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7 Tips on Quoting Freelance Projects
By Samuel Ryan     Freelance Lessons     Comments

One of the tougher aspects of freelancing is making sure you get paid a fair amount for your work. I'm sure every freelancer has at least one story of either getting grossly underpaid or not getting paid at all. So here are seven tips to help you improve your quoting.

  1. "Discover" the client's budget. When you initially talk to clients, very few will volunteer their budget because they want to hire you for the least amount possible. So to get them to show their cards, try using a preliminary "discovery" worksheet for them to fill out. Have this worksheet ask questions about their goals, timeframe, and of course, budget (although you may want to assure them that this is not for quoting purposes, but to better "explore" possibilities). Clients seem to be more forthright when the process is formalized.

  2. Spend time on your proposal. As nice as a potential client may seem, as agreeable as his terms may seem in your initial communication, always create a proposal and always put in the time to make sure it covers everything. And of course, don't start without it, even if the client is in a hurry. Make sure it covers both client and contractor responsibilities, expectations, requirements, payment terms, terms for changes outside the proposal, and everything else you can think of. Since clients often have a larger scope in mind than they communicate, a couple hours on this document could save you dozens later.

  3. Charge by the hour. Instead of providing a project price and finding out later that you misquoted (and thus, you have to eat some costs), simply tie your quote to an estimated hourly rate and time frame ($70/hr for 40 hours). Not only does this make quoting easier, but clients understand that they are buying a block of time that you think will be enough to finish the project. They will be more forgiving if you need more hours (versus quoting a project price, which clients will hold you to).

  4. Up your estimated cost by 10%-20%. Especially when you're starting out, it's natural to want to impress clients with "best-scenario" quotes that are lower than all your competition. However, you never want to be put in a position where you need to cut corners or give a subpar effort just to achieve a quote that you set too tightly. Furthermore, there are many hours that you will spend in communication, asset collection, and general administration (not to mention any snags you may run into). So do yourself a favor and give yourself enough time (because asking a client for more time/money is generally not a good habit). You will probably still be on the lower end of the quotes the client receives.

  5. Set and manage expectations. If you're quoting by project, let them know the cost and timeframe for additional changes. If you are quoting by the hour and giving them a total time estimate, let them know when you're getting close to that quoted total time and whether you will be able to hit it. It may be helpful to have a clause that says if your total time is within 10% of your time quote, you will not charge more (this gives you extra money for finishing quicker and saves them money if you take a bit longer). Clients don't like surprises: keep them informed on your current time status and let them know at proposal time the possibility of "run-over" and charges associated with extra changes.

  6. Collect up front. Outside of recurring maintenance work or very tiny projects (under $500), always collect some portion up front. This shows that the client is serious and much less likely to bail mid-project. You shouldn't have an issue getting 50% up front on most projects. If the project is pretty large, you may want to try 33% at the start, and another 33% at a predetermined milestone.

  7. Set a final payment milestone. If you create websites, invoice the final payment the moment the site is live. If it's a print job, invoice upon delivered goods. And so on. Since the client knows these invoices are coming (and that their project is effectively done), use shorter payment terms as well. If you aren't exact and business-like about your payment schedule, clients will ride ther debt as long as they can.

Community Comments
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1
::paul::
Good tips here. Never really thought about using a "discovery" worksheet, though thinking about it now, it seems like an obvious part of a project workflow...


2
Ashley
Re: #3 - I've been struggling with quoting, and doing it this way seems to make such good sense. Thank you!


3
Marzipan
Concerning #4 -- it's funny how we often quote very tightly in fear that we may lose the client. I've done this before and found out later that I was half the quote of most of the other "firms" in the bidding.


4
Nathan
Now your ready to go into construction. :)

Have you thought of a career change?


5
BillyG
Well if that $70/hr is any kind of ballpark figure, I just cut my legs out from under me lol.


6
Lilly
Hourly wage is so arbitrary sometimes and you should just find out what you can charge. I think 70/hr is for those who have pretty good expertise and have worked with decent firms. Starting out after college, I could only get 15 or so and worked my way up. To be honest, you have to charge seemingly high just to make as much as the normal salary guy because of double taxes, lost hours, etc...


7
Jay
Keep in mind that $70 an hour seems about standard for most professional tradesmen (ie. electricians, carpenters) and that if the client expects the same amount of professionalism and polish on the finished product they should be willing to pay a bit more. If they aren't... you should remind them. :)


8
Todd
Regarding hourly wages, a few things to keep in mind:

* It all depends on your field, but you probably should be charging a lot more than you think you should be charging. I just paid $70/hr to have my muffler replaced.

* If you can get a job, in your area, in your field, right now for $50,000 a year, then you'll need to earn $75,000 a year freelancing for it to be equivalent. Because you pay a lot more in taxes, you get zero paid vacation or sick time, no retirement benefits, no health insurance, or workman's comp.

* You'll need to charge a lot more because you won't be billing 40 hours a week, 52 weeks a year. I've consulted for 11 years, and it is nearly impossible to bill consistently more than 6 hours a day. That means if you take Monday off, you have to bill 12 hours the next day to keep it at 6 a day. It usually takes 10 hour days to bill 6.

* People will look at your high billing rate and they will think you're rich. These are the same people that think you'll forget how much child birth hurts and that owning your own business means you can goof off all the time.

Regarding fixed bids, don't ever take one, ever. Once the price is set in stone the client will try to get you to do as much as possible, and you will try to do as little as possible; you become adversaries and lawyers, not partners. One of you will be unhappy, this is a guarantee.



