FREELANCE PRICING GUIDE
Hourly Rate vs Fixed Project Pricing
Freelancers commonly charge clients either by the hour or by the project. Neither approach is automatically better. The right choice depends on the scope, risk and predictability of the work.
What is hourly pricing?
With hourly pricing, the client pays for the amount of billable time spent on the work. It is simple to understand and can protect a freelancer when the project scope is uncertain.
Advantages of hourly pricing
Hourly billing can work well when requirements may change, the client wants ongoing help, or it is difficult to estimate the total amount of work in advance.
Disadvantages of hourly pricing
A fixed hourly rate can limit earning potential. As you become faster and more experienced, you may finish the same work in fewer hours and therefore earn less unless your hourly rate increases.
What is fixed project pricing?
Fixed project pricing means agreeing on a total fee for a defined scope of work. The price is based on the project rather than the exact number of hours used.
Advantages of project pricing
Clients know the expected cost in advance, while freelancers can benefit from working efficiently. Project pricing also makes it easier to include risk, revisions, expenses and desired profit in one quote.
The biggest risk with project pricing
Scope creep can make a profitable project unprofitable. A clear written scope, revision limits and a process for additional work are important when using fixed pricing.
When hourly pricing may be better
Consider hourly billing for consulting, maintenance, uncertain projects, troubleshooting or open-ended work where the final scope is difficult to predict.
When project pricing may be better
Fixed pricing can work well when deliverables are clear, you have completed similar projects before and you can estimate the effort with reasonable confidence.