If you have just stepped into the freelance world this is probably one of the first questions that popped into your head- Should I charge hourly vs fixed rate for a project? Starting out freelancers working offline or online on Elance, Odesk etc. can charge either an hourly fee or fixed price for the entire project, but on the long-run most professionals will argue that fixed price is the way to go- here is why:
Charging fixed rate is better for experts
Get more done in less time and earn more
For beginners writing small articles or designing a website template or transcribing an hour of audio will take a lot more than an expert. So if you have years of experience in your field, charging fixed price you can earn more by getting more jobs done in less time. For example if you accept an hourly rate of $15/hour for an article writing gig – say 20 x 300 words articles and you finish those within 4 hours you earn $60. But let’s say you charge per article $6 per article you’ll earn a whopping $120.
Clients prefer to know the price in advance
Most clients prefer to know the total cost or flat rate of the project upfront. Clients are a little skeptic when it comes to paying hourly because they don’t know how long the freelancer is going to take to complete the work. Let’s say your client asks for your rate for a website project. The client might think you are expensive if you say you can get the job done for $40/hour with delivery within 6 days. A basic level website designer places a bid at $20/hour, which looks more appealing to the client, but working 10 hours a day it takes him six days to complete the project- that costs the client $1200 dollars. On the other hand, you, an expert website developer, might finish the same website within 4 days working only 5 hours a day. Now even if you charge set a fixed rate at $800 (at $40/hour) – your rate is far more competitive and the client will be happy to know the exact fee they are paying for the job. When the clients realize how efficient and cost effective you are, they will even consider you for a long-term project.
Things to consider before charging fixed price:
- Calculate the project rate based on your minimum acceptable hourly rate for a particular task.
- Add extra fees for things like project complexity, regular communication with the client, research, admin tasks like posting articles and formatting and so on.
- Make sure you get a detailed requirement from the client. If the requirements are unclear you will be spending a lot of extra time and effort later on in the project.
- If your client makes additions or changes to the initial requirements, send a revised fee and move forward only after it’s accepted.
When does it makes sense to charge hourly ?
If you are a beginner with limited skills, it makes sense to charge hourly because you don’t know how long it will take for you to write those 400 word articles or how long it will take to build a website. Because you are now in the learning phase, charge a competitive hourly rate or rather bid on those projects with low hourly rates. This way you have a better chance of winning bids as well as room to learn from your mistakes. Most clients who pay low hourly rates are aware of the kind of freelancers they’re going to get for that price so they will not be offended if you make minor mistakes- but make sure that your clients are not rude/difficult people who will give you one star for a single mistake. At the beginning clients can be your mentor providing you with instructions and useful feedbacks on how to improve your skills as you go about your work. After you become more advanced and more efficient in your delivery, you can move away from hourly rates and start charging fixed rates and earn more money.
Are you a freelancer? Do you prefer to charge hourly or flat rate? Please share your thoughts and experience on the comments below.