I thought I would try this here, as this site has been a fantastic place for answers so far! I’m interested to find out how people price up projects, as I’m currently having a problem with a client and the amount of designs/concepts we are doing.
So when you price up a project, do you give a fixed price and say you get 1 or 2 design concepts within this price? Then extra designs are so much each time?
Any examples of how you might spec up say a generic content managed site would be great too ;)
We look at the average complexity of the project and work out an hourly rate, then we estimate how long it will take and charge accordingly - so the client doesn't know about the hourly rate only a fixed amount.
This works well for both ends, the client doesn't have to worry about us going over budget if a problem comes up and if we do it quicker than our estimate we still get paid the fixed rate.
Regarding the hourly rate, it really depends on the project - for your example it would depend if we had to build a bespoke CMS or they already had one in mind.
I just give a fixed amount, for the reasons that Tjkoopa lined out. The trick is getting the estimation part right. That means that you need to measure how much work you put into every website you built. Joel Spolsky has a great article on evidence based scheduling. Only if you can estimate how much time you are going to spend on a project can you quote a fixed price to your customers.
at first, i give the customer a price range, based on estimated hours and our hourly rates ... if he is ok with that, i dive into details, doing a detailed plan and feature description, recalculating the price more exactly and seperating out parts/modules/features that i believe to be optional ... the most important thing is, that the customer gets all he wants and that you get paid for all you do ...
about estimating:
it is in everyones interest, that your estimation is good, because too much leeway will make your offer bad and chase away customers ... and a budget that is too tight is very vulnerable ... you wanna get paid for the work you deliver and your customer wants to pay for the work he gets delivered ... be fair and honest ... and don't hesitate telling your customer if the expect something to be far to cheap, but also be a good consultant and don't sell them stuff they don't need, or charge them too much ... that way, they will come back ...
I've found for smaller sized businesses, or maybe even the mom and pop type folks that want to get their small little project up on the web, a fixed "package" price works great. I lay out for them that they'll have up to X amount of pages, some basic database work (if needed), and some basic shopping cart/forum/blog setup done for them in this package. I typically provide two different design options for them to choose from. If they want to out beyond these items, then I start applying hourly rates based on the work.
More importantly, I also indicate the service available. They get free basic maintenance (simple page added, spelling corrections, not content block to the basic page) on the site as long as they are with me. There are plenty of outfits out there that will do things for a decent chunk less than what I'll charge, but they won't get the updates, they won't get the customized design decisions, and most importantly, they won't get the personal attention to their site they would want.
Those kind of features help justify a slightly higher price, and the fixed price allows the customer to not guess how much they are going to have to pay, which may make them try and nickel and dime your time away. You give them a solid product, at a solid price, and they can feel confident in that.