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Should Freelancers Charge An Hourly or Per Project Rate?

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When it comes to getting started with freelancing or even scaling your freelance business up, what you charge and how you charge are two very important factors.

There is so much mixed advice about what to charge as a freelancer and some people like myself still don’t have fixed rates because client needs tend to vary.

When it comes to how you should charge, however, I’m a big supporter of charging a per project rate over an hourly rate. Here’s why.

Hourly Rates Are Limiting

Your income is somewhat limited when you charge a per project rate, but it’s not as limiting at charging by the hour. When you charge an hourly rate, you’re limiting yourself by a number of hours you have to work on the project. There are so many hours in a day.

Plus, you may feel inclined to work less efficiently. If you don’t want to limit yourself, realize that you can probably get much more work done during the work day when you charge per project and you can charge more too.

For example, if you take on a $300 project that you happen to finish in 2-3 hours, you’ll earn at least $100/hr. You may have a hard time finding someone who’s willing to flat out pay you $100/hr.

Raising Rates Is Easier With Per Project Pricing

Say you are assigned a project that is larger and will take you longer. Let’s just say you want to earn more and raise your rates. In both cases, charging a per project rate is going to be easier when you’re trying to increase your rates or offer custom pricing.

It’s easier because it’s more measurable to fit within the constraints of your clients budget (which I will explain below) and in most cases, you’ll wind up earning more anyway.

It’s Easier to Accommodate Your Client’s Budget

Yes, charging per project may seem more intimidating than charging an hourly rate at first, but you have to realize that with an hourly rate, the client can only assume how long it will take you to complete the work. Meaning, they have no idea how much they’ll be paying upon completion.

With a fixed, per project rate, the client knows exactly what they’ll pay so there are no surprises and the billing process may go much smoother as a result.

For example, I work with two contractors – one who bills me by the hour and another who has a fixed per project rate. Even though the contractor with a fixed per project rate is a bit more expensive, it’s so much easier for me to budget to pay the monthly invoices opposed to the contractor with the hourly rate.

Maybe it’s just me, but with the hourly rate contractor, I often think about their productivity levels more and I don’t do this with per project contractor. I may actually be paying the per project contractor more for their time, but it doesn’t really bother me. This way of thinking is probably flawed on my end, and a different type of psychology, but you have to look at your own motivations to keep up your best work.

When You Might Actually Want to Charge Per Hour

While per project rates are my top recommendation for freelancers. I feel it’s more time effective, it’s important to realize that this payment structure won’t work for all freelancers.

Here are a few reasons why you may actually want to charge per hour.

  • The scope of the projects tend to change and you don’t want to quote too low upfront
  • In some cases, it’s easier to land work since hourly prices look lower than per project prices
  • Your freelance service, involves making quite a few timely revisions

Hourly or Per Project Rate Summary

Ultimately, the choice is up to you but you have to base your decision on what makes the most sense for your business in terms of profitability and client satisfaction. See which payment model your client prefers and what you feel most comfortable with in terms of rates.

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