Struggling to price your web design services? Coming up with an hourly rate that aligns with your experience level, location, and income goals is a great place to start. Let's explore how to calculate your web design hourly rate.
Pricing yourself as a web designer can be tricky. A simple Google search on web design pricing will give you numbers all across the board--from a couple hundred dollars to tens of thousands of dollars for a website. There are just so many different factors that go into pricing web design.
In this post, we'll dive into how to price yourself fairly as a freelance web designer. Specifically, we'll discuss how to calculate an hourly rate that aligns with your unique goals and situation. And finally, we'll review a few alternative pricing strategies that don't rely on trading your precious time for money.
When coming up with an hourly rate for your services, it's tempting to just look up the average rate and go with that. It makes sense, right? Since it's an average, it means a lot of people are already successfully charging that rate. It's a reasonable number that's not too high for most clients or too low for most freelancers.
The problem with charging an average rate is that it doesn't take into account your personal living expenses, experience level, and income goals. Just because a particular rate works well for some people, doesn't mean it will work well for everyone. Where average rates are helpful, however, is in providing a baseline to work with. If you charge much higher than average, you may struggle to win clients. And if you charge much lower, you probably won't be able to sustain yourself.
For a bit of context on where web design pricing even comes from, check out Ran Segall’s quick lesson on how to price web design:
There are many different ways to research the standard web design hourly rate. Websites like ZipRecruiter, Glassdoor, and Salary.com have already done the research for you. Through all the statistical data they collect, these sites calculate national average salaries in the U.S. Keep in mind, most salary websites are biased towards full-time employees, as opposed to freelancers.
Pictured below is an example hourly rate graph for web designers from Salary.com. With this tool, you can filter results by location, experience level, and education. If you play around with these filters, you'll find that the average salary for web designers varies widely by location. Cities like San Francisco that have a high cost of living tend to be associated with higher salaries.
So should you base your web design hourly rate on the average salary in your city? Not necessarily. If you're freelancing remotely, you're likely working with clients all over the country or even the globe. Let's say you live in a small town in Minnesota and have an opportunity to work with an up-and-coming tech startup in San Francisco. If you charge the client your local rate, the client will probably be happy, but you'll be cutting yourself short and for no real reason. Your location doesn't affect your ability to deliver high quality work, and therefore it shouldn't be the only determining factor in your pricing.
According to ZipRecruiter, the national average web design salary in the U.S. is about $60k/year, which is equivalent to $29/hour if you work 40 hours/week for 52 weeks/year. $60k may sound like a very comfortable place to be, but what if you want to take a few weeks off for vacation? Or work less than 40 hours/week? These are things we'll take into consideration when we calculate your ideal hourly rate.
Another useful tool for researching hourly rates is Bonsai's Freelance Rates Explorer. The benefit of this tool over the other websites mentioned above is that it's specific to freelancing rates. Freelancers generally have to price themselves higher than full-time employees because of taxes, social security, and business expenses. Here's a look at Bonsai's calculation for the standard hourly rate for web designers in England with 1-3 years of experience.
When we change the experience level to 3-5 years, the most common hourly rate increases from the £40-60 range to the £100-120 range. Play around with the tool and see where the numbers fall according to your location, skills, and experience level.
Now that we've done a bit of research on the standard salaries for web designers, we’re ready to dive into how to calculate your own web design hourly rate.
Ready to calculate your ideal web design hourly rate? Get out your calculator and let's crunch some numbers. We're going to do this by working backwards from your income goal. This way, we can ensure that whatever hourly rate we come up with can help you reach your goal.
The first step is to choose an income goal that feels good to you. There's no harm in dreaming big, but you'll want to be reasonable. If you only have one year of web design experience, it's pretty unreasonable to set an income goal of $150,000 (not that it's not possible!) If you're unsure of what's reasonable, it might help to refer to the average salaries we looked at for your area and experience level.
For the purpose of this exercise, we'll set our annual income goal to $75,000.
Next, we need to add up all your business expenses. Below are some, but not all, of the expenses to take into consideration as a freelance web designer:
The overhead costs for freelance web designers are generally pretty low, all things considered. But it's important to know your numbers in order to price your services for profit. For this exercise, let's assume your annual business expenses add up to about $10,000.
To estimate your annual tax burden, subtract the sum of your business expenses from your income goal and multiply the result by 0.3. The tax percentage for freelancers varies from place to place, but in the U.S., most freelancers can expect to spend about 25-30% of their net income on self-employment taxes.
