Should you charge by the hour or per project?

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March 19, 2021
5 minute read

As a freelancer, there are two main ways you can set your pricing. You can either charge your clients an hourly rate or a per-project flat rate for your work. So which one should you choose? There are benefits and drawbacks to each method, depending on the nature of your work and your relationship with the client. Let’s take a closer look at each option and when it makes sense to use one over the other.

Option 1: Charging per hour

If you’re charging your client per hour for your work, that means you’re giving your client an hourly rate upfront that they can agree to in advance. There are a few reasons to choose this method:

The benefits of charging per hour

Your pay is directly proportional to the amount of work you do. Put simply, you get back what you put in when you charge per hour. This is a great strategy if you’re working with a new client or on a project that has the potential to get dragged out or bogged down by multiple revisions. It can take some time to get to know your clients; some are nitpicky and will request multiple revisions, and others still could change the brief when your work is already well under way. In both of these scenarios, charging a flat rate per project could mean getting a smaller ROI on the project as a whole, so a per-hour rate makes sense.

It’s easier for potential clients to compare your proposal to others. If you’re looking for new work, it’s likely that prospective clients will also be looking at other freelancers to see who’s the best fit for their needs. Providing an hourly rate upfront makes it easier for the client to compare, and it’s also an efficient way to communicate your level of experience and the general quality of your work.

It works well for long, ongoing projects. Some freelance projects are less structured than others, with a less rigid scope of work and longer, more fluid timelines. It makes the most sense to charge for the time you put into projects like this, as it could come to you in bits and pieces over a longer period of time.

The drawbacks of charging per hour

You could be penalized for working efficiently. The more experience you have, the faster you’ll get at doing certain jobs. It doesn’t make sense to be paid less for getting better at something, right? For projects where the value for the client is high but the time you put in is a bit lower, an hourly rate may not be the best way to go.

You’re charging for the value of your own time, not the value of your work. Similarly, if you’re working on something that will provide a high ROI for the client, it could make more sense to eschew hourly rates altogether and instead look at your pricing structure from the point of view of the value it provides the client.

The bottom line

Charging an hourly rate is preferable in some scenarios. If the scope of work isn’t clear from the outset and you’re not familiar with the client’s typical feedback process, going with an hourly rate is a safe bet and prevents you from getting paid less overall for the amount of work you put in.

Option 2: Charging a per-project flat rate

This type of payment involves setting one rate for the entirety of the project. It’s almost always agreed to before beginning. There are a few benefits to this method:

The benefits of charging a flat rate

You won’t get dinged for working quickly. As we mentioned in the previous section, you’ll get faster at some jobs the more you do them. If you charge a flat rate, you’ll never risk losing out on earning potential just for being efficient.

You can avoid surprises. Agreeing on a rate with your client upfront will help to avoid surprises on either end. Your client won’t get an invoice for an amount they weren’t expecting, and you can avoid getting any pushback when you’re already well into the project.

You won’t have to track your time. Keeping track of your hours can get tedious, and it can be hard to predict in advance how much you’ll earn for a project when it depends on the number of hours you’ll put into it. When you charge a flat rate, you’ll know exactly what you’re in for, and you’ll be able to project your income more easily.

The drawbacks of charging a flat rate:

Scope creep can decrease your earning potential. Most freelancers have experienced some form of scope creep, where the client requests more revisions than expected or the nature of a project changes entirely midway through. When this occurs, you can very quickly increase the amount of work you’re doing without an increase in pay, which lessens your overall earning potential.

Some clients are more hesitant to agree to a flat rate. Presenting one flat rate before any work is done can make some clients nervous or cause sticker shock, prompting them to go elsewhere.

The bottom line

Charging a flat rate makes the most sense when the client brief is clear and structured, and when you have a good idea of how much work the project will entail. You can avoid scope creep in some cases by including the number of revisions in your project proposal or estimate. Flat rates also work well for work that will provide the client with a high value but that may not necessarily take much time for you to complete.

Overall, the pricing structure you choose depends greatly on a number of variables and comes down to what makes the most sense for you.