Comments on: Charging Project Pricing Versus Hourly Rates

By: Jenni

Jenni — Thu, 21 Jul 2011 01:08:13 +0000

I usually use the project pricing system with my clients.
Thank you for your great post.

By: Brad Maver

Brad Maver — Thu, 07 Oct 2010 05:21:42 +0000

Great Post. Very useful information in here. Thanks for sharing!

By: Berthold

Berthold — Wed, 14 Apr 2010 07:37:49 +0000

Well you started out nicely laying out the pros of hourly rates, but towards the end you became a lot less verbose. I’d like to take the liberty and fill in the blanks:

Hourly Rates

#designer
+ you will always get paid for your time on the project
– your processes are more transparent, inviting the client to call you out on time wasted, even if you didn’t

#client
+ good control over expenses, can stop you at any time if budget is tight
– *will* feel the need to control how much time you spent to make sure they get their money’s worth, essentially having to manage you (bad! They will apply their processes to your work, which most likely won’t fit and will lead to conflict)

Project

#designer
+ it’s easy to manage, you can be as efficient as you want and make a killing in hourly rates if you’re good
– unexpected issues are your problem, and may cause you to actually lose money on the project (if it gets too bad, you should renegotiate with the client. Be curteous, they don’t owe you anything. You miscalculated.)

# client
+ it’s easier to manage. They have a fixed budget and a fixed result.
– it’s harder for them to understand how the charge breaks down, and unless they a) get told what you do for their money and how long it will take and b) understand what value they get in the website they receive (more customers) they will try and negotiate until they undercut your bare minimum. Be verbose, and don’t give in.

As mentioned before, ideally you’d want to combine both systems – offer a flat rate but also tell the customer what is included and how they benefit from it all. Your estimates will get better and better with every project that you complete, provided you keep a running record of time spent and compare that vs. the target time for your hourly rate. You will also develop a keen sense on how long different processes should take you, and when you start running over/under budget.

By: Jamie

Jamie — Sat, 08 Aug 2009 17:26:54 +0000

Well, I’m not a freelancer, but here’s how it works at my company: we give clients a quote, which is usually a range (for example, $7500 – $10,000). Then we bill hourly for work, maintaining a spreadsheet that details how we spend the time. When it’s time to bill the client, the project manager usually plays with the spreadsheet a bit depending on a number of factors. For example, if the bottom end of the quote is $7500 but we only bill $5000, he’ll bump it up to within the quote range. If the client is especially difficult, he may also bump it up, and so on.

So, I think the best solution is a mix of both. Seasoned web developers know how approximately how long a particular project will take. That’s why we give a quote. Then, the client knows the range of the final bill, but they can still get an hour-by-hour breakdown of the work (which clients love to see, in my experience).
.-= Jamie´s last blog ..I am still alive =-.

By: Bathrobewarrior

Bathrobewarrior — Sun, 02 Aug 2009 03:20:39 +0000

Excellent advice! :) .-= Bathrobewarrior´s last blog ..Some tips on images for the web =-.

By: Clay S

Clay S — Mon, 29 Jun 2009 16:02:29 +0000

Great post! Project pricing is our preferred method as well, and I think it works out well for both us and our clients. We’re bound to produce a final deliverable and it also eliminates any guesswork or suspicion on their end, where they worry if we’re charging too many hours, etc. We also try to even avoid charging hourly for support and try to cover that cost with a monthly licensing fee. About a year ago, I wrote a post on our approach to billing and service that you might find interesting: http://www.newmediacampaigns.com/page/when-companies-dont-fear-customer-support-everybody-wins
.-= Clay S´s last blog ..Moving your script tags: The quickest way to improve site performance =-.

By: Project Pricing vs Hourly Rates | Design Shack

Project Pricing vs Hourly Rates | Design Shack — Thu, 25 Jun 2009 08:00:40 +0000

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By: Sam Dunn

Sam Dunn — Tue, 23 Jun 2009 23:46:24 +0000

@Ezrad Lionel
I’m baffled as to what kind of job would take you 1000 hours, but you would only be willing to get $30 for.

By: Ezrad Lionel

Ezrad Lionel — Tue, 23 Jun 2009 23:37:24 +0000

I sent a client an invoice for 1000 hrs at 0.03/hr I haven’t heard from him since.

By: Brian

Brian — Tue, 23 Jun 2009 09:27:21 +0000

It is my view that a predetermined price allows the client to accurately budget for the project. In pricing a project it would be imperative that one would be very specific about the service offering and the extent of it. The project must be clearly defined by the objectives being set out very clearly. Should the contractor Cleary indicate the extent of his offer the client and the contractor have a clear understanding of what is required and or offered with a set price.

One of the negatives of project pricing is the time one allocates to the quote. The abuse of this information is also a concern; nonetheless it is your brainchild and if it is well presented it will pay dividends over the long term. Good business is not just about today but every day. People who abuse others time and knowledge rarely succeed in the long term. Should you dedicate time to project pricing over time it will offer you a more refined product portfolio. Project pricing should also illuminate shortfalls in your product portfolio and the areas your business will need to allocate recourses so as to allow you to become more competitive.

Should the quote be clearly laid out this will also give the contractor a better idea of the time and resources it would require. The best contract between two people is not the paper it is written on but that both parties get what they want, a fair price for good work, clearly defined.

In my opinion a definite price for a definite service is best.