So, let's compare hourly versus fixed rates. 1
Both of these have their own benefits and drawbacks. 2
The good thing about charging hourly rate is that: It's very simple. 3
You don't really have to twist your brain on calculating how much you should price a certain project. 4
Just give a rate and be done with it. 5
No need to negotiate 6
every time you have more work from the same client. No need to worry about revisions 7
getting out of hand. More revisions means more money for you. Meetings and communication can take a lot 8
of time. 9
Some clients might want Skype meetings regularly. 10
But if you bill them for that as well and you should. Then they will make sure that not to waste your 11
time. 12
And if they do, at least you'll get paid for it. 13
The drawbacks of hourly rate is that, it says nothing for most clients. 14
For example, one hundred dollars per hour is that expensive or is that cheap? 15
Who knows? If you're done in three hours. 16
Then it's cheap. 17
But if you need 80 hours, then it's expensive. 18
Also clients will have an emotional reaction to certain hourly rates. 19
They will find certain rates too expensive. Even if the final price is the same. 20
It might be fine paying 5k for the website, but if you tell them 100 bucks an hour, they might 21
freak out. Is harder for a client to decide because hourly rate makes it uncertain, how much will be the 22
final bill. As you get more efficient and fast at your job, 23
you make less per project. 24
Benefits of fixed rate is that it's easier to sell. 25
Clients see a clear number and they feel safer with it. As you get more efficient, 26
you make more money, so gives you a chance to make a lot more money per hour, without looking too expensive. 27
No limit on how high you can charge. Whereas an hourly rate, there are mental limits. 28
For example, 300 bucks per hour is going to be a mental limit for most clients. 29
The bad thing about fixed rate is that revisions can get out of hand, if not clearly defined. 30
For example, 2-3 revisions and after that applying a certain hourly rate. And when your client asks 31
for a 3rd revision, then you'll start charging them. 32
This sometimes can be uncomfortable to talk about. 33
It's quite uncomfortable for me. But I learned my lesson when I ended up earning a minimum wage on one 34
of the projects, because of endless revisions. Another drawback - 35
calculating is a pain. 36
You'll need to put extra work in calculating to clearly define exactly how long it will take you to 37
finish the project. And make sure to put a profitable price on it. 38
It involves a lot of guesswork and until you learn all your lessons the hard way, you'll end up losing some 39
money. 40
So which one should you choose? 41
Just like with amounts, it's a good idea to go case by case and client by client. 42
For example, with studios and agencies, it's the best approach would be probably going with hourly rates. 43
And when it comes to final clients, then probably going with fixed rates and flat rates. Because fixed 44
rates are little trickier to navigate in the beginning, 45
it's OK to go for hourly rates for everyone. 46
I myself have a mixed bag of burritos. 47
I started off with a flat rate, but then soon after I realized I was losing money, because I wasn't setting 48
estimates properly. And I was losing money on revisions. Then I switched to an hourly rate, which was great 49
and I kept for a long time with hourly rate, because it was simple for me. 50
I loved the simplicity of it. 51
And then, right now, I have sort of both. With my long term clients, 52
I do hourly rate and then with new ones I do fixed rate. But with more long term clients I do hourly, 53
because I do a lot of different type of work. Like UI design for example for mobile apps. And those projects 54
can get monstrously big, and they are weird, and it's impossible to sort of put a flat rate on it. 55
So, I just, you know, use hourly because it makes it simple and makes it easy to bill. 56
And one final criteria to consider is to choose whatever you feel comfortable with. Because at the end 57
of the day, it's your work and you have to do this every day. 58
And it's important to make every aspect, as many aspects of your work enjoyable as possible. 59
And if something gives you anxiety, like it did for me, then it's OK to sacrifice some money for peace 60
of mind and comfort.