How To Price Freelance Services — Reducing Your Costs

Posted: 10 Oct 2013 05:30 AM PDT

The last couple of weeks, I’ve been looking at the business side of freelance design and development. So far I’ve offered some thoughts on how to understand your costs and things to think about when determining a price to charge for a project.

Note: This post includes an audio version. If you don’t see the audio above, Click here to listen.

There are a couple more topics I’d like to address which I mentioned in passing in these previous posts. Today we’ll look at ways you can reduce costs and next week we’ll look at smoothing out an uneven cash flow.

Value Pricing and Reducing Costs

When price is based on cost your incentive isn’t aligned well with your client. As you gain experience and work more efficiently your cost goes down, but then so does your price. Your incentive is actually to take more time and do sloppy work, because it increases your costs and thus your price.

When you set price based on value you break the direct connection between price and cost. Your incentive aligns well with your clients. Your goal is to do better work making your client happy and you work to reduce the time it takes to do that better work making you happy.

Beyond gaining experience and getting better at what you do, there are some other things that can help you reduce your costs that I’d like to talk about.

Process
Modularization
Automation
Outsourcing

Identify and Optimize Your Process

Process gives you a roadmap for completing your work. Granted something like design has creative components that often don’t want to be corralled into a process, but much of what we do doesn’t need the absolute freedom of creativity.

Much of the work we do is the sea from project to project. The details may differ, but we typically get from start to end in a similar fashion. We deal with many of the same problems again and again and we can develop processes to recognize which problems we’re trying to solve and then solve them quicker.

You likely go through a similar process with every site you design and develop anyway so why not observe your natural process and work to optimize it. Mine goes something like this:

Discovery and research
Sketch and conceptualize
Produce design deliverables for client sign-off
Develop site until client signs off
Test and launch

My full process contains more sub-steps, but understanding I have a process allows me to observe it and optimize the various steps.

For example design comps were always a bottleneck for me. My graphic skills lag behind my html and css skills and so I’ve changed the design part of the process to deliver html and css prototypes that the client and I iterate together to produce a finished design. It’s quicker for me to iterate a prototype than a design comp and by the time the client and I agree on the design a significant part of the development process is complete.

Another simple benefit to identifying parts of the process is you can better determine when you more efficiently perform certain tasks. I find I’m more creative early in the morning and late at night. In the middle of the day, usually right after lunch, my brain has a tendency to shut down from creative thinking and is better suited to analytic or busy work. I seem to be able to code at any time other than first thing in the morning.

Knowing when I best perform these tasks allows me to schedule them at the times when I can produce better work in the least amount of time. It also allows me to recognize when a single task might serve multiple purposes and get two things done for the price of one.

Modularize Repetitive Tasks

Even though every design is unique, there’s much that repeats from project to project. You may not specifically know how you’ll layout a site, but you might already know you’ll develop it on a grid or that it’ll be similar to some layout you’ve created before.

Your site will include content and navigation. There’s going to be a logo. When you need a form, you probably reach for the same code. Similarly you have your way to code buttons, style lists and tables, present images, etc.

Why reinvent the wheel on each site? Modularity leads to more efficient and maintainable design. If you build a library of patterns and templates you’ll save yourself considerable time. Pattern libraries and frameworks are easily found online, though I think long term you’re better off developing your own.

Not only can patterns, libraries, and frameworks save you time, you can work on them independently of specific projects, making them better, and increasing their value and your value to clients.

Automate Where Possible

The more you create modular patterns and templates and the more your work is standardized, the more you can automate it. In a sense frameworks and content management systems are automating our work as they mean we no longer have to develop them ourselves, but there are other things we can automate.

Does your code editor offer autocompletion?
Do you take advantage of toolkits like Emmet?
Are you automating tasks with Grunt?
Do you use CodeKit, Hammer, or any app that handles project repetition?

These aren’t the only tools that can add automation to your business. Plenty more exist depending on your workflow. The point is there are many tools that will quickly do repetitive tasks for you.

Don’t be afraid to spend money on tools that will make you more efficient. What they cost is more than made up for by how much time they save and how much they reduce your costs on projects.

How about customer service? Do you find yourself answering the same questions time and again? Could you create FAQ pages or use something like Text Expander to store prewritten responses to the questions.

Outsource to Those More Capable

In addition to buying tools to do some of your work, you can hire others to do it. Outsourcing isn’t something I typically do, but it is something worth considering.

Your first thought about outsourcing might be to hire cheap labor and then mark up what they charge you. It’s often the way outsourcing works, however think of it in a different context for a moment.

How good are you at marketing? How much time do you spend promoting your business. That time is a cost to you. Perhaps you’d be better off hiring a marketing company. Do you do your own accounting? Again how much time do you spend doing that work? Would it cost you less to hire an accountant?

Freelancers wear too many hats. I certainly do. It’s worth thinking about paying others for some of that work. It costs money, but it ultimately saves considerable time and that time counts against costs. Besides, someone who does marketing or accounting or copywriting full time probably does it better than we do.

Summary

When we break the direct connection between price and cost it means we can work to reduce our costs without reducing our prices. We can make more money for doing the same work better and more efficiently.

The first step in reducing costs is understanding your natural processes and then optimizing them. You can work the parts of the process at more productive times and you can start down the road to modularization. You can automate through different tools and you can outsource some of your work to others better able to do that work for less cost than you.

Next week I’ll continue with ideas for controlling the ebb and flow of cash in your business. We’ll look at cash flow and how you can smooth out the peaks and valleys and help make sure money is flowing into your business on a more consisten basis.

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