Fixed fees or hourly rates?

Bill Platt posted on Twitter: “When you compete on value, you will often have much more flexibility in your pricing”.

He is right.

If, as a freelancer, you charge for the whole job, not your hours, you’re doing a favour to yourself and the client. It is useful for both to first have a talk about what needs to be done to achieve the client’s objectives and how to do it in the most cost-effective way. When the job is defined in as much detail as possible, you can then send a customised estimate.

It is a good idea to offer this first consultation free of charge to the client. Not only will you get valuable information on what really is expected, you will also be able to pretty accurately estimate the value of your work to the client. You don’t want to short-sell your work; on the other hand, you don’t want to overprice it and lose the assignment.

When you submit your estimate or offer, include fixed prices for all items that can be defined in advance, plus a provision for out-of-pocket expenses and undefinable items, if these seem likely to occur. Of course, a ceiling may be set for these costs if the client so wishes.

Remember to include the expected result of each item. This will tell the client what she is actually getting for her money through the different stages of the project.

Approaching the pricing of a job like this will allow both you and the client to prepare an exact project budget right from the start. You never need to discuss why a job took 10 hours instead of 8.5 or 12. When the fee is agreed on, it stays that way. An excellent way to build trust between you and the client before you have even started to work on the assignment.

For smaller-scale and quicker jobs it may make more sense to base the billing on time or amount of text, depending on the nature of the job. In that case, I recommend Steve Slaunwhite‘s way of basing your time charge on a daily rate instead of an hourly rate. First, using your targeted hourly rate, figure out what your daily rate will be, then estimate how many days the job will take. This is a lot easier than trying to calculate the hours while also giving you some manoeuvring space.

Sometimes there will be emergencies that require results within just hours. Always be prepared to go the extra mile, but in such cases you will have every right to invoice a rush surcharge.

A word of warning: Be careful about what you promise in the way of corrections and rewrites. Usually, no more than one or two rounds of comments are needed to get to the final result. If you find yourself discussing punctuation on a seventh round, then one of you is not doing his job professionally. Major revisions, the introduction of new material or a change of the brief while the work is already underway are of course subject to an additional charge.

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