When venturing into the world of freelance, one of the first problems you try to figure out is deciding on how to price your projects and whether to charge per hour or per project.
I’ll discuss the pros and cons of each, and leave it for you to decide which will be best for you.
Charging Per Hour
Charging per hour is the most common way to set your prices, and is how most customers are used to paying for things. Charging by hours is the most comfortable, and seems the easiest to judge by. You state your hourly cost, and the customer chooses to accept or deny your rate, as simple as that.
Charging per hour is more flexible. You estimate that a project will cost X hours, and if a project needs more work, you just add X more hours. How much easier could that be?
Since charging per hour is the more common way, clients also feel much more comfortable with it, even if they don’t know exactly what those “hours” are going to be. Sometimes, clients would rather just do what’s natural instead of doing something they haven’t tried before.
One of the biggest drawbacks to charging per hour is the breakdown of the hours. A client might not like how all of your hours are being spent, and in turn may argue that the project may not need this many hours or may just decide to not work with you.
Charging per hour means your client is in charge of each of your hours. If you work too long in a certain area, they may see it as “wasting time” and just a way to get your prices up. For example, why did sketching and prototyping take 10 hours, when the regular website build only took 2 hours?
When your time is estimated in reports in sections like this, your client may not be happy where the hours are going and demand for a refund, or demand for a change in how you spend your hours so that they feel they are getting the most for their money.
Hourly rates are also easily beatable. Clients may just call around to see what a designer charges, and in turn get one who’s hourly rate is at their budget. This is one of the biggest downfalls of the hourly rate, because if a client determines a designer based solely on an hourly rate, many times the higher rates will often lose to the lower rates.
Hourly rates can also be used to start bidding wars, and used to lower designers rates so the client gets the best deal.
Lastly, the problem with billing hourly is adding hours. If your client isn’t aware that your proposal is an estimate, then if you have to add hours to the project, the project could get sticky. You could end up working for a lot more hours than you can bill for.
Charging Per Project
Charging per project is the other most used method of charging. Creating a proposal based on a project or individual parts is often first based on an hourly rate.
You estimate your time it will take on all parts of the project, times that by your hourly rate, and then use that for your proposal. Charging by elements of a project is often easier for a client to see a breakdown of what they are paying for compared to the hourly rate.
Per project rates also allow you to break down elements of a project for a client better. For example, when you price a project, you can also price different package options. Not only do you give a client options, however you also give them the option to choose a package at a better “cost”.
By giving a client several packages to choose from, you aren’t only meeting their options, however allowing an easier way for them to upgrade without pushing anything on them.
Charging per project is a hard thing to get adjusted to. New designers or those who haven’t had many projects won’t be able to estimate a project’s cost as well. Charging per project gives you little to no room to negotiate if hours spent on a project increase, so your estimate has to be as exact as possible, otherwise, you will lose money.
Charging per project is based just as much on experience as it is charging an amount, because it makes you work differently and more efficiently. You still have to remember that your time is valuable and if you can’t maintain it well, you will lose money just as quickly.
Charging per project gives you little to no room to negotiate if hours spent on a project increase, so your estimate has to be as exact as possible, otherwise, you will lose money.
So, How Should I Charge?
Charging is dependent on your preference and how you work. Certain people may work better by charging per hour while others may like to charge based on the project. I recommend trying both and seeing what works best for you, and tweaking each to your own personal preference.
Personally, the most important aspect for me is to have a strong work ethic and try your hardest for each project, regardless of how awesome it seems. If you put your passion into each project, your client will come to you and pay you because of who you are and what you offer, not just your portfolio.
Show your passion in what you do and good things will follow.