Ask HN: How much?

[hackeronymous]

I am using an anonymous account for this post. Indeed, I registered this account solely for the purpose of this post. Sorry, pg.

I have been freelancing for almost a decade, and I still never know what to say when a prospective client asks me this question.

Given that I have always worked alone, and given that I have never talked to anyone about this topic openly, my response has always been based on personal intuition. Now I wonder if I am underselling myself.

I am not sure if this is a taboo topic among hackers, but my impression is that such a thing does not really exist. But given that I don't know any hackers who freelance personally, I have a real need for getting some more datapoints. If I don't know what others are billing, and I therefore bill significantly less out of my own ignorance and misestimation of effort, I reduce the average price at which others are able to charge. The compound effect of this is tha we are all running like hamsters on wheels for very little money.

Between 16 and 21, I made 5 to 10 HTML-only websites for between $2,000 and $5,000. I also made 3 to 5 flash-based intros/websites for between $5,000 and $20,000.

At 21, I made a .NET-based windows desktop app for $50,000.

At 24, I wrote a RoR web-based app for $100,000.

These were all freelance projects built by me from scratch while doing HS and Uni.

Does anyone else feel like sharing what they billed for contract projects (not subcontracting gigs, client-direct only -- before any type of broker takes their cut)? It doesn't have to be something you did personally. Maybe you know what the company you worked for billed for developing a specific type of app. The results will only be interesting if we get numerous data points, and the best way to motivate more responses is to respond yourself.

[SwellJoe]

Not sure why you consider this such a touchy subject that you had to do it anonymously. Charging money for your services and skills is not a bad thing.

I've rarely done software development contracting, but I spent several years as an IT contractor (with a lot of scripting, and simple web-based UI work to make it possible for non-technical people to carry on when I've gone). I started at $95/hour, and by the end was quoting $150/hour with a four hour minimum for off-site work, and eight hour minimum plus expenses for on-site work (with a $1000/day discount rate for multiple days).

Most of my development work over the years has been product-focused, wherein no one client paid for the whole thing. I would build as generally as possible, retain ownership, and sell the result to many customers. I wasn't very good at this for the first five years or so, however, and ended up doing a lot of development for pennies on the dollar. I would talk to a potential customer, they'd say, "We wish your products could do X and Y." and I'd think, "Yeah, I bet a lot of people would like that", and would offer to provide it for some ridiculously low price ($199, or whatever) as a plugin for my existing product line...spend two or three weeks working on it (and sometimes money for icons, design, other developers, etc.) and then never sell another copy of that plugin. I suggest not doing that.

[Laurentvw]

Just for the sake of giving us more information, would you be willing to compare your RoR app with a website I made a while ago.

I got paid $500 to make http://www.solafcars.com (works in multiple languages, includes an admin panel, everything on the site is editable). I would assume your RoR app was much bigger, but let us know how it compares.

I know I got underpaid though.

[patio11]

A tip for your future: Price based on value, don't price based on cost.

You are delivering a tool which sells new automobiles. A single sale is worth thousands of dollars to the dealership. If they are achieving ROI on the first sale they make as a result of your website, and you're expecting that to eventually be in the few sales a day range, you are DRASTICALLY underpricing relative to the value they perceive the website as delivering.

[tptacek]

Did this take more than 3 hours to make? Did you provide any post-implementation support at all? If either are true, you wildly underbid.

[Laurentvw]

It definitely took more than 3 hours, I'm not superman lol. Everything was made from scratch. The admin panel took most of my time. Keep in mind I also made the design, registered the domain name and set up the hosting. Support was also provided, we got together so I could explain how he could manage the website on his own. It was my first real freelance project though, so I let him choose the price.

[tptacek]

Your pricing may be off by as many as two orders of magnitude.

[utku_karatas2]

Lol, dude, so you're where the Chinese companies outsource to :).

Joke aside, I suggest using Django in such low budget projects if the admin is a selling point. Will save you some time at least (In Django a very slick admin is automatically there for you). Best of the luck.

