Opinion: Why Freelancers Shouldn’t be Charging Their Clients Per Hour
One of the most heated debates within the realm of freelancing is whether you should charge hourly or per project (flat fee). While both sides of the coin have legitimate arguments, charging hourly can potentially hinder your ability to advance your entrepreneurial career. Below, I will point out some of the main arguments frequently presented when justifying why freelancers should charge per project, and not hourly:
Your value gets compromised
By charging an hourly fee, your value becomes vulnerable to compromise, and you’re probably wondering how. Let’s examine a simple example of a quote agreement. A freelancer charges a client $20 an hour for a project. The client might insist that such a price is far beyond their budget, and that the most they are willing to charge is $10 per hour. Little does the freelancer know that the clients are debating between him/her and a less experienced freelancer who happens to charge $10 an hour; the less experienced freelancer could end up being less cost-effective for the client in the long run, if it takes them longer to complete the project to the client’s satisfaction.
In short, if you do quality work and work quickly, your value can go down in the market, simply because said project would end up costing the same price (or less) as the freelancer who charges $10 an hour, only because at face-value $10 hourly sounds more attractive. So, compromise in value manifests by how you’re positioned in the market.
If you think of it logically from the client’s side, they generally want someone who can do the work for the lowest price possible. This is not to overgeneralize by any means, because some clients will sit and calculate the costs and relate it to their budget before hiring a freelancer, but it’s fair to say that a good amount of clients who insist on charging hourly will obviously want to pay the least amount per hour, without necessarily taking into account the scope of the project from a holistic perspective.
At the end of the day, the client just wants results
Trust me, if you were the client, you would want to pay X amount for good work. Period. That’s why it’s crucial to really understand where your client is coming from. The majority would like to pay as little as possible, but expect high-quality work. This doesn’t delegitimize your stance as a freelancer, which is to charge what your time and efforts are worth (regardless of what prospective clients think about your rates).
However, this is precisely where charging hourly becomes a bit of an issue. Depending on the project, after a certain amount of time, there is an unspoken and relative limit as to how much you can charge hourly without looking ridiculous. Therefore, as you become more seasoned in your craft, and therefore, quicker, the hourly rate you charge may completely stop reflecting your skills, experience, and not to mention, hard work.
A good example of delivering results for a fair price (both for you and the client) would be to quote a client a flat fee of $400 to design a logo and wireframe for their website, in lieu of saying “I charge $300 per hour.” Why? You’re putting a price-tag on the final product and not on yourself. Your prospects will not only be more likely to agree to this fixed price, but if you also happen to be quick on top of quality work, they will be even more satisfied. Retainer contract, anyone?
This video explains the logic of value for what you’re offering vs. hourly pay pretty clearly.
Setting your per-project rates
Your flat-rate pricing scheme should be well thought-out. Your prices should still be based on an hourly figure, with expenses and profits built into your calculation. Your calculation should include customer services, revisions, the scope, etc.
Another important aspect of determining rates involves getting the most detailed brief possible. This can entail asking numerous questions, so as to avoid confusion, especially regarding revisions. Revisions can be a tricky facet of price-setting, but it’s a very important one to go over with your prospective client before you begin to work.
For example, let’s say that you agree to design an entire website for $500, including any small revisions (i.e. featured images and colors). Make sure you decide what is included in the fixed price, and that anything beyond that, you charge an additional $30 per hour to revise. This will ensure that the scope of the project remains intact, but more importantly, that you’re not taken for a ride in the event that the client is not satisfied. When there is a written contract and mutual agreement in detail prior to starting a project, an array of potential misunderstandings are eliminated.
So… when is it okay to charge hourly?
I am a firm believer that revisions are the only aspects of a project that should be charged hourly. In the aforementioned example, for many reasons, a client might request several revisions, each one taking more of your time, in turn, affecting your profit. So, in such cases, it makes sense to charge hourly, as opposed to a flat fee. Additionally, everything depends on the industry. While a developer could easily charge a flat fee for developing an entire website, a freelance translator might find it to be easier and more reflective of his/her skills to charge hourly or per word.
Charging per-project is certainly not the only way to price your work fairly, both to you and your client, but it’s important to keep in mind that the decision is ultimately up to you and how you prefer to work, in addition to what the scope is of a project you’re presented with. As long as you consider how much time the project should take you, as well as what the needs of client are, it will be easier to come up with a fair flat-fee, benefiting both you and your prospective client(s).
Now that the debate has been broken down, what do you think? Do you disagree? Take our poll or read the other argument: Why freelancers should charge hourly