What would you charge?

Hello friends,

A few of my friends and neighbors have approached me about building them a rather basic e-Commerce site or SPA for their home-based businesses. As part of my online learning, I’ve completed several courses that have included class projects where we made a fake online store that included such features as:

  • a functional shopping cart with fake products
  • a working database back-end with protected routes
  • a real login system with admin-level permissions
  • a fake payment API

There would be a bit of custom work involved in tailoring this template project to each individual user, but overall it should be fairly straight-forward.

While I’ve done a bit of professional coding before, this would be the first time I’ve ever asked another person for money in exchange for my work. So, my question is simply this: how do you go about determining the value of your work? Do you just pick an arbitrary hourly rate, or a flat fee for the initial project plus an hourly rate for additional improvements, or something entirely different?

I can give a more detailed answer when I’m not on my phone but in my opinion an hourly rate is probably your best bet.

Another good option is a weekly rate if you know roughly how many hours per week you’re comitting to.

  1. Create requirements with your customer: Which features are needed? Be very explicit here to save yourself a lot of headaches. E.g. a shop needs handling payments, so Paypal? Stripe? Credit Card?

  2. Estimate from previous projects the amount of hours for each feature. If you are new, have a look at other people’s estimations. And double that time for troubleshooting.

  3. Set a prize for the whole project and add different milestones for it, e.g. V1: basic functionality just Credit Card payment, V2: Paypal + Stripe etc. Money-wise, I set my freelance hourly rate at 3x my employee rate. So let’s say you estimate for 50 hours and your employee rate is $20/h, this would be: 50h * (3 * $20/h) = $3.000

I don’t recommend hourly based pricing, because shit like “why did you need 10 hours for this feature, I could do this in 2 hours” will come up soon. It also increases the probability that you will slack off, because you will get paid for slacking.

If new wishes come up that are not in #1 requirements, be very explicit that this will cost extra money and need new time estimations.

No, it’s not arbitrary, it’s how much money you need to make. How much do you need to make an hour? How much is your time worth?

So how long will it take you to do it, do you think? Then × hourly rate. Note [YMMV, but] you’re likely to be way off in the calculation there, so probably multiply the number for time you come up with by, say, three.

All this is rule of thumb, but if you Google freelance calculators online, they’ll do the same thing for their calculations.

Two issues here:

  1. you’re a beginner and this will feel wrong, because the numbers get quite big quite quickly. Compare to full-time employment though, bearing in mind that the actual cost of an employee is often 2-3× the salary paid to them. If you’re working for yourself, actual cost is the thing you compare. If you have the skills to do this, what’s the difference?
  2. You’re doing it for friends/family – this is a problem when it comes to charging, because they know you. So do calculation as described, but you may have to cave on pricing

The value is in the product: if it makes a lot of money for them, then it is very valuable, if it does not it isn’t. So then the value of your work is in how well you can produce that

This all becomes a much easier process with experience, but initially it is very difficult; IME you have to do it a lot for it not to seem unnatural