[midnightmonster]

This might be the worst example of underpaid I've ever seen.

[hackeronymous]

It seems to me that you got seriously shafted on that deal. I don't think that the app I made was much more complex, i.e. I probably maybe spent 10x as much time as you did on that one, but I made 200x more money doing it. The pricing of these things seems to be very subjective to me, and contingent on numerous factors including: How much they've actually got to pay for it? How much they think they can get away with? How much they think someone else would bill them for it? How much their friends tell them it should cost? What is the actual application? How much incremental money do they stand to make as a result of its existence? And very little with how much time/effort actually goes into it on your part. Ofhand, you could have easily made at least $5k on that site. And if it was for a more general purpose, i.e. as opposed to just one dealership, you could have made much more.

[christofd]

You made a triple-language supported database application with immaculate crisp graphic design and well thought-out layout for $500 dollars??? Your solution btw is about as good as it gets for a small-biz website.

I second the opinion that your pricing is off by one or two orders of magnitude.

[curoi]

Furthermore, I wonder how jobs like this effectively lower the expected cost for other business. When does the owner's brother approach me and ask why he can't have a top-notch custom webapp for $500?

[robryan]

I don't really think it's a big deal doing something on the cheap for a first project, the experienced gained and the reference to show future clients is worth it.

[ujjwalg]

I think it will be easier to answer your questions if rather than providing the total amount, you provide $/hour in those time periods.

[hackeronymous]

The problem with billing by the hour is that developer performance varies by a factor of 10x or more, whereas hourly fees vary by about 5x. And most clients would not feel comfortable playing $250-$300/hour unless there was some way for them to justify it. (i.e. more people involved, despite the fact that they may do nothing). Besides, why charge per hour? If I solve your problem, what does it matter how long it took me to do it?

[ujjwalg]

I was not saying that you should charger per hour. I was asking that the numbers you floated will make more sense if you can provide how much time you spent on each of those projects. For example: you mentioned $100k on RoR project. This number will make more sense if you mention whether it took you 1000 hours or 10000 hours or maybe 3 months or 3 years.

[hackeronymous]

Oh, I see what you mean. It probably took about 1000 hours total, but spanned over a period of a year. So maybe 20 hours per week. I was just learning Rails at the time, so it took a bit longer than it otherwise would have. I could probably make what I made in about 1 to 2 months tops now.

[Tichy]

100000$ for two months work seems like a good price.

[hackeronymous]

I should probably mention that even though I spent 20h/day working on it, I spent/spend virtually every waking hour either reading/writing/thinking about writing software/business. I don't drink, I don't do drugs, I don't party. I live with my fiancee, and work pretty much every waking hour on something or other. I don't have a blog because it would consume too much time, and I don't interact with other developers because I worry that it will pull me toward the middle of the bell curve. I worry that I may be going insane, but only passively.

[jroes]

hmm. even for a year's worth of work it seems like a good price.

100k/year gross working only 20 hours a week is pretty badass if you ask me. The average (full-time) web developer salary according to salary.com is 70k/year.

[lsc]

the reason why many of us charge by the hour is that it requires less negotiation. When is the project 'done'? a flat rate contract requires a lot of work up front to define things that might be better defined after you are most of the way done. Hourly rates make last minute changes simple, and mean that you don't have to argue if it's a last minute change or not.

it also means that the employer bears more of the risk if the work is harder than originally imagined.

(Now, I also agree with your points about why charging a flat rate is better; I'm just pointing out that there are also reasons why charging an hourly rate is better.)

[weirdwes]

This has often been a hesitation of mine when being asked to do freelance projects. Before I took a web programming job, I had no formal training or experience so I always felt like I couldn't ask for high hourly rates because I wasn't confident enough in my work. After landing a job and doing it for a living, I still felt like I couldn't charge much because I would compare it to my salary which was a FAR cry from anything close to $50+ an hour. Because of the inhibitions, I've always just stuck with friends, friends of friends and family members when doing projects.

