Hourly vs. Fixed Rate: Where do you Stand?

The debate never seems to end in my circle of professional acquaintances. Would you rather be paid for projects based on an hourly or fixed rate?Argue as we may, we never do seem to come to a conclusion. I myself am of the opinion that there is no “right” or “wrong” answer necessarily. That being said, I have met many freelancers that are very passionate about one side or the other.


For those that prefer fixed rates, they will often ask their hourly rate-preferring counterparts why they would ever be excited to trade their time for money. On the other hand, those that prefer hourly contracts wonder why anyone would agree to a project that may end up requiring much more effort than originally anticipated-- effort that would essentially go unpaid.


I personally believe one’s preference for fixed or hourly contracts stems from the way that he or she views work. The individual that sees his or her completed task as product tend to favor fixed rate projects. They feel comfortable pricing a project based on the perceived value that the finished project will bring to the client. Those that see their availability and time as the primary product being offered to the client feel most comfortable billing a client in a similar manner.


Interestingly enough, a couple of close friends of mine recently completed projects that they chose to bill using their preferred method. One, a web designer, typically bills clients a flat rate for projects he completes. Another friend, a graphic designer, prefers to bill hourly. Both recently completed projects where they ended up regretting the billing method that they chose!

My web designer friend recently landed a gig where he was asked to do a complete redesign for an academic organization. He was thrilled when the client agreed to a very high fixed rate for the project. He was anticipating that the project would run somewhere between 3-4 months. In the end, the project ended up taking almost 6 months! After taking a look standard hourly rates in industry, he found he could have very easily made an additional 50% over the course of the project had he chosen to bill hourly.


My graphic designer friend prefers to bill hourly. She has come to expect that clients will ask her for various edits. She offers as many edits as the client asks for as each of these edits is done on the clock. A recent project left her shocked and upset however when the client gladly accepted a project that was done in under a half hour. She ended up selling what she described as an “awesome, professional poster” for less than a quarter of what she would typically make.


All this to say, no billing method is perfect in my opinion. As a developer, I tend to favor flat-rate projects. At the same time, I’m sure I can find freelancers doing similar work that prefer hourly billing.


Which do you prefer and why? Do you have any personal anecdotes that would help me understand your reasoning?


Thanks!