As a developer or web designer, you may frequently encounter requests for e-commerce websites. These projects can be quite lucrative if priced right, but can also turn into an unprofitable nighmare if you don't anticipate the actual scope of the project. So figuring out how much to charge is important.
While some designers charge by the hour, most clients want a set price up front, or at least an estimate. To come up with an accurate price, you need to clearly define the scope of the work, and properly estimate the labor and resources required, and the associated costs.
Every project is unique, so you usually have to give a custom quote, which should be in writing, defining the scope of the project and what is part of the project and what isn't. And if you don't include something, put that in writing, otherwise the customer may dispute it later.
Here are the things you should factor in when estimating a price:
- How much will the shopping cart, hosting and any tools that you need to complete the project cost? These would need to be factored in.
- Will there be custom coding or graphics design involved, and how long will that take, or if outsourced or you have a team, how much will it cost for that portion? If this is not included or there are limitations, then state that in writing.
- How long will it take for you to communicate with the client? This includes meetings, phone calls, reading and answering emails, etc.
- How long will it take you and the customer to select a template, and then for you to customize it? Getting the customer to agree on the template or look & feel could be simple, or it could drag out into lots and lots of meetings. Factor in time for this.
- How long will it take to enter all of their products into the shopping cart? This can be quite labor intensive if they have a lot of products, especially when under a deadline.
- Does the customer already have all the product descriptions and marketing content written, or will you have to research and write them yourself?
- Does the customer already have images of all their products, and if not, are you required to provide them? Can you legally get images from one of their suppliers or other legal source, or will you have to take pictures of all these images? Be aware of copyright issues before you agree to use any third party photos, and have the customer certify in writing that they have a license to use such images, to protect yourself.
- How long will it take to train the customer on how to use the shopping cart? They need to be able to process orders and manage payments. For some customers, this will be easy, and for others it will be a real learning curve. So factor in time for training.
- How much support will the customer need after the website is complete? Additional training? Support requests? Specify what comes with the price, and factor in any associated time and costs.
- How organized is the customer? Do you think they will really provide the information you need in a timely manner? If not, you need to factor in the time it takes for follow-ups and chasing down information. You may also have to anticipate that you may wind up having to do some of the things the client was supposed to do just to get the project done (like write product descriptions).
- How picky is the customer? Do you think they will be open to your recommendations and like what you have to offer, or do you think there will be a lot of tweaking and customizing and changes along the way? Picky customers take more time, so charge more to compensate for that extra time.
- If something happened and you couldn't do the project personally, is your price high enough where you could outsource various components and still make a profit? If not, then your price is too low, and you are not paying yourself enough, and you have no backup plan if you can't do 100% of the work yourself.
You may also have other factors that are unique to the particular project. Be sure to anticipate and itemize these.
In the end, you want to come away with a price that is fair to the customer and to yourself. Don't be afraid to insist on a fair price.
I once had a client come to me to build an e-commerce website. She wanted a lot of work done, and she wanted it in an extremely short period of time. I would normally have charged her $6000 or more for the amount of work she needed, but since she was a close friend, I gave her a discount and quoted her $3000. She balked at that number and said her cousin promised to do it for one third of that. I told her, go ahead and use your cousin then, but it's too much work for only $1000. I did warn her that for only $1000, I doubt she would be satisfied.
A few months later, she comes back to me and wants me to build her website and agrees to the $3000. It turns out that her cousin only built part of the website and demanded more money and refused to give the $1000 back since he already started work. So I took over the project, and created her website by the deadline. It took four of us to get it done by the deadline, and the customer was happy. After paying everyone, I barely made a profit, but since it was for a friend, I was fine with that.
So just because someone undercuts you, doesn't mean you have to match their ridiculously low rate. If the customer has to learn for themselves that they get what they pay for, then you have to let them learn that lesson. When they get burned, they often will come back and pay what you quoted them in the first place.
So, price fairly. You may lose some orders by not being the cheapest provider, but you usually wind up hating the project if you price the project too low. It's not worth the stress to be underpaid, considering how much work is involved.
You can certainly make a lot of money working on e-commerce projects, but only if you price them to be profitable.
Good luck, and if you have tips and/or questions, we would love to hear them below in the comments.