Now that I'm unemployed, I really think I need to reevaluate what my work is worth and start asking for a decent rate when projects come my way. The comments in this thread are definitely telling me I'm selling myself short - both in freelance projects and in what I fought through to earn what I earned at my last job.

Enjoying this thread. :)

[ujjwalg]

Somehow I feel that this post was more about being boastful than anything else.

[hackeronymous]

Actually, no. But I can see why you would think that. I literally don't know the range of what is reasonable and what is not. Your comment is implicitly informative, though. Furthermore, if I was being boastful, I would probably not be hiding behind an anonymous account.

[natrius]

Boasting usually isn't done to make other people feel bad; it's to make the boaster feel good. This post could serve that purpose even anonymously. If people confirm that you indeed are being highly compensated, that could make you feel good about yourself.

Not that I think that was the intention.

[caffeine]

Could you add estimates of the amount of time each site took you (in hours), not including time spent teaching yourself, but including all time spent writing code, corresponding with clients, etc.?

That would make it easier to compare.

[larrykubin]

Over the past few years, I've worked on quite a few PHP/MySQL/jQuery/Oracle webapps for clients. I've never worked on a plain HTML site or a Flash site, so I can't provide any stats there.

Here are some of my stats - most projects I have worked on cost around 10-20k, average around 75-100 an hour, and take approximately 3 months of part time effort. I've done maybe 15 to 20 projects of this length/cost. I like projects of about this size because: I am not overwhelmed, it allows for nice quarterly vacations ~ a week each, the requirements aren't overly complicated, I have free time during the day, and the projects don't drag on forever. I freelance in Austin, my wife covers me on her insurance, I'm in my late 20's, and have done this for 3 years.

I have bid on a few 100k-size, year long projects, but have not been selected for any of them so far. So it goes.

[hippee-lee]

If you don't mind me asking, where/how do you find projects to bid on?

[z8000]

Boy am I in the wrong business if these kids can knock out CRUD apps for $100K.

[christofd]

Well, Laurent charged only $ 500 USD for his solution (but that's an anomaly).

If you are serious about web apps, then scaling the back end comes into play, which means getting into distributed systems. Networking, security and SysAdmin become relevant as well.

I think it's fair to charge up to $100K with a college education and/or work experience in the field. Other professions do so as well.

Go pick on other professions: i.e. banker bonuses, real estate commissions, union rates, lawyer rates etc.

[ujjwalg]

so you are saying $500/hour is industry average? Hackeronymous mentioned that he charged $100k for a 1000 hour work which he could have done in almost 1/6th time if he was experienced. I am not sure about the industry average, but I work through guru/elance/odesk and average seems to be $50-$150 for an experienced developer.

[christofd]

No, in the example on this thread Laurent, a Belgian programmer, charged $ 500 USD for the whole solution, the whole shebang. (He could have just given it away for free, since the main point was to establish a reference)

Although, I admit... this example is really just a CRUD app, with no advanced server back end.

[noodle]

assuming that your .net and RoR app took less than a year to finish and you're not killing yourself with the hours (around 40/wk), it sounds like you're doing fine.

[req2]

A freelancer's wage is different from a salaryman's wage - health insurance dollars and the "self-employment tax" are two sizable bites to take into consideration.

[tptacek]

Both of those "bites" are true, but what the market is compensating you for is risk, not overhead.

[req2]

I agree, but I simply meant that the numbers for "doing fine" differ between salary and freelance, just as the numbers for "doing fine" differ between Topeka and New York.

[hackeronymous]

Precisely. As well as the increased risk of having no contracts for long-stretches of time, and the additional overhead time of promotion, customer relations, etc.

[tptacek]

150,000/yr (~75/hr) is low.

[jroes]

How is that low? once again, I must whip out some statistics:

http://swz.salary.com/salarywizard/layouthtmls/swzl_compresu...

