Flat fee or hourly rate?
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- 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.
- ohhhhhsnap0
Flat for some jobs.
When flat:
50% Advance
50% EndHourly when I'm hired as a contractor for a client who is hiring me to work for a gig (another client) that they've acquired.
Tho... it really depends.
- sublocked0
Weird. I got stoked when I saw the title of this thread...opened it, and forgot I created it.
- zoozoo0
I have seen clients liking flat.
I don't mind either way. As long as the time is being accounted and paid for and I don't feel like I am wasting my time.
- Ambushstudio0
Flat.
50% advance
30% in the middle
20% When done
- Amicus0
I've been thinking about this a lot over the last couple of years. I've been so busy I haven't had much time to get freelance work, but that is something that I'm determined to change.
I think that one of the problems we have being valued as designers is that we only charge for our time and not the value of what we create. If I created a brand and advertising campaign that helps double a clients business in 6 months, isn't that worth a decent percentage of that increase in profits?
Obviously this isn't an easy road to go down for many reasons, but I think we'd get a lot more kudos from the business world if we as a profession started to act with a more business oriented mindset than a work for hire mindset.
This would probably work best to start with if you covered costs with a low hourly fee or a retainer and picked up most, or all, of your profits based on a profit sharing model.
Any thoughts out there?
- timeless0
I love QBN. Used this thread tonight to help me draft an answer to a "So do you bill hourly or by flat fees?" email.
- sublocked0
Thanks for all the constructive feedback guys.
I've been feeling like I'm missing some key workflows on my product (Cashboard) for a minute and this confirms some design decisions I'm making ;)
- boobs0
Simplest business advice: don't work for high-pressure cheapskate maniacs! Only work for sensible people, and you'll be miles and miles ahead. Sensible people will respect that you need to make a bit of clover for what you're doing, and that what you offer is a real skill, and they won't feel the need to put you down or try to pull one over.
- maxx_prophet0
You can always work on a per project basis with an allocated amount of hours. The client is comfortable and then knows they will pay more if you go over the hours. You communicate with said client if you're getting close to the limit so there are no surprises. Once trust builds with the client it usually turns into strictly hourly over the years making it much easier to manage into the future.
- boobs0
There are pros and cons to almost any system, the pros being you get paid for all the work you do, the cons being you scare off prospective clients.
I've found that most of my jobs vary tremendously in scope, and timeframe, so it's hard to give a really informed estimate on the price. But everybody wants a (low, of course!) fixed price, and until you've worked with them a bit, or built up a stellar rep in the community, it's hard to talk them into hourly.
But the work keeps coming in, and my negotiating skills increase with each job, so things do keep getting better.
I've found the best thing to do is ask for the moon--and sometimes they say "yes!"
- palmer_0
Always a fixed rate. Itemized budget, detailed with number of revisions, based on day rates for me and anyone that I may need to bring on times the number of days need to execute. Always bill for R&D and usually give myself some wiggle room in the budget as well in case something ends up taking longer or problems occur. Always invoice at the end of the project (Net30-Net60 depending on cost.)
- lukus_W0
Generally I work this way:
* Fixed price for large projects / full sites.
* Hourly rate for fire-fighting and fixing problems.
* Day rate for contract work.With sizable projects I aim for payment of 40% at start, 40% at an agreed major milestone 20% at completion. ( ... the smaller % at the end avoids the situation where you're waiting for content before you can be paid).
To avoid creep on deliverables - I try to draw up a decent set of specifications which detail what will be supplied, although inevitably there'll be a bit of give and take.
- nocomply0
You guys bring up some good points about working per project.
I've never really liked to do it because there's always been a lot more I would have to worry about in terms of contacts, signatures, etc...
With hourly you have to log all of your hours (which is a bitch), but it's easy to get away with basic contacts for the most part. I also find that logging my hours forces me to be more efficient when I actually sit down to do work.
In the end, it really comes down to feeling out the client. I've done a few flat-fee gigs that have been ok.
I do both web design and development, but more development these days. Hourly seems to work well for that. I can see how with pure illustration, t-shirt design, etc... a flat rate works best.
- juhls0
I prefer hourly with development. Part of it up front; rest at the end. I'm thinking the milestone idea by heavyt. And yes, some people are hesitant about paying by the hour. People I know are more likely to ask how much it would cost (total).
- arthur0
My billing schedule -
Most of my jobs have very tight deadlines, less than a week or so, so it's not practical to request a percentage up front, and that's not how most magazines (the bulk of my clients) work. Nearly all US mags are 30 days from invoice and that's that.
For larger ad jobs, I'll request 50% paid to begin work and the remaining 50% upon completion and that usually works out. A company's creative department and accounting department aren't always in sync, so sometimes it takes some work.
- fyoucher10
Fixed rate w/ specified # of rev's = no surprises for anyone.
You can also give different options for price based off of a schedule.Lowest rate = Longer timeframe to do project in.
(Being able to work part time on the project until completion)Normal rate = Just enough time to do project in.
(Working 8 hours a day during weekdays until it's done)Rush rate = Not enough time during normal hours
(When the client wants it fast. You need to work longer hours and possibly weekends)You need to find out what others are charging, what they're putting out, and then how you compare to them. Price competitively.
Hourly, if money isn't an issue and you just don't feel like coming up with numbers and bidding. There are usually always problems with hourly when working with lower budgets, either for you or the client. You can't foresee everything. Higher budgets / big ad agencies, not usually the case. Giving hourly estimates on things "helps", but then you're working a time sheet and you're responsible for not going over an imaginary budget. Why not just do a fixed price if you're going to do this. Also, be careful doing these "hourly estimates". Sometimes you might get folks coming to you just to get these estimates, just so they can compare it to other bids. Just give a price and when you can get it to them by, no need for the rest.
- arthur0
As an illustrator I charge by the project with a flat fee, as I believe the majority of illustrators do.
I've had prospective clients ask for my hourly rate, and that pretty much ensures I don't want to work with them.
- nocomply0
I charge hourly.
I provide my clients with a detailed estimate that outlines my anticipated billable hours before getting started so that they have an idea of how much they will pay.
Some clients are hesitant to work with me under these circumstances, and that's usually a red flag that I shouldn't be working with them in the first place.
I should also note that I generally meet with my clients in person and develop a sense of trust with them before providing them with an estimate. It makes it easier for them to feel comfortable with me and say yes.