Flat fee or hourly rate?
Out of context: Reply #24
- Started
- Last post
- 24 Responses
- gramme0
Flat fees. I did hourly for a long time and it nearly drove me to hate what I do for a living. I felt like a slave to the clock. Also, it put a firm cap on my profitability.
First, I do my best to forecast the amount of time the project will require. Multiply that by our hourly rates, depending on who will do which part of the work (I have different rates for myself and the guy who works semi full-time for me). That's the lowest I'd be willing to go. Then, I sit back and think about how valuable the work will truly be for the client. Depending on the project, that can double or triple the fee. I've been learning this the hard way... especially because things almost always take longer than one might think at first.
Also, I charge more when the number of decision makers increases by more than one. More people to deal with = more communication styles to parse, more voices, more time, etc.
I present the client with a range. Start high with a sticker shock, then a low (but still profitable) figure. I save the middle number for last, the one I think is most accurate. Then I ask the client "how does all of this sound?" and sit back and wait. If they go right to money, then I haven't shown them enough value, and need to reorient the conversation in that direction.
After winning a project, there's always a deposit up front. The exact percentage depends on the size of the project. Often 30% or 50%. I'm doing something right now where a largish project is being carved up into phases, each treated as a separate project. The client will pay 100% of the fee for each phase before we begin.
Eternally grateful to my business coach for helping me craft these methods and attitudes.