Pros and Cons of Package-Based Pricing for Web Design
Pricing services is one of the most challenging parts of being a designer. Most designers have an opinion of what their time is worth and what they want to make on an hourly basis, but accurately estimating everything that will be involved with a project and how much time it will take can be very difficult.
In attempt to simplify pricing for both the designer and the client, some designers and agencies use package-based pricing with prices listed on their website. While offering proposals or quotes for each project is more common, package-based pricing is used frequently enought that it warrants consideration from the designer or agency.
In this post we’ll take a detailed look at both the pros and cons of listing your prices publicly. It may be worth noting that Vandelay Design does not use package-based pricing, although this has not always been the case. A few years ago packages were listed on the site before deciding to price projects on a case-by-case basis.
Pros of Package-Based Pricing:
1. Gives Visitors a Clear Picture of What to Expect
Many visitors and potential clients really have no idea what to expect in terms of how much they will need to spend for web design and development services. In some cases this is a result of a lack of experience in dealing with the subject, but another contributing factor is that prices can vary so drastically. If a client is looking simply for a low-cost provider, regardless of the type of project there will always be someone who is willing to take on the work (not necesarilly qualified) for a fraction of what most of the competition would charge. This variance in pricing can make it difficult for clients to know what is included at that price, what quality of work and customer service they will receive, and how this compares to their other options.
Clients like to know what to expect, and package-based pricing can give them the general information before they even contact the designer. If the pricing is out of their budget they can move on to another designer, or they can re-consider what they are willing to spend. Clients can make comparisons much easier with package-based pricing, assuming the details and any potential add-ons are clearly provided.
2. Inquiries Will be “Pre-Qualified”
If your website lists the prices of your packages, chances are those clients who cannot afford your services will not take the time to contact you. In this situation, most of the inquiries you receive from potential clients will be of a higher quality because they know about your prices and they are interested (“higher quality” is used here to mean that leads should convert to sales at a higher rate). Of course, you will still get some emails from people who want to see if there are any lower-priced options available or even from people who did not notice the prices on your site, but in general it can help to reduce the amount of time that you spend responding to people who are never going to pay for your services.
3. Saves Time Compared to Pricing Each Project
Developing a quote or an estimate can be a time consuming process. You can’t make an accurate guess without knowing basic information about the client and the details of what they are looking for in the project. You’ll also have to estimate how long it will take you to do each aspect of the project and any costs that you may incur along the way. All of this data will be used to make the estimate.
Creating proposals or estimates takes up a lot of time that you could be using to do other things, and offering package-based pricing can eliminate a lot of that. Clients can evaluate the packages that you have to offer and they can decide if it’s a good fit for their needs. It’s possible that you can get started with a client without spending much time at all on preliminary things before the work is secured.
4. Allows You to Define Exactly What is Involved and Included
Most designers and companies that list package-based pricing on their websites will include a list of everything that is included with each package. This can be helpful for clarification purposes, from the perspective of both the designer and the client. It’s not uncommon for designers to run into issues with clients where there is some confusion about what is included in the service and what will need to be charged an additional amount. Package-based pricing can help with this situation by clarifying up front. It can protect the designer from scope creep and it also gives the client confidence that they know specifically what they are paying for.
5. Allows Clients to Have Options
When package-based pricing is not available and a client gets a proposal or a quote from a designer, they may feel like it’s a take-it-or-leave-it situation. In most cases the designer could probably reduce or increase the scope and price of the project to suit the client’s needs, but this is not always communicated or undestood. Package-based pricing makes it clear to clients what their options are, and they can easily compare the various packages offered by a designer to determine what meets their needs.
Cons of Package-Based Pricing:
1. Reduced Flexibility for Pricing
The main reason that most designers and agencies do not use package-based pricing is that clients and projects are all unique, and this usually requires some flexibility and customization in the pricing and scope of the project. Package-based pricing attempts to put projects into a specific box. Sometimes this works well, but many times the project will have unique characteristics that make it impractical to use a set pricing strategy.
2. May Reduce Number of Inquiries Due to Sticker Shock
Many clients, particularly if you are dealing with small businesses or non-profit organizations, will have unrealistic expectations regarding what they are expecting to pay for web design and development services. When these people see prices listed on your website they may immediately leave if it seems to high, without even examining the details to see what is included as well as to take a look at the quality of your work.
It’s not uncommon for a potential client to receive a quote that they initially feel is too high, but after looking at the details, speaking with the designer, and checking out some competition, they may decide that it’s actually a pretty fair price. In this scenario the designer has the opportunity to clarify the details of the proposal and to pitch it to the potential client. The client may wind up being happy with a price that they initially would have passed up if they had seen it listed as a package price.
3. It’s Difficult to Create Packages if You Offer a Wide Range of Services
Many designers and agencies offer a wide variety of services. Package-based pricing is really only effective in situations where the majority of projects can fit into certain classifications. If you are offering different combinations of services (such as logo design, web design, business card design, SEO, etc.) to your clients, chances are they will not fit into a specific package. The more types of services you offer, the more packages you would need to provide as options, and this can simpy become too overwhelming for clients when there are more than just a few options.
4. Can Be Intrepreted by Clients as a Cookie-Cutter Approach
Clients like to know that their project is important to you and that they are receiving a service that is customized to meet their needs. Package-based pricing can sometimes lead them to feel like they like they are being forced to take a cookie-cutter approach rather than to have their specific needs addressed within the project.
5. You May Still Wind Up Doing a Lot of Custom Quotes
When I used package-based pricing in the past I still wound up preparing a lot of quotes because things just didn’t always fit with one of the packages. I imagine this is also the case for many others who use package-based pricing. While offering packages can certainly save some time in this area, it will not elminate the need to be able to provide custom estimates.
6. Competitors Know What You are Charging
In my opinion this is not really a big deal, and it’s probaly less significant than the other factors listed here, but it’s still something to consider. Many designers aren’t excited about listing their prices publicly so that all of their competitors can see what they are charging.
There are certainly significant pros and cons for using package-based pricing. The situation where it is most effective is when the projects you are working on are very similar and there is only a difference in terms of scope. For example, PSD to HTML providers typically offer set prices based on factors like the number of pages being coded and the use of a CMS or shopping cart. Add-ons are then available for specific needs and sometimes custom price quotes can be provided depending upon the needs of the client.
In situations where a designer offers a wider selection of services and one project is vastly different from one to the next, package-based pricing will usually not work very well. When packages are used, it’s a good practice to still offer quotes for projects that do not fit within any of the options.
What’s Your Opinion?
Do you use package-based pricing? Why or why not?