Following our example, our estimated annual tax burden comes out to $19,500.
P.S. Wondering why taxes are so high for freelancers? When you're employed by a company, your employer withholds taxes from your paycheck. These withheld taxes include payments into Medicare and Social Security. If you're self-employed, you have to pay both the employer and the employee contributions. Thus, you're paying more than you would as an employee.
Now, add your annual income goal to your business expenses and estimated tax. The result is your new, adjusted income goal. This is the number you'll need to hit in order to take home your desired income.
In our example, our adjusted income goal is $104,500.
Next, we'll work backwards to determine our ideal web design hourly rate.
There are 52 weeks in a year. With a standard 8-hour work day, most employees work 40 hours per week and are compensated for holidays, vacation time, and sick days. Unfortunately, freelancers don't have the luxury of paid time off. If we want to take time off for vacation, we need to adjust our rate accordingly in order to meet our target income goal. If you'd prefer to work 30-hour weeks or take 3-day weekends in order to spend more time doing things you love outside of work (that's why we started freelancing, right?), you'll need to adjust for that time as well.
For our example, let's say we're okay with working 40-hour weeks but we want to take four weeks off for vacation each year. In addition, we'd like to budget for five sick days and seven holidays, because no one wants to work on Christmas or while battling the flu.
Our total number of working hours per year comes out to 1,824.
As freelancers, not all the work we put into our business is billable client work. Thus, we need to account for hours spent on non-billable tasks, such as bookkeeping, marketing, and sales. This number varies for everyone, but for the sake of simplicity, let's estimate it at 25%.
Continuing with our example, that leaves us with 1,368 hours of billable work per year.
Finally, we're ready to calculate our web design hourly rate. Divide your adjusted income goal (step 4) by your billable hours (step 6). The result is your hourly rate.
In our example, our hourly rate is $76/hr.
How does your number feel to you? Is it higher than you expected? This is normal. Freelancers have a tendency to undercharge. Know that this number is not set in stone and it's okay to work up to it gradually. On the flip side, you're totally free to charge more than that number if that feels good to you. This is good to do because you never know if you'll have a dry spell or find yourself in a situation that requires you to take more time off than you calculated for.
Hourly pricing is just one of several pricing strategies web designers can implement in their business. The top two alternatives to hourly pricing are project-based and value-based pricing. Implementing one or both of these alternative strategies is necessary for scaling your freelance basis; there's a limit to how many hours you can work, as well as how much you can reasonably charge at an hourly rate.
The way project-based pricing works is that you quote a fixed amount for the project, which you can then divide into a number of milestone payments. There are a few benefits to this pricing method over hourly pricing. For one, you have more control over how much money you'll make. This can actually benefit the client as well because they'll know exactly how much they're paying upfront. Secondly, project-based pricing enables you to get a deposit upfront for your work. This is often between 25-50% depending on the scope of the project. A deposit adds a layer of security for you in case the client disappears or backs out partway through the project. Finally, project-based pricing is beneficial because you can add in profit.
Pricing web design based on value is an advanced pricing strategy that you can adopt as you gain more experience. Essentially, the way value-based pricing works is by assessing what the outcome of your work would be and charging the client based on the value of it. For instance, if you're creating an e-commerce website for a client who expects to bring in $100,000 in sales from their new website, you could charge 10% of that number, or $10,000. Note that this is not a cut-and-dry formula, and therefore value-based pricing isn't recommended for beginners. Sometimes the value of your work won't be a tangible dollar amount, and it'll take a bit of guesswork to come up with a price commensurate with the value.
If you’re curious about value-based pricing, watch Ran Segall’s video below to learn more.
In this post, we looked at some of the standard hourly rates web design and then calculated our very own hourly rate based on our income goal. We also covered a couple alternative pricing strategies that can help you scale your business by accounting for profit. At this point, you might be feeling pretty good about your pricing and are ready to go out and hit your income goal. Or, you might be wondering, how do I actually raise my rates? What if I'm not booking enough projects at my current rate? Is this even possible?
Good news--it's entirely possible to raise your rates and earn six figures, or whatever your income goal is, as a freelance web designer. Our popular course, The 6-Figure Freelancer, teaches exactly how. The course offers a step-by-step roadmap to take freelancers like you from frustrated and burnt out to confident and booked out. Along the way, you'll get weekly mentorship calls plus a plethora of done-for-you business resources to help you get to the next level. Click here to learn more about the course.
