Comments on: Why You Should Never Charge Hourly

By: Sumeet

Sumeet — Wed, 23 May 2012 10:59:30 +0000

Why you should never read articles which insist on never doing things one way or another …

By: Scott

Scott — Mon, 12 Mar 2012 23:35:50 +0000

Wow. Very enlightening. I’ve been freelancing on and off for nearly 20 years and am vowing to never charge hourly again.

Thank you for a compelling article. Very helpful.

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By: Amber Weinberg

Amber Weinberg — Thu, 19 Jan 2012 20:23:42 +0000

@Joseph I have NEVER had an issue with scope creep because I have an a contract that outlines what will be done in the project and what they have to pay if they want something outside of the scope. Charging hourly means a lot of lost money once you get above $100/hr because clients don’t want to pay that, even if it’s just perception. Charging by the project has allowed me to make way beyond those rates.

By: Joseph

Joseph — Thu, 19 Jan 2012 19:34:48 +0000

I’m sorry but I CANNOT agree with this. I wholeheartedly disagree on just about every level with every point you are trying to make here. This is terrible advice, at least from my perspective. I do everything from designing websites to coding in Javascript/PHP, and high end 3D character animation/video editing. I have different hourly rates for each skill required of me.

I will NEVER bill by project because it puts you in a situation where the client can ask for tons and tons of changes AFTER you’ve delivered 100% what they asked for. Perhaps I’m a victim of my environment here in New York, where clients want you to save the world but they don’t want to pay for it. I did a simple 3D animation for a client billed originaly at about 45 hours of work. 6 revisions later, I was paid for 78 hours.

78! I don’t know about you, but I’d rather be paid for that time. Here is how I do it and I get a very steady stream of freelance work.

Give a set amount of hours to the client and offer 1 free round of client approval. Which means if you set an estimate at 55 hours; even if you go over, the client gets their say with 1 round of reasonable changes. After those changes are made, which could amount to anything from 1-15 extra hours of work, I start to bill hourly.

This is fair and it prevents scope creep. If you’ve never fallen victim to scope creep, then I’m envious of you. It means you work with honest clients. I prefer to keep my clients honest. They don’t get free work and they don’t get to change their mind whenever they want to. Setting a flat rate means you don’t value your time. Why should the client? What stops the client from turning a 2 week job into a 1 month job?

They are much more careful with changes because they know that they are on the clock.

By: Fred D.

Fred D. — Thu, 06 Oct 2011 23:47:14 +0000

Old thread, I realize, but little seems to have been said much about PROFIT! If you are not freelancing to make a profit, why not work for a wage and keep life simple?

The right way to determine your rates is to take the sum of:

ANNUAL SALARY + vacation pay + benefit costs + other expenses + PROFIT MARGIN

Then divide by full time hours per year. If this is not close to the (effective) hourly rate you are billing, you are selling yourself short! Expenses should include training costs, marketing, opex, capex, and YOUR TIME spent running your business.

Some realistic values:

vacation pay: 6%
benefit costs: 20 – 30%
time spent running business: 40%
other expenses: 10 – 20%
PROFIT MARGIN: 7 – 15%

I think some contributers to this thread might discover that $100 per hour is quite reasonable (for anyone interested in making a profit).

For all the reasons stated in this article, my preference is fixed rate, by the way, so I end to quote a high end rate to clients who insist on hourly. If it scares them away, I move on.

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