Do you have these Problems with your Hourly Rate?

by TNT011
5 replies
You can't live with and you can't live without it. This is what I have to say about my hourly rate.

I don't need it, in the first place, but my clients obviously do. I mean, every client and project are specific and unique in their own way. The best way is to determine a price from case to case, strictly individually.

However, I noticed, the clients want to have some kind of a warning sign, so to speak. How much is going to cost me? This is what they all want to know. They're obviously making rough estimates. Your hourly rate is like this. I estimate it's going to be like 5 or 10 hours. Something like that. This is the lovely theory. Now, let me show you what's happening in the real business life.

What's the best way to track working hours?

Software or no software? So far, I have always had only two options. Either I agree with the client to use some tracking software or to create a simple excel table and just put the working hours in it. At the end of the week or month, we draw a line, evaluate the work and working hours. I get paid we move on.

So, what's the problem? Well, these tick-tock-clocks are getting on my nerves. It's just like someone is watching me over my shoulder. It's not natural and if you asking me, it's humiliating. The software monitors the time I spend working, how many times I move my mouse or click on a keyboard. The worst part, let's say you work eight hours, but you have only 5 effective hours you can get paid for. I know, you put the hourly rate you think is fair and problem solved.

When I'm using a simple excel sheet for the same purpose, the things are much more relaxed. I am a fair player. I say in advance, how many hours it usually takes me to do some job, so the client can see for himself whether or not the excel time tracking table it true. Here it is all about the trust. You can trick me once, but you can't trick me twice. I am really fair in using it. I don't put every single second I work on project or every Skype talk, that's for sure. Yet, for some reasons, clients prefer the software option.

What's a fair hourly rate?

How to determine an hourly rate that's fair for both parties? Maybe, $100 per hour is fair for me, but I'm sure my potential clients aren't going to be thrilled about it. On the other hand, you want to be fair, but what do you get in return. You put $40. Then, I talk to a potential client. After 15 minutes or so, I realize this isn't going to work. He was like, let me pay you for your time. You may say, this is fair, I will say, I don't need ten bucks. Yet, do you know how many conversations such as this I have on a daily basis? Hours and hours of unpaid time slipping through my fingers. It's a business risk? Please!

So, if it's too high, you are going to scare off your clients. If it's too low, you are always going to feel bad about it.

When does the clock start ticking?

What about this problem? Before we begin with the work. We need to negotiate. We need to clarify things. OK, these are reasonable things to do. Call me stupid, but again, I'm the one to pay all the bills.

So, I like to start a friendly way. Like I'm not in a hurry. I don't rush things. I'm patient. I take time to discuss all the project details. You need to sacrifice an hour or two to get work for 10 or 20 hours. Right? Negotiations fail. We need to discuss many things before every phase of the project begins. What then?

On the other side, if I begin our working relation like I'm so maniacally obsessed with the time, it's not going to end up well. Right? How I'm going to present myself? It's just like a job interview. You think about the salary, but all you do is talk about the job you're applying for.

After all the trouble, I applied a 45-minutes rule. If we can't figure out what needs to be done in 45 minutes, then I'm not going to accept the job. Right or wrong, I'm not sure, but I need something to protect me. It seems like this is an unavoidable lose-lose scenario for me. Either I will lose money, if I'm in my friendly mode, or I will spoil the positive working atmosphere, if I'm obsessed with the time. Like there's no way to turn this one into a fair win-win situation.

Do you think more about the clock than the work?

When I work on a project based price, all I worry is the project itself. I can focus completely. When it comes to hourly based projects, my first and my last thought is the time. I am fully aware that the same job can actually cost you more time as a fixed price based project. You get less money than you would get, if you were to do it as an hourly based one. Yet, if I don't have the pressure of time related thoughts, I don't notice this problem and honestly I don't care. So, in a way, it is a matter of personal perception. OK, I get it, but that fact doesn't solve my problem with the time.

Also, if your goal is to hit 8 hours of work on your hourly project, then you should be aware that these 8 hours can easily stretch into 10 or even 12 hours of total time. At least this is what happens to me. So, 4 to 5 hours of effective or let's say net time turns into 6 to 8 hours of gross time.

Finding a solution for my hourly rate problems would be great. I can't say, I don't work on hourly projects. I can't go on like this. Something needs to be done. Let me hear, how you handle your time.

Thx.
T
#hourly #problems #rate
  • Profile picture of the author agmccall
    Personally, I would never charge an hourly rate. How can you. Lets say your charge $40.00 per hour for your service and I am interested so I say "How much will this cost me?" So your response is 5 to 10 hours so it will either cost me $200.00 or double $400.00 Sorry but that to me is a bit difficult to swallow.

    If you are providing a service then you should be able to estimate how many hours it will take to do something so if I were to ask that question you should just say Either $200.00 or $400.00 or even just split the difference and charge $300.00

    When I was young my Father used to do construction and I would work with him sometimes and I asked one time how much he charged and he said " I charge a weeks salary on each job" So if he made $300.00 per week he would charge at least $300.00 on each job. He said that way if he did not pick up any other work that week he still made what he needed.

    al
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    The Flu? Not worthy of a mention here???
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    • Profile picture of the author TNT011
      Exactly! What's wrong with the good old project based price?!

