Fixed Rate vs Hourly Rate: Which Should I Choose?

Designers who work for bigger corporations often don’t have the difficulty (or for others, the privilege) to choose how will they charge for their work. This burden (or for others, opportunity) is often placed upon the mighty shoulders of freelancers.

However, trying to determine the method of charging clients for web design can be difficult. You’re basically in a difficult situation because you don’t want to charge a client wrongly. As much as possible, you would want to make a fair earning and just enough cash to make your fuels go for the next projects.

Commonly, there are two methods in which freelance web designers charge. One is by the hour, and the other, by project.

In this article, we will be discussing the pros and cons of choosing one method over the other, in the hope that it will help you arrive in a choice for your next projects.

Hourly Rate

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Charging by the hour is commonly practiced in almost all professions. The primary reason behind this is that charging hourly is straightforward and less complicated. Tell your client your hourly rate is, and he’ll decide either to accept it or look for someone with a cheaper hourly rate.

The Advantages

1. Straightforwardness

Hourly rates, as we’ve mentioned before, run in a straightforward fashion. Some web designers charge a flat amount per hour, regardless of the nature of the job. That means that if you are to charge hourly, you’ll be charging your client in a universal hourly pay be it for installing a WordPress theme or designing a website from scratch. On the other hand, some charge on different hourly rates for different tasks. Clients often make the best out of this deal because they can easily control the price by simply varying tasks.

2. Trasparency

Transparency is the product of straightforwardness. Because you charge by the hour, you make your clients comfortable in doing business with you. The reason is: first, they are used to these kinds of deals (as most clients work corporate); and second, clients will be able to determine a base amount for your task(s) objectively.

The Disadvantages

1. Mis/Mal-estimation

This is one of the most dangerous situations to be dealt with a client. If you are in the process of preparing some estimates for the project and you met a few roadblocks on the timetable, your clients might get upset and feel like you’re stalling to earn more cash. That is why it is necessary to make it clear to your client that although you can give estimates, there are still chances that your work will be delayed.

2. Clients and the Work

Another disadvantage that this method proposes is that some of the clients you will be having are a bit clueless on the whys and hows of web design pricing. They commonly base their prices on the market value of designers in firms. Of course, because clients want to get the most of the designer in the lowest cost, it takes the work in jeopardy.

This is why it becomes difficult for experienced web designers to charge by the hour. Think of this, before the client looks for a designer, he’ll certainly research for the average rates, not even considering how good the designer is.

3. Prone to Organizational Problems

Now if you are a web designer and you’re really not the zen master of organization, then you’ll have trouble with hourly-based tasks. This is because by the hour web design projects need to be monitored. And if it so happened that you lost track on how many hours you put up with your work, you’ll have a difficult time.

But if you are currently focused on one project alone, hour-based work is good enough for you. One the other hand, if you are otherwise, and would want to work many projects at the same time, it will almost be impossible for you to charge hourly.

Fixed Rate

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Fixed rates happen when a designer charges for the whole project, rather than measuring it through time. Normally, fixed rate projects are based on both the duration of the work, the difficulty of the task, and the experience of the designer.

There are two ways for you to use this method:

  • Charge by page
  • Charge by project

Advantages

1. Flexibility of Schedule

If you are to charge on a fixed rate, you’ll have freedom over your time. It will not matter if you are a morning person or a night person, or if your design moods change. You can work at a more flexible timetable and would not be obliged to monitor your working time. Because of this, you’ll have a better flow of creativity because you can just breathe and relax any time you want.

2. Ability to Work on Multiple Projects

Of course, because of your flexible timetable, you will be able to take on multiple projects. This sounds good news because, well, the more projects, the more the money. Right? Honestly, it’s a yes and no situation. Yes, it would mean that you will get more money, but it will also mean that you will have less focus on each project. But if you can work on many things all at once, this will not be a problem.

Disadvantages

1. Less Pressure

While the smaller amount of pressure given to you sounds good, it will also be something bad. Because you tend to think that you really don’t have to rush this work because no one is monitoring your time, you tend to be complacent, and this complacency leads to procrastination. So while you really aren’t pressured to finish the work now, you will most certainly be pressured tomorrow if you don’t do anything today.

2. More difficult to determine amount

If you are charging by the hour, you can easily know the benchmarks of charging your clients. Because there is a readily available payment matrix, you will not be having any difficulty pricing your work. However, that can’t happen in fixed-rate projects because the amount of work really lands on many factors to determine.

So which will I choose?

Before answering this, let me ask you a few questions:

  • Are you new to web design? Or are you experienced?
  • Are you willing to work under time pressure? Or do you want to carefully pace yourself?
  • Do you want to focus on one project at a time? Or do you want to work on several more?

If you have chosen the first questions over the second, then I suggest you should do by the hour. For those who had just gone in, it is important for you to determine your skills first. Test the waters! I suggest that you start doing by the hour tasks first so you can gain experience to work under time pressure and really squeeze your fresh creative juices. It is also better if you start on one project at a time so you won’t smear your reputation as someone who can’t deliver what was promised.

Now, if you are already experienced, you might want to play that to your advantage. And because you would want to deliver an A1 steak sauce of a job, you would have to pace yourself carefully and work without pressure.

Either way, you will earn some cash, and gain some experience. Good luck in choosing.

 

Written by

Rudolph is a geek. He loves reading: books, blogs and even nutrition facts found at the back of products. He loves to read interesting internet stuff.

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4 Comments, leave yours
  1. Jason Jan 20, 2015, 10:37 pm

    Hey Rudolph,
    Good article, but I have a slightly different take on “…and would want to work many projects at the same time, it will almost be impossible for you to charge hourly”.
    I am currently working on 6+ projects & charging hourly for all of them. As long as you ‘are’ organised & use tools like Harvest & Xero, its no issue charging hourly on multiple projects.
    I tend to find that any hold-up’s are on the client side as well, so working in large chunks of time doesn’t actually happen that often.
    I guess it depends entirely on the way you work, but in my experience it’s good to have many projects on the go at once, & charging hourly (for me at least) is the easier/safer option. The amount of times a client has come back to me with what they think are ‘small’ changes (that actually aren’t) & if I had been charging a fixed rate, my equivalent hourly rate would quickly reduce. At least I can go back to them & say “sure, I can do that, it will cost $$$ extra – ok?”. To me fixed rates benefit the client more than the freelancer/contractor, they’ll milk your time for all it’s worth. If it’s hourly, they likely want that extra work done ‘at some point’ anyway, so there’s future work for you too.
    Cheers,
    Jas

    Reply
  2. Josh Jan 21, 2015, 3:45 am

    “And because you would want to deliver an A1 steak sauce of a job” -that’s hilarious, im gonna use that

    Reply
    • Rudolph Musngi Feb 6, 2015, 8:42 am

      Ha! Thank you!

      Reply
  3. Adam Jan 21, 2015, 9:16 am

    Thanks, a nice little explanation of the pros and cons of both ;)

    As a business, I prefer to hire designers and devs by the hour for on going projects and by the project for, well, one-off projects.

    Reply
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