Turn Your Web Design Agency Around By Raising Rates by 500%

One day at our modest design agency, we raised our rates.

Like, astronomically. I’m talking about a 500% increase, out of the clear blue.

And it was scary as hell. But guess what? It worked.

This is our story.

Our initial business plan for Madtown was based on a simple numbers game, as it is for most young design agencies.

We figured that if we charged $2k/website and designed five or six of them a month, we’d be running one hell of a successful design agency. Plus, we could charge each client $25/month for hosting, giving us ongoing residual income. We even had a plan for growth, which involved hiring a business developer and paying him 25% commissions.

In our first few years, we got a lot of business, but not as much as we’d anticipated. We strategized, we planned Adwords budgets, we came up with all kinds of nifty little ways to boost our income. But we were never truly profitable.

It wasn’t an SEO problem, if that’s what you’re thinking. We ranked first for all of our keywords for several years. It didn’t matter–we were still unable to achieve the workload volume our entire business plan hinged on.

Before the start of 2012, our team sat down to talk about what it would take to turn Madtown into a profitable design agency. And that’s when we took the biggest risk in our business’s young life. We started raising rates.A lot.

The Idea

Around the time of our life-altering strategy session, I came across a blog post by Blair Enns, from his website Winwithoutpitching.com. If you’re a young designer or a small design agency, Enns’ manifesto
is a must read. But this particular post specifically discussed premium pricing and how it improves commitment with clients.

When you’re doing websites at $2k a pop, you don’t get much commitment from your clients. They’re just not financially invested enough to be emotionally invested. They’re flaky, they beat you up over price, and they make it clear that you’re low on their priority list.

They also don’t see you as a big-time designer, so they’re more likely to walk all over you. These are the clients who request 1,000 changes to their sites, including changes that make no business sense or that completely reverse a previously requested change. You know them: the clients who suck.

After reading Enns’ manifesto and thoughts on premium pricing, I brought his ideas to our team, and we made the change the very next day. From that moment forward, we were charging $10k minimum on all of our projects.

I know this is a very scary proposition for most. Like I said, we were scared as hell. I mean, we had families, bills, and business expenses to take care of, just like everyone else.

But we did it anyway. And it worked.

How We Pulled It Off

We knew we weren’t going to be able to raise our rates that significantly without changing a thing about our services. To get the $10k clients we wanted, we had to up our value.

We realized that, in today’s business environment, designers aren’t just being hired to design–they’re being hired to bring new perspective to business problems. Businesses don’t just need new websites–they need new strategy, delivered through their websites.

And there was our value.

Instead of just making cool-looking websites, we started tackling business problems. We created an entire diagnostic progress, through which we’d learn as much as we could about a business and then present a plan outlining how that business could overcome its problems and move forward. We started charging $5k as a flat fee for this service.

In addition to giving us a foothold into a more premium market, this new service allowed us to take the time to get to know and understand our clients’ businesses. It also got our clients more invested in the process, which resulted in smoother, more successful projects.

Here are some other things we did:

  • Defined and implemented a design process, start to finish, that we followed with every client.
  • Focused on working with only a small number of clients each year.
  • Stopped writing proposals. We haven’t created a proposal in almost two years now, and the amount of time and energy we’ve saved is astronomical.
  • Started building our expertise in thought leadership and contributing regularly to the market conversation online.
  • Eliminated all the clients who did not fit our new pricing model. (If they didn’t value our expertise, they had to go.)
  • Identified any deficiencies in our expertise and resolved them immediately.
  • Stopped letting clients dictate our process or design choices.

The Transformation

I know. At this point you’re thinking, “That actually worked?”

And the answer is yes. Within the first two weeks, we secured a project worth not just $10k, but $20k–our largest ever. We were also saving tons of time and money by not writing proposals or pitches, chasing after businesses we never had a chance of getting under our previous business model. (One of our huge lessons learned was that if someone really wanted to work with us, they wouldn’t bother with the proposal writing process. And there was no need to waste our time on people who didn’t really want to work with us.)

By the end of 2012, Madtown’s revenues were up over 100%, and we’re going strong into 2013.

More Money, More Pressure, Better Results

It’s basic human nature: someone who’s paid more has more incentive to perform at a higher level.

The designers who are willing to slash their prices to win clients are only in it for the money. Whether their clients grow as successful businesses isn’t really on their radar.

But when we charge a premium, it’s not about the money anymore. It’s about creating something great for our clients–something that will transform their businesses.

Now that I’m paid a rate I’m happy with, I feel more pressure to perform exceptionally well for my clients and make sure they are getting real results.

Save Yourself: Raise Your Rates

Looking back, I don’t understand how any designer can get away with charging $1-2k for a website.

If a typical project takes 100-200 hours, that’s only $10-$20 an hour. When you’re working for yourself, you can’t just charge the hourly rate you might get if you worked for someone else. You have to charge enough to take care of expenses, education, and healthcare, grow the business, and make a profit.

Profits are the true validation that your business is successful. If you’re only making enough to break even each month, you’re just one bad client away from going broke.

