Written by tkstarley


Value Based Pricing vs Cost Plus Pricing

Are you a fellow design agency or freelance web designer/developer? Regardless of the size and scale of your work, the bottom line affects us all. Striking that perfect balance between cost, value, quality and affordability is a delicate issue that we all must consider carefully.

Many designers and developers in our industry employ what is known as ‘cost plus pricing’. This uses a formula which takes into account their business expenses, personal expenses, hours that they are able to work during the year, level of experience and so on. This is entered into a calculation that generates their hourly rate.

I am here to introduce you to the idea that selling hours actually creates a conflict of interest. It puts you and the client on opposite sides of the table. If you’re selling hours, it’s in your best interest to take more time on the project, in order to bill more hours. But your client is interested in getting solutions that work as promptly as possible. What if you work quicker for one client than another, but deliver the same value? Should you penalise the client you worked longer for? If you’re slow, it’s not their fault.

What if there was another way to approach the delicate matter of payment for a project?

Value based pricing is based on the amount of impact a project will have on a clients business.

This results in benefits for both parties:

  • It means we take the time to understand what you really want
  • It results in a more consultative approach to getting the best results
  • It means we are heavily involved in helping to shape your vision and objectives

After all, as a truly integrated design and digital agency it’s our ideas not just our work that makes a difference to our customers’ success.

We urge clients to think of a new website as an investment in their business rather than another expense. Digital technology is changing our lives. It is changing the way we do business. Can you afford not to invest in your businesses future?

To discuss your project with a member of our friendly team call us on 0800 88 60 75 or email us.