Most freelance blogs suggest to calculate your bills and basic needs, then calculate how your budget fits into your desired billable hours and voila! Others suggest to create prices based on deliverables. With many different ways to bill our clients, what's the best method, for which skills, and when to use an hourly vs. per-project rate?
We know by now that letting clients pitch prices to you is a huge no-no; we end up overworking ourselves and getting stuck in employee/employer-like client relationships.
If we want to ensure we get what we’re worth, we have to set our freelance rate, be prepared to justify it, and say no to any creeping demands to offer us less.
However, there are some cases where it's appropriate to "change" your freelance rate. It isn't truly a change to your rate, but rather a second way to price your services that's more suited to certain types of projects.
So, what are the most common methods of billing for freelancers? Are per-project prices better than hourly rates? When is it best to use an hourly vs. per-project rate?
When to Use an Hourly vs. Per-Project Rate
The two most common ways to price your freelancing services are per hour and per-project. Let’s look at the good, the bad and the complicated for both options to help you decide when to use an hourly vs. per-project rate.
Some freelancers may stick to one type of pricing all of the time, while other freelancers might bill hourly for some projects and on a project-basis for others.
It depends on which billing style will work better for your clients, projects and skills – which gives you the best return for your time spent AND the best reception from clients.
When to Use an Hourly Freelance Rate
Hourly rates are the most common billing method for freelancers. That means it’ll be easily understood by potential clients and later, easy to set-up your weekly working hours and predict your pay-outs.
It’s best to stick to an hourly rate when the work you're proposing takes an uncertain amount of time or resources to achieve the desired result.
For example, a client may have a back-linking project they want to complete, but as the scope of their efforts is large and based on the chance a website will work with you, the time you spend finding a site to work with is uncertain.
Long-during projects with wide scopes are best for hourly billing, as well. That way, you're not stuck calculating each add-on mid-project.
Imagine a client approaches you and wishes to create a blog. There are a LOT of steps involved in that process – so stick to an hourly rate to make sure the money keeps coming in at the same rate as the tasks on the to-do list.
To make sure you don't end up working for free, it's best not to set a per-project rate on work with an unforeseeable outcome or duration.
Projects with big aims that are reliant on opportunity or feedback from customers are hard to predict time-wise, so make sure you get paid for your time with an hourly rate.
Using an hourly rate will also keep you from being exploited by a bad, scope-creeping client. Use an hourly rate that keeps their demands on the clock.
If you meet a client who wants a large number of revisions or seems to be nit-picky, an hourly rate may be the best way to go.
Even if you're working with per-project rates, you can add an hourly rate into the contract for any work that goes over 2 revisions. Sometimes you don't have to worry about when to use an hourly vs. per-project rate; you can use both!
When to Use a Per-Project Freelance Rate
While hourly rates are common, experienced freelancers working in a niche will find that their $75/hour rate is way too high to pitch to clients. However, their service is too valuable to accept less money!
Achieving a client's desired outcome in a short amount of time should be rewarded, not under-estimated with an hourly rate.
For projects or tasks which bring the client a high measurable amount of return, the investment (your freelance rate) should reflect that in a per-project rate.
For example, long-form SEO articles boost websites on Google searches and bring lots of traffic to websites. Instead of having a freelance writer charge by the hour she takes to write it, she'd be better served by charging according to the R.O.I. the client stands to make.
Using a per-project billing method is great for projects that entail lots of technical tasks and steps, as you won’t have to justify each function or process to your client.
Having technical processes to complete based on the clients' goal can even help you come up with your per-project rate, as you can price each process separately and create a new per-project rate for each client without much thought.
Once your work can be separated into deliverables and priced that way, you can apply it automatically to your proposals, granted they're very similar to your past projects.
Use a per-project rate for projects that are similar in scope to past projects.
That is to say, once you know what you're doing, pick a price and apply it everywhere. Using a per-project rate for projects in your niche allows you to be more efficient in potential project selection as well as proposals.
Recap: When to Use an Hourly vs. Per-Project Rate
Freelancing freedom is what we all chase – and we should be able to use the pricing methods that suit us best. Here's the breakdown of the situations when to use an hourly vs. per-project rate.
Hourly rates work best for:
- Projects with unpredictable efforts/outcomes
- Long-term projects
- Projects with a wide scope of work
- Clients who want many revisions
Per-project rates work best for:
- Projects with high measurable R.O.I.s
- Projects with many phases or steps
- Projects with similar scope to past projects
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