This is a tough question that all freelancers must answer at some point.
Should I charge per hour? Or should I charge a flat fee per project?
If I do charge, how much do I charge for my services? What’s a good starting point?
Well, let’s jump right into it:
How much should I charge when I first start out?:
That’s an excellent question that I’m getting better at answering everyday, but I still struggle with it (part of the fact is that I offer new services).
When I first started, I struggled with pricing my services.
I started at $15/hr doing random oDesk projects while I was still in school. In hindsight, that was a terrible mistake. The jobs were neither long-term nor consistent. I spent more time looking for work than actually doing it. When the project was completed, I was actually making way less than $15/hr if I included all that time finding work.
On the contrary, it gave me some low-risk projects to work on that helped develop my design, management and customer service skills.
So how much should you be charging as a freelancer that’s starting out? I would say at least $25/hr.
Should I charge by hour or by project?
This is a definitely tough question to answer, as some clients are better off with hourly and some are better off with project based pricing.
For example, I have a client that gives me small and random graphic and web design projects weekly. They usually don’t take more than 2-3 hours a week, so I charge her by hour.
On other cases, some clients asks for a 8-10 page website. I consider all the factors and charge them by the project.
However, I’m moving away from hourly and going towards project base (even for the small ones). Here are 3 reasons why:
1) Some projects that I can do in an hour, other ordinary people will do in 4 hours.
2) The better I get at design, the less time it takes for me to do it. This means that I’m making less for better and more efficient at what I do.
3) Charging by project makes much more sense because it goes by what it’s worth for the clients, and puts the importance on the project, not on how much I charge.
Point number 3 is the most important here. Because we get to charge based on VALUE.
Let’s say I got a Real Estate client that wants a new website done because their current one isn’t generating enough customers for them. If they get one client, their typical commission is roughly $10,000.
Imagine that I decided to charge by the hour $50/hr (which may scare a lot of clients away). In the end, I spend 30 hours to finish the project. That comes out to be a $1500 project.
Now imagine that I decided to charge by the project. I can quote the Real Estate Client a $5000 website, and give him the same product as the one that goes by hourly.
What’s the difference? Yes, the price. But we’re talking about what it’s worth for the client. If the website redesign helps the real estate agent get one NEW client, it pays for the website and gets her $5000.
I get paid more, and the client is still happy.
Of course there are a lot more variables involved, but that’s one of the biggest reasons why. And this example is not a true story but just an example to explain the point.
So should go by hourly or project based pricing? I would recommend going by project based pricing.