The average full-time web developer salary is 70k. I'm not saying I don't want to make $150k+, but I just can't find any way to substantiate the claim that I'm worth that much.

[tptacek]

An "average full-time web developer" covers a huge number of roles, most of which don't solo end-to-end on applications.

[whatusername]

don't forget payroll tax, supplied laptop/desk/electricity/etc, sick leave, annual leave, any skills development, the fact that you're also doing sales (which is probably more than 70K)..

Just because you have 70,000 listed on your annual pay summary - does not in any way mean that's how much your company spends to keep you employed. When you are a freelancer - you take on a lot of those costs yourself.

[tptacek]

You're making the same mistake made upthread; price by value, not by cost. Payroll costs, leave, utilities, all irrelevant.

Freelancers make more because they accept risk. Customers pay extra to mitigate scheduling risk, recruiting risk, and project risk.

(Yes, you're not viable if you can't at least pay freelancer overhead and still have a living wage, but that has nothing to do with what your bill rate is.)

[req2]

Ah, I see the disconnect I made- I started talking about the 'doing fine' comment on the yearly salary, rather than the initial topic of pricing.

[sho]

There are wild variations between what two different "web developers" can produce. As the type of person who is actually interested in programming enough to be hanging out on a site like this, you are probably at the top end of the chart without even realising it. The bottom end is the schmuck clicking around in Dreamweaver, you never see him but he outnumbers you 20 to 1, and he is dragging the salary down to 70k. If you are familiar with statistics, you might say that 70k is the mode but I doubt it is the mean.

Everyone should listen to tptacek, he is absolutely right. It is the value you can deliver, not what your actual cost is. A good web site can be literally worth millions. Deliver the final product, end to end, and you can charge a good proportion of that. 70k is "sitting down money" and most good web devs should not accept anything like that.

[noodle]

low/high is very subjective. depends on a lot of stuff.

[tptacek]

Most freelancers who can solo a multi-month .NET or RoR application make more than 75/hr.

[hackeronymous]

how much per hour would you say that it's worth?

[tptacek]

You got downmodded for complaining about being downmodded. The anchor price for generic (solo, incl. project management and interaction design, but excluding graphic design) web dev is ~$120/hr, but Rails and Django people are hard to find right now.

iPhone rates seem to top out at around $200/hr, and iPhone devs "feel" like the hardest consultants to hire right now, so there's your range.

Note that these rates bear no resemblence at all to what a big firm would get. There are all sorts of other risks big firms mitigate that you can't. [%]

[%] (to wit: the risk of negotiating with your brain fully engaged)

[hackeronymous]

why the downvote? It was an honest question.

[hackeronymous]

Am I missing something? Is what I said offensive in some way to someone? If so, would you please care to clarify?

[ekanes]

Where do you live? It seems bold to declare it arbitrarily "low" without including location. If you lived in a small town, or Bangalore...

[nailer]

I billed at AUD 75/hour as a Windows admin when 17.

Now GBP 550/day at 28 as a Linux architect and infrastructure software developer.

[highplains]

sweet fancy moses!

[tptacek]

550/day is not crazy high at all.

[christofd]

That's in british pounds, not USD.

Addition: did the math at www.oanda.com (currency conversion). GBP is LESS than what I thought: 1.63842 USD.

So, that's 900 bucks a day, resulting in $ 110-120 USD/ hour.

[tptacek]

Yes, I know. It would be quite low in USD.

[lzell]

"We're hiring a Rails/jQ developer. NYC or Chicago"

Someone should take you up on $120 per hour being low!

[patio11]

When I heard it was in pounds I'll admit to a brief flash of envy. (Though $550 a day would still be, erm, rather substantially more than Japanese salarymen my age get.)

[tptacek]

$68/hour is less than my mechanic charges. It's not a bad living, but for a feast-or-famine consultant supporting a family as a sole breadwinner, assuming 70% utilization, it's a gross 95k salary, from which you subtract self-employment tax.

