Choosing the appropriate charging model is often a challenge for freelancers. Even if you ask seasoned freelancers, you won’t get any definite answer. Since both charging methods are common in the freelancing world, you need to be familiar with them in detail.
In this article, we will discuss the pros and cons of both charging methods and their use cases, so that you can choose the right one.
Use Case Scenarios of Charging by the Hour
In the hourly pricing model, freelancers have a fixed rate for each hour they invest in a project. The client calculates the final payment by multiplying the hours invested by a freelancer with an already agreed hourly rate.
Proofreading, tech support, and customer service are some ideal projects for this price model. Here, you may need to spend any amount of time depending on the complexity of the projects. In these cases, payment by the project will not get you a justified pay for your time and efforts.
Benefits of Charging by the Hour
If you're thinking of charging your client by the hour, you may want to know the benefits of this model. Here are some advantages it offers:
1. Get Paid as You Work
This rate model depends on the time you spend on a project. If you take two hours to write a blog, you get paid for that. Another blog of the same project may take five hours, and you get paid as per your labor in this price model. If you need to do unexpected edits and revisions, you will receive payment for that too.
2. Quick Comparison
Some clients prefer a simple charge model like hourly payment. They can easily compare the charges of multiple freelancers and pick up the ones charging the least. With hourly rates, you can also communicate your quality and experience.
3. Easy to Calculate
If you consider from a freelancer’s perspective, calculating the hourly rate is easy. If you want to bid for a job in a short time, choose this model. It will let you skip the complicated calculation of pricing for a whole project.
4. Ideal for Lengthy Projects
Some projects don’t have a rigid structure and may stretch for a long time. Choosing an hourly rate for such projects is perfect, as they can take more hours than you expect.
5. Suitable for Scope Creep
Scope creep is the situation when clients ask you to perform some extra work outside the original project scope. If you charge on an hourly basis, clients won’t ask for additional work. Even if they do, you get paid for the extra hours as well.
Disadvantages of Charging by the Hour
Payment by the hour isn't free from drawbacks. The following are a few disadvantages that you can expect:
1. Getting Charged by Time, Not by Skill
While working on a project that offers high value to the clients, getting paid by time may not be the correct method. This method ignores your effort and experience by emphasizing the invested time.
2. Efficiency May Result in Less Pay
Skilled and experienced freelancers can finish a project quickly without compromising the quality. Hence, charging per hour is not the right decision because you're delivering high-quality work in a short time.
3. Unhappy Clients
While bidding for a lengthy project, asking for hourly payment might make your client unhappy. Clients have no idea about the total time you will take for such projects. There is also the risk of project costs crossing the estimated budget.
Use Case Scenarios of Charging by the Project
This pricing model is also known as the fixed-rate model because your total earning from a project becomes fixed at the beginning. Here, you determine your rate for the entire project, and the client pays you once you successfully complete the project.
In this model, the number of hours you spend on a project has no impact on your earning. Freelancers usually go for this rate model with projects that come with clearly defined deliverables.
You can choose this model for projects like designing a website, developing a mobile app, or writing blogs. Freelancers have a rough idea of the total time it'll take, and they charge accordingly for the project when signing up for it.
Benefits of Charging by the Project
There are some decent advantages to charging your clients by the project. The following are notable benefits:
1. Forget Time Tracking
If you charge your client by project, you can forget about tracking the hours. Asking for a fixed rate will give you an insight into the total income, and you can put your effort accordingly.
2. Attract More Clients
Hourly rate systems can be discouraging for some clients. They may think that freelancers will make the projects lengthy to get paid for more hours. Such clients will prefer a flat rate and won’t bother with the time you take to finish the project (adhering to the deadline.)
3. More Money for Seasoned Freelancers
As you get skilled in a work, you can finish it in fewer hours. Charging a flat rate for a project will let you earn more money in less time.
4. No Surprise for Clients
The unexpected amount in the invoice might surprise a client. Avoid that by coming up with a fixed rate for the project before working on it.
Disadvantages of Charging by the Project
Before you charge your clients by the project, know its drawbacks mentioned below:
1. Scope Creep Won’t Be Beneficial
Asking for a flat rate while working with a picky client isn’t going to work well. They may want you to review or tweak a project without any extra payment.
2. Needs More Planning
To add the total charge of a project in quotation and proposal can be time-taking. You need to consider every aspect of the project before sharing the quote, and all the labor you put in might get wasted if the client decides not to proceed.
3. Clients May Need Explanation
You decide the flat rate for a project based on numerous factors that the client is unaware of. They may ask you to explain the reason behind asking for a hefty amount.
Try the Combined Model
As a freelancer, you should not be rigid about opting for one particular payment model. You may want to charge the clients in both models, depending on the task scope.
For example, if you are working as a content writer and digital marketer for a single project, you can charge by the project for your content writing and get paid by the hour for digital marketing.
If you’re uncertain of how much you should charge, you can use The Freelance Rate Calculator. Here, you also get a template where you can include your goals and expenses to get the minimum rate you must charge your client.
There Is No Right or Wrong Method
Freelancers need to understand that no charging model fits everyone. It will vary depending on your skill, project, and client.
Now that you know about the benefits and drawbacks of both models, you will be able to select the appropriate pricing structure for each project. You must follow the deadline diligently, irrespective of the project pricing model.