So please: take a leap of faith and raise your rates.

Of course, you can only raise your rates successfully if you are willing to turn down business. And yes, it’s definitely scary, but the rewards are plentiful.

These days, I turn down 90% of our potential business. Even if people can meet our minimum financial requirement, I’ll turn them away if they seem difficult to work with. In web design, as in so many other businesses, the best results come from an exchange of services between two parties that are well matched. As much as I want to be the right fit for my clients, I also want them to be the right fit for me.

Give your design company the best shot at success by charging what it takes to do it right. Ditch the disrespectful, cheapskate clients who pay you unsustainable rates, and you’ll discover a whole new sense of satisfaction in your work. You’ll also discover that, suddenly, you’re doing the best work of your career.

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Jay Baron is a brand strategist at madtownagency.com. You can follow Jay @jaysbaron or Google+.


  • ravi sharma

    wow That’s great Article i’m also continued w+worried about our company service charges. We are “Cgchimp” based web and graphics design studio.

  • Makes sense for every product, why not for webpages, SMART!

    did you have also a powerfull portfolio?

    This idea is making me think.


  • Thanks for your article. This is the exact thing I’ve been considering with my business. I think the biggest indicator that I’ve seen that I’m not charging enough and need to adjust my strategy is that lack of client commitment. When a client is paying only $1-2K for a site, they don’t see the website as a true priority in their business day. Their contributions and responses are sluggish at best. Very frustrating when I’m trying to schedule upcoming clients.

  • Simon Hermann Hector Goellner

    Great article!

  • If you aren’t submitting proposals, what does your sales process look like? Are you willing to share more about what your diagnostic uncovers?

  • Awesome read! We’ve been implementing the same switch and I hope for the same results!

  • Jay Baron

    Hey Pelayo,

    I think that might have been the scariest thing for us. Would client’s really see value in $10k project fee because our portfolio wasn’t as strong as it is now. That’s why we spent so much time looking at areas we could add value.
    With that said I think the power was the fact that we were charging so much coupled with the fact that we refused to write proposals clients could see the value and felt as though they would miss out if they didn’t work with us. Being exclusive makes clients want to work with you.


  • Good advice. I wonder, though, what specific markets you focus on and are most successful with. Probably not most small, local businesses and startups.

  • Really interesting read! I’m not ready to take that kind of plunge, but I can see how adopting some of your strategies could be helpful to anyone. For one, being more exclusive and standing by rates you’ve set because you feel you are worth that much help your confidence and will help attract the perfect clients. Thanks for this!

  • Jay Baron

    You would be surprised how many small businesses and night owls work with us. I think we assume too much that small businesses don’t have the money when in reality we’re not allowing them to see the value.

  • Jay Baron

    Great Bob,
    I hope you share the results with us I would love to hear them. If I can be of any help let me know.
    Good luck.

  • Jay Baron

    Glad it helps. I hear ya we struggled with that too. The client doesn’t really respect you and they don’t see you as a professional.

  • Jay Baron

    Hey Mia,

    I saw your Tweet. What I would recommend doing is starting with Blair’s Manifesto. Read it from beginning to end and after that read it again. I have honestly read it 3-4 times, and I continually reference back to it. He gives specific advice on what to do. Although we take a slightly different approach that we have honed through the past year and half that works for us his approach does work as well.

    Consider how lawyers, doctors, and other professionals are engaged would we ever hire them if they worked by proposals? Probably not, if you want to be viewed as a professional proposals must go. It was hard for us to do this and you will lose 50%+ of your leads because you don’t write proposals, but we no longer chase business and our cost of sale is down dramatically.

  • Wholeheartedly agree – often web designers undervalue what they bring to the table and it’s not just the “pretty design.” When you show up as the authority, you get paid as the authority! Raising my rates allowed me to focus developing long-term strategic plans for my premium clients and fulfill my passion of mentoring other designers.

  • Loved this article! Thank you!

  • I definitely will and I look forward to see how much things improve. Yes, we’ve lost a couple sales because of it so far, but I’m more confident in moving forward despite the loss.

  • I definitely agree. Our attorney had an engagement agreement stating their rate and that they would bill at the end of each month for the work performed. No proposal – just an invoice at the end of the month for what they did. Was it higher than I anticipated, yes, but I trust their judgement.


  • David Albert

    Great article Jay. I commend you for having the cajones to be bold and make that move. I couldn’t agree more that quality trumps quantity every time. There are plenty of hungry freelancers and small startup shops that are willing to cut their teeth on cheapskate clients. It’s the only way you graduate to the good stuff. Thanks for sharing your experience.

  • Agustín Alejandro Linenberg

    Great article Jay. Only one question, how do you get your clients to choose you without writing a proposal? isn’t that too informal for a design agency?


  • Guest

    Awesome article, Jay! My business partner and I are in the infancy stages of starting a creative agency, and it’s great to hear that a successful agency is about being selective with it’s clients, rather than shortchanging all involved parties just to make a buck.

  • Aj Will

    Thanks for recommending this read R. Hammond. Its confirmation.