As you begin your freelance career, one the biggest dilemmas you will likely face is whether to charge a flat-rate or an hourly fee. This issue plagues nearly every freelancer because solid arguments exist in favor of both options. However, more entrepreneurs are turning to flat-rate pricing structures instead of hourly rates because of the advantages that this option offers. Here are the main arguments in favor of flat-rate pricing to assist in your decision of which option to choose.
Better Customer Confidence
The main focus of your freelance business should be on customer satisfaction and on developing the confidence that clients have in your professionalism. Charging flat-rate pricing is just one of many ways you can begin developing client relationships at the outset of each project.
When hourly rates are charged, clients often worry they will be billed for hours of work that wasn’t completed or that they won’t be able to determine exactly which services are being billed. However, when you use flat-rate pricing, the project price will be established at the outset of each project, leaving fewer questions in the customer’s mind.
This will also mean that fewer surprises will appear after each project is finished. If the customer is given a project price at the beginning of the job, he or she will be less likely to question their bill and will be less reluctant to pay the price that is charged.
Fewer Billing Issues
As a freelance professional, the main aspect of the job you likely dread most is dealing with billing issues. Calculating project costs and sending out invoices are mundane tasks that can drive creative professionals to the edge of insanity.
As such, by charging flat-rate prices, you can reduce the amount of time you spend on billing issues and instead focus more energy on what you love most about the job–the creative process. By charging a flat-rate for projects, there will be fewer surprises when billing time arrives and you will likely have to deal with fewer inquiries from clients regarding their invoices. Considering how touchy of a subject money can be, any reduction in these inquiries is a wonderful thing.
Using Flat-Rates Effectively
As you begin your career as a freelancer, you will undoubtedly hit a few snags in the billing process. Problems with late client payments and arguments over project pricing are both likely to occur. However, you can incorporate certain practices to use flat-rate pricing in the most effective manner possible.
As you cultivate more clients and gain experience with the billing process, you will develop a feel for the flat-rate pricing system. One argument that still often wins in favor of hourly pricing models is that freelancers worry about being underpaid due to the excessive hours spent on the projects of difficult clients.
However, one way to bypass this dilemma is to specify that the flat-rate being charged is for a certain number of hours worked and also for a specified number of edits. Reiterate to each client at the outset of a project that if the job extends beyond the specified number of hours or if additional edits are requested, a higher fee will be charged. The most important aspect of using flat-rates effectively is to listen to your intuition and make adjustments in the process as your freelancing experience develops.
Setting a Flat-Rate
The largest question most freelancers have is determining which flat-rate to charge. The best advice here is not to over-value or under-value your talents. If that sounds like a vague solution, it is. This is a very gray area to discuss because the appropriate flat-rate to charge varies with each freelancer depending on experience level, the type of work they create, and many other factors.
One technique to utilize is to first determine an appropriate hourly rate for your services based on your experience and skill level. You can then convert that hourly fee into a flat-rate based on how long you think a project will take to complete.
The flat-rates you charge will likely vary with each client depending on the nature of the work and how long you think a project will take. In the beginning stages, you will likely make a few mistakes when trying to determine an appropriate rate. However, in time, you will develop a feel for the system and build more confidence in your price setting abilities.
Starting a freelance business can bring you immense financial stability and provide freedom from working for an employer. However, to ensure the continued success of this venture, you must establish practices you feel will work the best and then continually monitor those practices to determine if adjustments must be made. A flat-rate pricing system is the practice that fits best into the business models of many freelancers and may very well be the best option for you.
What About You?
How do you charge for projects? Do you use a flat rate or do you charge by the hour?
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