or multi-stage corporate design deal, go out of your way to explain how you can add value to the project, not how you can help save money.

Ability is rewarded, frugality isn’t.

6. Know Your Competitors and Understand Market Rates

There’s a slight danger in pricing yourself according to others in your industry, particularly when your design services are focused on a particular geographical area or online niche.

When you let other people control your pricing, you’re inevitably forced to compete with them, battling for the same clients and bidding endlessly on the same projects.

However, it’s important to know how much your competitors are charging, even if only to best them in quality and offer a premium service.

Keep in contact with other design agencies in your field or area, understand their pricing and ensure that you can offer a greater deal of value at the same rate.

Don’t let the market dictate your pricing, but do let it create guidelines for what you can offer.

7. Always Consider Growth and Overheads

Great branding goes beyond having an attractive website, a clean business card, and a portfolio of clients that are remarkable at what they do. It’s a discipline that’s steeped as much in pricing as it is in visual identity, and without a price guideline that reflects your ability, it’s unlikely that you’ll be able to grow, both as a designer and as a business.

Factor growth and overheads into your per-project or per-hour quotes, and always think of projects with opportunity costs in mind.

Grinding through every possible project at a laughable rate will lead to short-term success, but it’s almost always at the expense of long-term growth and progress.

If you want to bid on major design projects and truly grow your design business, think of low-cost projects and one-off assignments as a stepping stone, not as a destination for your business.

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Mathew Carpenter is an 18-year-old-business owner and entrepreneur from Sydney, Australia. Mathew is currently working on Sofa Moolah, a website that teaches you how to make money online. Follow Mathew on Twitter: @matcarpenter. Follow Sofa Moolah on Twitter: @SofaMoolah.

31 Comments

Kristof

August 19th, 2010

Some great points to keep in mind.

I’d also like to add to #1 that it’s good to know your cost per proposal.

A simplified way to figure this out is to divide your yearly income by the number of estimates sent. This will give a baseline for determining how much time you should, or shouldn’t, be spending to create/send proposals.

edurup

August 19th, 2010

very good artcile thanks a lot

John Cowen

August 19th, 2010

Over time I’ve found that for the clients who are too focused on the price and making the project ‘less expensive’ – they’re often clients you’re better off without.
It can be hard to turn down a job, but sometimes having no work is better if you use that free time to seek out better work/clients. You risk hampering your ability to develop and work with ideal clients if you’re working flat out to make ends meet with a load of low paying projects.

Anterpreet

August 19th, 2010

Great article, really useful tips. Knowing the value of your time is very important for freelancers.

DSM Design

August 19th, 2010

Great points! Keep up the good work! :)

Shannon Noack

August 19th, 2010

Good tips! I agree with John Cowen, you can’t keep lowering your prices for the clients that don’t want to pay very much; aim high and hold out for the good clients that are willing to pay what you’re worth. They will come and the wait is worth it ;)

Kelly

August 19th, 2010

Mathew, your wisdom is amazing for an eighteen year old – and your advice is great!

Jackson

August 19th, 2010

Great article and I agree with John Cowen. Be wise when choosing who you want to do business with.

Ricky

August 19th, 2010

The information on this blog has been priceless to me

Edwin Ortega Bu

August 19th, 2010

Great, useful tips.

Nelson Pacheco

August 19th, 2010

Great article Matthew. I had a problem clicking the link to your site in the authors box.

TFG

August 20th, 2010

I always make the bulk of my decision based on my time. I always think if there’s not enough money in it then I could be spending that time doing something for myself.

dzine

August 20th, 2010

I agree with you when you lower your prices it always go down
and your effort for work is worthless

wdp

August 20th, 2010

Always be upfront with design costs. There’s no point undercutting your value as you’ll only come to resent the project when you’re making changes at the clients request, which you feel are outside of the calculated and quoted costs. If a project costs X amount, then tell them , X amount.

Mario S. Cisneros

August 20th, 2010

Very well-written article Mathew!

In relation to #3 I always include in my quote a fee for project management, which addresses and covers the costs for all the administrative functions associated with Web-based initiatives.

Also, I include in my quote a stipulation that if after submitted the prospective client alters the requirements then a re-quote is required. This prevents scope creep from the onset.

-MC

John

August 20th, 2010

These are all great tips. We’ve been doing web design and development work for over ten years and these tips all resonate with lessons we have learned. Tip #1 is especially important. Don’t ever apologize for your rates are be shamed into lowering them. Stick with what you know you are worth and if clients don’t want to pay it, move on until you find some that do.

