Easy Formulas For Setting Web Design Prices

Here is one commonly used formula:

Earnings = Salary + Expenses + Profit

Billable Hours = *2080 - Overhead Hours

Earnings divided by Billable Hours = Hourly Rate

*Total Annual Work Hours (52 weeks x 40 hours per week = 2080 hours)

To clarify, let's walk through an example.

Salary - Let's say you are qualified to earn a $50,000 salary.

Expenses - For accuracy, total your projected expenses. However, expenses are often estimated to be equal to salary, so for this example we will set our expenses at $50,000.

Profit - Let's use the standard 20%.

Overhead Hours - To be accurate, total your projected nonproductive hours. I have read that 20-40% is usual. For this example, we will use 480 hours. According to the HTML Writers Guild, this is the number used by most ad agencies.

Now, let's put it all together:

Earnings = $50,000 (salary) + $50,000 (expenses) = $100,000 + 20% (profit) = $120,000

Billable Hours = 2080 (full time annual hours) - 480 (overhead hours) = 1600 hours

$120,000 divided by 1600 = $75 (your hourly rate)

The formula above is a common one that offers a simple but effective method of computing rates. A good resource is The HTML Writer's Guild How to Set Rates FAQ. It covers five ways to determine your rates. 

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