[nailer]

Thing is, I wonder where I spent the money.

[christofd]

ah, steak and strippers :)

[sokoloff]

and he probably wasted the rest... :)

[tptacek]

Here's a useful outside perspective:

http://www.cartalk.com/content/columns/Archive/1999/October/...

[pmjordan]

I've been trying to work this out for some months now, so apologies for piggy-backing onto this question:

How do you actually achieve market prices?

I'm aware that there are massive differences in how much you can charge based on location, but I still feel I'm hitting more resistance to my asking prices than I should be. As far as I can tell, it's not a quality issue. I've had repeat business from almost all my past customers and none of the others were unhappy as far as I can tell, and I've had zero downtime for over 6 months now after starting 15 months ago.

Yet, if I give a straight hourly figure, 90% of the time I'm either told it's too much or I never hear back at all. I do a little better when quoting a fixed price based on the same hourly rate (plus buffers, etc), but many times the work is too ill-defined to come up with a definite offer, so it comes down to giving an hourly rate, with the usual result.

I've had the most success and repeat business with extremely time-sensitive projects, or projects that have gone off the rails and need turning around. I charge about 50% more if I'm basically being asked to work day and night. Once the work is done and done well (and it always is), I can generally get future projects at the standard rate with no major trouble.

I've reluctantly tried the loss-leader strategy of charging less on the first project, and as expected it's not terribly effective.

So as far as I can tell, the issue isn't so much the price as proving I'm worth it. How do you guys handle referrals, references, etc.?

A lot of my work involves NDAs (as it's often subcontracted), which makes referring to existing work and customers extremely difficult. I have a few customers who are brilliant and who I can use as references, but as far as I know, nobody has ever followed them up. Other than literally becoming known by everyone in the area, what other options do I have? Am I expecting a higher conversion rate than I should be? How do I go about finding more well-paying customers?

Maybe I'm tending to the wrong niches, too. My background is mainly in high performance computing, game tech and web apps.

- I've had zero HPC freelance work, and no leads either. No clue where to find them.

- I've had a sizeable amount of game tech programming, but getting reasonable money from game devs seems to be like squeezing blood from a stone.

- The web app business can yield better results, but there's a sea of awful programmers (who seem to exclusively know PHP for whatever reason) out there who call themselves web developers. Their hourly rates are dirt cheap, but their efficiency is lower still. I still can't reliably get this through to potential customers.

- The easiest money is in business-y/enterprise-y development. Except the only way I seem to be able to do this is via subcontracting, which is suboptimal because it's the middle man getting the reputation.

I'm not sure what other areas are more lucrative. Embedded stuff seems like a good fit to my skill set (game console development isn't far off) but I have no clue how to even find potential customers. I'm not sure how or where best to sell myself to enterprise-y businesses.

[tptacek]

Short answer: by turning down projects that are below your threshold.

Intermediate tactics:

* No matter how your SOW/MSA is structured, don't quote prices in terms of $/hour.

* When you get rate pushback, follow up with a bid for a smaller or more constrained project. Slip scope. Never slip your rate. You'll never get it back.

* Include a support retainer or annual/quarterly maintenance price, instead of giving that away for free.

[pmjordan]

Thanks for the advice, Thomas!

Short answer: by turning down projects that are below your threshold

I'm slowly getting to the stage where I can afford this, but I've only built up about 6 months of runway, and it seems nobody starts projects in winter, which meant I came this >< close to running out of cash in February. I'm trying to avoid a repeat performance. Is it adviseable to turn down below-threshold projects purely for reputation's sake?

No matter how your SOW/MSA is structured, don't quote prices in terms of $/hour.

Easier said than done. I keep doing this dance where I'm avoiding giving an hourly figure, but end up going nowhere. Do you have a more specific suggestion for how to go about doing this? Also, what does 'MSA' stand for in this context? Too many meanings for google to be useful.

