Ask LH: How Should I Charge For Site Design?

Hi Lifehacker, I'm in the process of planning a website design business. I have an ABN and I've designed my own website, but I have no idea where I stand in terms of charging people.

Design picture from Shutterstock

I was thinking of charging 50 per cent up front; I do the work and get approval from the client and then once complete, I ask for the other half. Is this common practice? Is it even legal? Any thoughts? Thanks, Aspiring Designer

Dear AD,

Asking for some payment up front and then the rest later is certainly a common model (for site design and various other kinds of work). There's certainly nothing illegal about it, but we'd make a few observations:

  • The most important point is this: be very specific about what you're going to deliver for the money. Don't just say you'll 'design a site'; specify the number of pages it will include, whether you'll provide the design elements, how much consulting you'll do on what the client needs, and how ongoing maintenance will be handled. This might require a series of prices (a fixed basic site fee, charges for extra pages or tweaks, separate fees for ecommerce and so on.) If you don't do this, you'll risk being asked to repeatedly tweak or extend, with the threat of the other half of the payment held over you. Put this in writing; don't rely on a verbal agreement.
  • Set clear deadlines for payment: no work until the down payment is received, a fixed delivery date for the site, an immediate invoice and payment within 30 days.
  • With this model, I'd set up and demonstrate the site but not deploy it until the final design has been approved and you've issued that second invoice.
  • Not that this directly relates to your charging question, but you'll need multiple example sites to show off. Web design is a competitive space.
  • A final fiscal reminder: don't forget to include GST in your prices for your Australian clients.

Good luck!

Cheers Lifehacker

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Comments

    To charge GST you must be registered for tax in Australia and be completing a quarterly BAS statement.

      Also, you only have to register for GST when your GST turnover (or projected turnover) is above $75k per year. http://www.ato.gov.au/businesses/content.aspx?doc=/content/20724.htm&page=5

      If you are registered you can claim GST credits for your business expenses, but you have to do a quarterly BAS statement.

    Always get a deposit, even a couple of hundred dollars is enough to work out which clients have any hesitancy in paying bills promptly.

    The 20% of clients that you reject makes a huge difference to your business and your life. Even if you can't fill that gap with another paying client, using that time in other productive ways (like training or marketing) will be far more beneficial than dealing with a tricky/dishonest/unreasonable client.

    In web design, a seemingly simple request, even if very specific, can be either extremely complicated or very simple (e.g. off the shelf widget versus a hand coded alternative or somewhere in the middle) and the choice between the two can't always be determined even from the most detailed brief in advance.

    Trying to lock down everything in advance can lead to a brief/scope of work that could take longer to prepare than many small projects, and you'll do plenty of quotes for jobs that don't end up going ahead, so it's not worth it.

    So the easiest way to work is to provide estimates, not quotes and to say:
    "we can deliver broadly X within your fixed budget of Y, and will work to help you get the best possible result within that scope & strictly within that budget, but we charge by the hour. If your requests start steer part of a project beyond its suggested share of the total budget, we'll recommend options to bring it back in, or come back to you to confirm a budget increase, or delay a component until other aspects are completed so we know how much budget left we have to play with for that particular area."

    Most of all, manage expectations and keep clients informed on how budget is tracking, they won't have any concept of what's involved in most things and won't know which bits happen "automagically" (and sometimes big complicated things can just be plugged in and switched on) versus those (often seemingly simple things) which involve painstaking hand coding - so just keep them in the loop and you'll avoid any shocks that upset client expectations.

    When putting together a proposal, I like to include "Scope" as well as "Outside of Scope" so it's abundantly clear what I am NOT expected to do - eg hosting or copywriting, etc.

    It might seem obvious, but I've seen a lot of people not include it and get screwed.

    Make sure that your quotation is signed off on, with some terms and conditions around the payments as you probably intend to, but add a clause that all elements of the site that you design are copyrighted to you an may not be replicated for any commercial purposes, until the customer has paid the invoice in full.

    That'll allow you to take the site back, even though it has their logo and name all over it if things go pear shape. It'll also stop them from getting you to do half the work and then getting one of their kids "who's tinkered a bit with PHP" to do the rest for peanuts. Some people try, especially small businesses that are used to exchanging favours and mates rates (tradies).

    If you are really suspicious that you may not get paid, or suspect a client is going to turn into one of those difficult ones that has an endless list of tweaks (move the image left a little more, no up, left, oh wait I liked the way it was before, but can we make the text a little bigger?), consider using an escrow service. Basically, a neutral third party that hangs onto the money and won't give it to you until the client is happy, but won't give it back to them either unless you agree. That takes away the "I can always walk away and lose nothing since I haven't paid anything" mentality that also exists in some circles.

    It really depends on your customer base. The easy clients are in small business, because there's just so many of them. Government customers have their own rules, but you'll never not be paid; it's just probably going to take them 2 or 3 months to get around to it. Medium to large businesses generally never give you problems, but competition is fierce because there aren't that many and or they might have people employed to do all the massive work and just outsource irregular niche stuff, so regular or large work is tough to come by.

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