      It's like a global conspiracy of clients who prefer hourly prices. Just remembered how one of my clients used to complain about hourly rates being unfair when it comes to revision work. Seriously? From this point it looks like a perfect self-defense weapon for clients who go hard on revisions.

      Either way, I'm seriously thinking about saying, I don't have an hourly rate. I don't work like this. Forget about it. Allow me to give you an offer, a fixed price, or simply forget about it.

      Thx,
      T
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  • Profile picture of the author vandahumble
    When the client says the project is going to take X hours. Ask him what is his basis for his numbers? Did he do the same project before? Was a similar work done for him by another freelancer?

    Base on your own past experience doing similar work, respond back with your estimated time. Ask him about his budget limit for the project and tell him that you will stop when that limit is reached and he can review the progress on the project.

    I don't like working with trackers too and my clients trust me to just do the manual reporting of my time and base their payment of the work done and see for themselves that it is worth the final price.

    Regarding your 45 minute limit on client meetings about the scope of work--that should be enough. They should be able to explain what needs to be done on that amount of time---longer than that and they may be just asking for "free consultation" on strategies.

    [Based on more than 5 years of taking in freelance work from time to time, I never had a client who can't explain the requirements of the project in under 10 minutes---after that it's just a quick question & answer e-mail exchanges to get the work done.
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  • Profile picture of the author gingerninjas
    I also quote a project price for a job, it is easier this way and the client is aware of the expected outcome price-wise.

    While they may be aware of my hourly rate and can calculate how many hours it may take from this amount there are a stack of variables involved in some of my projects, so I need to account for these.

    Often I do projects that need graphic design, web development, specialist business development services, or general research, so as well as my rate for managing and creating these projects I need to factor in additional prices.

    Don't forget you also need to run a business and your price needs to cover all of your tools of trade and the cost of providing this service.

    Many of my projects I quote come in slightly less for some clients, and I bill them accordingly. At the same time, I have the tendency to underquote at times so I would suggest being very realistic when you are quoting to ensure you cover all of the costs you need to outlay and so that you can make a profit.

    The conversation about money is always a bit of a gripe of mine. I am very clear about my rate to clients and it particularly annoys me if there is much discussion about it. If they see my work, they see the value and I don't want to be negotiated down.

    Regarding your question about monitoring the time, I don't use an app for monitoring the work by the minute. My designer charges in 15 minute blocks and uses one of these however I do keep a note for my own sanity when I roughly started a project and how much time has been put into it. This is more for me so I can ensure that in the future I am charging the right amount based on the effort put into the project. It also allows me to improve my systems and gauge when I am more efficient and when are the times when I need to take a nap and go and do something else to re-charge my brain.

    My advice, step away from the clock. Focus on your offering and unapologetically state your price when you are asked for a quote.
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    • Profile picture of the author TNT011
      Originally Posted by gingerninjas View Post

      I also quote a project price for a job, it is easier this way and the client is aware of the expected outcome price-wise.

      While they may be aware of my hourly rate and can calculate how many hours it may take from this amount there are a stack of variables involved in some of my projects, so I need to account for these.

      Often I do projects that need graphic design, web development, specialist business development services, or general research, so as well as my rate for managing and creating these projects I need to factor in additional prices.

      Don't forget you also need to run a business and your price needs to cover all of your tools of trade and the cost of providing this service.

      Many of my projects I quote come in slightly less for some clients, and I bill them accordingly. At the same time, I have the tendency to underquote at times so I would suggest being very realistic when you are quoting to ensure you cover all of the costs you need to outlay and so that you can make a profit.

      The conversation about money is always a bit of a gripe of mine. I am very clear about my rate to clients and it particularly annoys me if there is much discussion about it. If they see my work, they see the value and I don't want to be negotiated down.

      Regarding your question about monitoring the time, I don't use an app for monitoring the work by the minute. My designer charges in 15 minute blocks and uses one of these however I do keep a note for my own sanity when I roughly started a project and how much time has been put into it. This is more for me so I can ensure that in the future I am charging the right amount based on the effort put into the project. It also allows me to improve my systems and gauge when I am more efficient and when are the times when I need to take a nap and go and do something else to re-charge my brain.

      My advice, step away from the clock. Focus on your offering and unapologetically state your price when you are asked for a quote.
      Talking about realistic expectations and a fair attitude in business. I have often found myself in a position to do both. To hire and work at the same time. Now, I remember one video producer and his approach to this situation. He said, I need to charge for two hours, but my price needs to cover eight hours, because I'm not sure whether or not I will work the whole day or only a couple of hours. Now, this is a great approach if your skills are in high demand in the market. Personally, this is a huge gamble. Thank you for your thoughtful points. Cheers!
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