When you get rate pushback, follow up with a bid for a smaller or more constrained project. Slip scope.

Thanks, that's useful. Thinking back, that's happened by accident a few times, but I'll consciously encourage this in future. Some customers seem to fear this though: it seems they're afraid I'll build something only I can maintain and then charge them crazy money later. Maybe this happens. I don't know.

Never slip your rate. You'll never get it back.

Yep. I expected that, had to do it once or twice anyway. No fun at all.

Include a support retainer or annual/quarterly maintenance price, instead of giving that away for free.

So far, I've just billed individually for any but the most trivial maintenance. (e.g. 15-minute fixes to bugs that were blatantly my fault) How do I avoid scope creep on flat fees without it seeming like a raw deal to the customer?

[tptacek]

An SOW is a statement of work. An MSA is a master agreement. Together, they're your contract.

If your BATNA is "lose house, live in box", the bill rate discussion is academic. Steadily raise your rate with new clients. Many consultants will advise you to build a steady pipeline and then raise your rates until you're turning away enough work to be 50+(Nx10)% utilized.

You can quote prices in fixed project dollar amounts (or by the milestone), and then cap your hours in an SOW. If you're working with procurements departments, it doesn't matter, since they're doing the math automatically. But don't offer up a $/hour amount.

I have less development consulting experience than many of the other commenters here do, but what I'd probaby do with regards to bugfix support is:

* Have a formal acceptance process, at the end of which the customer is responsible for signing off on the deliverable. Most large projects I've worked on are QA'd by the customer as well as the vendor.

* Have an escalation ladder for bugs, from cosmetic to data-loss, and have SLA time frames for free fixes on anything other than "cosmetic".

* Offer an up-front retainer contract for rapid (=better than SLA) bugfixes, changes, or feature requests, pointing out that if the customer does not opt for the retainer, feature additions and subsequent revisions will be full-on new projects subject to whatever your current rate and scheduling terms are.

Something I've learned in the past 4 years: scheduling risk is something many customers will pay to mitigate.

[hackeronymous]

Brilliant advice.

[steveplace]

How do you actually achieve market prices?

You get a good model that helps to answer that question, and you've got a sellable market product.

[antidaily]

I used to throw out numbers and almost always underbid. These days I ask for the budget, figure out how many hours that comes out to, and tell them what they get. I never give a number before the potential client tells me what they can spend. They know what they can afford so why play games?

[herrherr]

Unfortunately some clients like to play this game and don't mention their budget. In my opinion this makes it worse for both sides.

[utku_karatas2]

As another freelancer much below your rate I wonder if they knew you were a one man show in your 100K project. Usually firms want to see teams and sales reps in suits if they're going to shell out large amounts like that. How did you ever gained their trust?

[herrherr]

In my 3 years of freelancing I have done quite a few websites (40+), but I never reached prices that were this high.

Here are my rates. Btw I see no reason to post this anonymously. It's ok to charge money =)

- HTML Website $1500+ (without design)

- CMS $2200 - $12000 (without design)

Normally I'm using fixed prices, but in case someone specifically asks for my hourly rate I quote $70/h. Note: I ran this business part-time while doing my bachelor. Since I'm now a B.Sc (since last week) I think I might increase the rates. Guess that's appropriate, right?

[Andys]

Speaking for myself, if I was hiring someone to do a website, or a CMS, I couldn't care less if they had a B.Sc. or not. I wouldn't check, and I certainly wouldn't let it change my mind about the price being charged.

[herrherr]

I'm fine with your argument, but you would be suprised how some clients are argueing. For example: "You are no professionals (read: no finished studies), therefore I'm not paying more than $X."

[Andys]

So they're just using it as a technique to get a discount? That's terrible :-(

[midnightmonster]

Clients are sometimes amused that I actually majored in English and philosophy, but I've never gotten any grief about it. Raise your rates because after 40 sites you're better than you were 3 years ago.

[utsmokingaces]

damn I need to charge my clients more.