9
Brett
I don't agree with the comparison on having a 75k freelance gig be worth a 50k formal job. There are so many things you can write off doing freelance that actually make it well worth your while. Sit down and talk with an accountant and you'll immediately see the huge advantages of working freelance. If anything I think it's flipped around. When working at a formal job, you have no write offs. So your 50k job actually is about 33k after taxes and all of that.


10
Todd
First, "write off' doesn't mean free, it just means that that amount isn't included in your income, saving you taxes; so if you spend $100 on something, and your tax bracket is 25%, you save $25 dollars in taxes.

It depends on your business, but any accountant will tell you that you can only "write off" reasonable business expenses, "reasonable" being what an IRS audit agent would think is an actual business expense for your type work. For many freelancers, that's a part of your rent (if you rent), your office equipment, software, accounting expenses, etc. If you work for a company, you get your computer for free, if you freelance, you have to buy it yourself, but you get 25% discount because of the "write off"; hardly a cash windfall.

Depending on your business type, you will pay a lot more taxes. When you work for a company, the company pays a lot of payroll taxes for you; these taxes you never see. When you work for yourself, you do, and that can be as high as 15%. So look at your check now, take your taxes you pay, then add 15% more taxes to it.

It also depends on your income level too, if you go over a certain amount it gets worse.

If you get 2 weeks off a year for vacation, and 5 sick days, and you make 50k a year, that's an additional benefit of 3k a year, plus any 401k matching your company may offer.

I've worked for myself for 8 years, I enjoy it, and I enjoy the freedom I have over my career. But truthfully I would have made more as a full-time employee; but it's not about the money.




11
Freelance Designer UK
Really useful tips - especially number 2 and number 7.
Regarding number 6, most sites (including a one I have worked on http://www.peopleperhour.com) allow you to use an Escrow service which means that you can ask for a significant % of the project fee to be deposited in the Escrow upfront without any major resistance from the buyer.
Alex


12
Nikole Gipps
I actually do flat rates for jobs because I can somewhat help the client control costs. It also motivates me to be as efficient as I can, because reducing my time spent means that the project will be profitable ... or if I need to take the time to learn something new, I don't feel guilty for sticking it on their tab because I'm not billing hourly.

The trick is estimating correctly, which is a skill acquired with time, and listing out the project scope, so that you can point out any beyond-scope additions that will need to be billed in addition to the original flat rate.

I find the hourly requirements just require more paperwork and the hassle of me keeping track of every second spent on the project. But do whatever works for you, you know?


13
J.D. Humphreys
I'm still trying to figure the whole freelance thing out and I've been doing it off and on for a number of years. I have to be especially careful now that I'm a full time grad student at the VCU Adcenter (now Brandcenter). Here's some helpful advice...

- every year I give myself a raise of $10 (I'm at $40/hr)
- do not charge per hour for logo design (just offer 3 or so options)
- don't ever put off calls or correspondence, after a while the client will think you aren't serious
- get a laptop so that you can work at the train station or waiting in the doctor's office (time well spent!)
- definitely add 20% to any project so you don't undercharge
- if it's possible, arrange to present the creative work in person not as JPEG
- save those receipts and claim everything that pertains to your biz
- keep a timesheet for each client (I just tried the free Paymo software and I love it!)
- see the Graphic Artist Guild Handbook of Pricing and Ethical Guidelines for advice, rates, forms


14
Samuel
@J.D. - Every one of those is great. I think a confident freelancer that's got his "act together" with such protocol can do really well for himself. I especially second the point about never procrastinating -- I know freelancers who make 6 digits easily not because they are talented or are doing cutting-edge work, but because they are always on time with projects and they are professional with their communication.


15
Richard
Thanks this is great advice! I'm not working freelance at the moment but I have recently started a job where I'm quoting for work regularly. I often find myself in situations where I feel that I have under priced jobs in order to get a client on board. Using #3 in particular should go a long way to helping me deal with awkward clients if used carefully.


16
Rico
Some great advice for new freelancers like myself. I was wondering if you could help me out with deciding how much I should charge for a logo design for a fashion label? #3 has helped resolve a few issues for me with charging hourly. I am a returning freelancer but have been doing it on and off in between an MSc. How much of a bearing does an extra qualification in the field do for your hourly rate? Great tips once again.


17
Cooking recipes
I agree with the privious posts. Great tips and techniques! Thanks very much.


18
rondostar
Really good read here. I wish I woulda' found this earlier. I will definitely bookmark now and have already tweeted.


19
güzel sözler
Really good read here. I wish I woulda' found this earlier. I will definitely bookmark now and have already tweeted.


20
jamloy
As I read the article and some comments, I realize that I've underpaid on my freelance job. :( what a shame.. I never imagine that I'm doing all my best to work and satisfy my employers ( I have 2 employers and working for 15 hours on one of them ) on my services. I know that copy and paste is an easy job but it came to the point that I am the one who is doing things not included on the bid. And to be accurate, they are paying me $100 per week.... per week!!! not like the $75 dollars/hour.. Am I dumb or what??

Can i ask your opinion maam/sir?? about my situation and what will i do to make them pay me fairly. BTW, i'm a freelance writer/re-writer on some site for promotions and stuffs...

please email me some info's, ideas and opinions on my current situation. [email protected]

Thanks in advance!!! :)


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What is all this?
My name is Samuel Ryan and I make websites. Sometimes, I write about it. I disappeared from this blog for a couple years, but I'm jumping back in now -- even began using my twitter account. If you care to know more, go here.