Above all, it is best to examine what you do in your freelancing and whether or not you should even be considering the dilemma. Some professions and lines of work that freelancers work in have standards in what to charge. Some industries are accustomed to per day, per word, per page, or some other means of charging. You should investigate what if you are freelancing in one of these industries and how they charge.
However, some freelancers are in the design and web industry are pretty split on whether to charge on a per hour or per project basis. There are advantages and disadvantages of each, however, I will cover the advantages and disadvantages of each in relation to the student freelancer and their level of expertise.
Per hour pricing
The main reasoning to choose per hour pricing is so that you can charge for every bit of time you spend on a project. Basically the project price will be the amount of time you spent on it, plus any expenses you incurred to complete the project (such as stock imagery, hosting, etc.). However, other benefits of charging per hour include controlling picky clients who request a lot of changes and extra work, projects that require a lot of research before the project starts, and if the project is very simple and straightforward.
However, the disadvantages I have found with per hour pricing range from clients being uneasy as to what they will have to pay to shortchanging yourself if you finish the project more efficiently than you originally planned. One of the issues I kept running into was that I was not spending as near as much time on a project as I originally quoted, so I had to only charge for the time I spent. I gave away three projects that I know of for half of the price I originally estimated. Another issue I found was that client’s weren’t too comfortable not knowing exactly what the project price would be or paying for unneeded time spent on the project.
These two issues can be resolved (and typically are) by experienced and seasoned freelancers. Seasoned freelancers pretty much have their hourly rate set accurately and know exactly how much time they spend doing certain aspects of their projects. This is rarely true of a student freelancer, as I discovered for myself. Because of this, I highly recommend charging by the project.
Per project pricing
Per project pricing has its advantages as well: client comfort knowing exactly what they will be charged, being compensated for the value and worth of the project, and winning projects from clients who are more focused on the money aspect of the project than the project outcome. For me, the client comfort factor was major. Matter of fact, I had a client say to me, “Your bids were estimates based on the number of hours, which raised the specter of additional charges (other [designers] chose flat rates for their work).” This was the major reason on my decision to charge per project.
To resolve the issue of being too efficient, charging per project allows me to estimate the project on the amount of time I spend plus with the project is worth. If a project only takes me five hours to do, but is worth much more than my hourly rate times five, then charging per project allows me this freedom.
There are disadvantages to per project pricing however, such as being asked to make constant changes and spending more time on the project than anticipated. I have this happen as well. I spent a year doing a simple web design for a client, and had much more time invested than I originally estimated, so I took a huge loss on the project.
To keep from losing money or spending too much time on a project, state exactly what the client will get when you estimate on a per project basis. Limit things such as comps, revisions, and other aspects, as well as be firm on what constitutes additional work.
Hybrid
Some projects and situations may call for a hybrid of these two methods. Personally I have begun to work on a pricing system that allows me to estimate on a per project basis, however protects me and allows me to charge hourly if the project isn’t going exactly how I originally planned for. This will help cover me for when a client doesn’t quite know what they want and drags the project on and on, or if a project requires much more time in one aspect of the project.
Hybrid pricing can be very tricky though, but can be very effective as well. If you chose to do hybrid pricing, I highly recommend stating everything in your estimate and contract so that your client understands exactly what they are going to get at the project price, but additional work will be billed hourly.
Caveat
The more you freelance and the more experience you gain, the more you will discover which method works for you. You may discover that per project pricing allows you to gain more clients, where charging per hour may allow you to make more money. Finding the right balance for the exact type of freelance work you do is crucial. I would have to say it took me about two and a half years to really discover which method works for me, and I am still adjusting and making tweeks. Only experience will tell you which method works best, and it is worth the effort to try both methods to see how well they work for you.
Do you charge per hour or per project? What are your reasons behind your method?
Per-project is definitely the way to go. It eliminates the uncertainty for the client, and ties the cost directly to the result.
Somebody gets hurt whenever per-hour pricing is involved. If the freelancer is good at their job and finishes quickly, they are financially punished for their efficiency. If they are slow or run into problems, the client is forced to pay for the freelancer’s inexperience.
Of course, it’s fair to say that a freelancer’s hourly rate should align with their amount of experience, but it’s difficult to justify charging twice as much to a client, even if you are twice as fast at your work.
Most clients seem to understand this once it’s explained to them!
I price per project, but often times it’s impossible to completely envision the scope of work heading into a project, so things change, work is added or subtracted. If you charge by the project, everytime the client makes a change, you’re put in the awkward situation of asking for more money. Eventually, they might just think you’re trying to penny-pinch them.
I think the hybrid model is best. Give a flat rate for the project and identify the scope of work as best as possible, and make it clear that all work outside of the scope is billed hourly.
One option is to establish a price per project, but to be clear with the client that there’s an option of additional hourly costs for excessive changes or additions to the initial project brief. As a student, clients perceive you as learning and not as experienced, which means they think it will take you LONGER to do something – therefore hourly is not a comforting solution.