Cylet

August 20th, 2010

This was great to read! One thing I do is; when I give an estimate or quote I put this in red on the bottom of each:

Estimates/Quotes are given to the customer based on specifications provided by the customer. The price can change if the order specifications are not the same as the estimate specifications. All estimates/quotes have an expiry date of 2 weeks from the date of “my company here” reply. Prices for business cards or any print job may change without notice. So price today may not be the same next week.

This way they can’t come to me a year later when I have had more experience and now my prices are up or my printing prices are up! Plus, they know they will be charged if they add more work :) Really helps!

Thanks again!!

Rmagyar

August 20th, 2010

Thanks for a nicely written and thought-out article., Mathew.

Lisa Thomason

August 21st, 2010

This is a great article and has great advice. LT

Doug Sapusek

August 22nd, 2010

I also agree with John and Shannon. A client that is hung up on pricing immediately and not willing to pay your rates, disables you from designing for and billing other clients that appreciate good design.

Carson Samson

August 23rd, 2010

Preach it brother!

The number 1 source of anxiety and confusion for myself and most of the subcontracts I work with. Your tips help break it down into logical variables. And you’ve convinced me I’m undercharging my clients. Ha!

Craig

August 23rd, 2010

Good Skills and Professional services deserve above market rates, but never get too greedy.

WORKetc

August 23rd, 2010

These are all great points. I remember as a start up freelancer how awkward and scary it was for me to give my own quotes.

Perhaps mentioning the use of some software may help when it comes to quoting. Software can help keep track of all the necessities to look back on when generating quotes and giving evidence you’re doing a quality job.

WORKetc for example, is a business management solution made for freelancers/small businesses. It combines aspects of CRM, project management, and billing into one software – so you can do everything you need to (from developing sales leads to managing projects online to sending out the final invoice) under one tool.

WORKetc could contribute a huge hand when it comes to quotes. Consider being able to reference historical data regarding a similar project (or any project for that matter) for any specific client/company, and using that to help give you a more specific range. From there you could use the tool that allows real-time look at your budgeting, to make sure you’re going to come out with decent profits in the end.

If you manage every aspect of your business under one roof there’s a huge potential for efficiency and more money earned.

(If anyone’s interested they can click my name for a direct link to the site)

David

James Curcio

August 25th, 2010

Good article. One little thing: “When the difference between a high-end provider and the cheaper alternative is a better result, any large business is going to spend the extra cash.” This has NOT been my experience. At least in the US, and especially in the past couple years, it seems that more and more “cheap” is all many companies (and clients) want to hear.

Amanda Smit

September 9th, 2010

Sound advice, Thank you for sharing this excellent article!

Aireen

February 15th, 2011

I must thank you and and your fans for this timely article. After just receiving a limp counter-offer to my proposal for a potential client, I was looking for some inspiration, and I have found it here. As exciting as it would be to work with this client, I’m getting the distinct Spidey sense that says, “I’m going to screw you!” What’s more is that my initial offer already went lower than I normally charge (I know, terrible!), based on meetings we had previously about their budget, which I was willing to work with; also, not only do they have issue with my pricing, but they have issue with the most basic aspects of my terms, which have been designed to protect me. Yikes! I agree with most of the comments here. I’ve got to stick to my guns!

Angel Grablev

March 1st, 2011

This is an amazing article, thanks so much!

Ramesh Vishwakarma

April 18th, 2011

Great article!… I think, I can really workout something with this article.

iNet

May 6th, 2011

Quoting has always been a matter of concern me and despite spending so many years as a freelancer I am always skeptical before quoting. You gave a nice insight into the freelancers quoting fiasco. Thank you.

Charles "The Web Chef" Coyle

May 18th, 2011

Extremely helpful! I wish I found this site earlier. I am constantly having to jump over the hurdles of price being chosen over value with potential clients. I find myself asking questions about their business that always lead to them telling me how they have spent “loads of cash” on everything else that will not bring them any profit but want to spend the least amount on the most important marketing tool they have…that unlike them doesn’t need sleep and wont take a break. I am still working on ways to present value and quality before they even reach me to avoid any thoughts of…”it cost to much” I am working on a couple of things within the next two weeks and will be sure to share the steps and results with anyone who is interested.

Dina

June 28th, 2011

A million thanks for posting this infmoration.

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