Pricing system Explanation needed. SORRY!

[Jonathan Sanchez]

Hello.

You guys will have to forgive my ignorance. I'm currently working on building a strong portfolio. I havent been looking for jobs yet. I'm concerned still with one thing. Pricing. I realize that most of you charge by the hour, some from 50 and others to over 100 p/h. However, and again forgive my ignorance, but wouldnt it be better to charge say by size and detail of project? The thing that worries me, is that how does the hourly thing work. If I were to charge an architect by the hour, how does he know I worked those hours? What if I have someone working for me? Does he count to double my hours such that 1 real hour= 2 virtual hours? I dont understand the hourly system. If one of you were benevolent enough to explain that system to me I would be most undoubtedly grateful.

Sincerely

Jonathan

[mbr]

I give estimates based on hours. Regardless if I get done earlier, it's still the same price and likewise, if I am wrong, I work more for free.

 

Where it is important is if there is more requested, ie additional changes, added/subtracted elements, etc., this all can be billed at the agreed upon hourly rate. That way everyone knows what you are charging per hour and what it includes and what to expect if they ask more (and they always do).

 

It also breaks it down so people understand how long things take. It helps them appreciate that it's not a 'click' that magic button and out pops a pretty rendering! That's important.

[Jim Mann]

I charge as a lump sum for the whole job. I (try) work out the number of days a job will take based upon its size, complexity etc and then apply a daily rate. I don't put the daily rate in the quote, just let the client know that it will cost £xxxx and the list exactly what they will get for that.

 

I have yet to come across a client who would be comfortable with hourly rates. even when I did freelance work for other Viz companies it was on a daily rate.

 

If someone works for you, add up the total number of days you both spend on the job i.e.

 

person 1 cost: 10 days at $250 per day = $2500

person 2 cost: 6 days at $375 per day = $2250

 

Total estimate = $4750

 

Thats pretty basic but I think that you may find more detailed info among David Wrights articles.

 

Jim

[Jonathan Sanchez]

So, basically, the thing to do is to estimate the hours, or days, it would take to complete the project, and give it to the client as a lump charge? Am I right? Now I'm starting to understand. MBR, where can I find David's articles?

[Iain Denby]

I charge as a lump sum for the whole job. I (try) work out the number of days a job will take based upon its size, complexity etc and then apply a daily rate. I don't put the daily rate in the quote, just let the client know that it will cost £xxxx and the list exactly what they will get for that.

 

Jim

 

I'm exactly the same. If you're lucky, you'll finish early and be up on money, but occationally you might be down.

 

I've said on a previous thread that I use the hourly rate thing as a guide for me. I work fast, so I don't want to penalize my self now do I?

[Jeff Mottle]

As a general rule you should always bill a lump sum for a project based upon your internal hourly or daily rate you use to ensure profitablity (Good rule of thumb is cover all your overhead + add 20% profit). As mentioned, if changes are made that are out of scope of the original contract then you can either negotiate another lump sum fee or do the changes based upon a hourly rate.

Sometimes a client may approve only X number of dollars for the changes. In that case you do as much as you can and tell them when you have run out of time/money to do the changes and show them where you are. Of course you'll want to let them know this ahead of time.

 

If you are going to require a freelancer you should still charge your hourly rate. That way you are proctected should any unforseen problem come up or more project management is required. If nothing happens then you get to pocket the rest as profit. You usually would not want to lower your own rate to correlate to the lower hourly rate that you are getting as a result of using a freelancer. If you do this and another project comes from that client that you can handle on your own, they will wonder why this project costs more.

If you need to lower costs find freelancers that can do it faster. This way your can still calculate based upon your own hourly rate and get the budget within the range of the clients demands.

 

 

Most large firms have several internal hourly/daily rates depending upon the person that is doing the work. More experienced people have a higher bill out rate, but usually can produce faster.

 

There are always eceptions to the rule and some people choose to do it differently, but that is how I've worked.