Freelancers take note - reasons why you should stop billing by the hour.

17 replies
Billing by the hour is the bane of my existence - its time consuming hard to manage and I just dont have the patience or the time to be managing the 50 or so hours I am working a week without missing something.

Working by the hour might be ok if you're a teenager with a paper run but its not sustainable when youre in the big bad world and there are plenty of reasons why this is the case.

Freelancers, I know you need the work and fair enough however youre chopping off your nose to spite your face and here's a few reasons why you should consider project fees rather than hourly rates.

Granted this is my opinion, hopefully it will allow you to make a firm decision next time someone asks you to charge hourly.

You have two options when youre freelancing
  • Hourly rate
  • Project-based prices

Heres why you need to consider not charging by the hour:
  • Hourly rates penalise you - the more you work, the faster you become however with hourly rates you are basically being penalised for working well. That sounds pretty dumb to me. Whereas if you work on a project base, no matter how long it takes you get the same amount. This arrangement is good when you are starting out and also when you are a very proficient freelancer.
  • You know how much you will earn when you sign up for a project-based job - there are absolutely no surprises for you or your employer when you have a milestone in place and you get cracking. Whats more, it can be harder to get employers to cough up more money if their expectations of the time it should take and your expectations differ.
  • Projects are easier to bill - from a billing perspective its much easier to know what you have coming up so there are no surprises. Its hard enough to make money as a freelancer, so the last thing you want is disputes.
  • Tracking hours spent is a massive pain - if youve had to track and prove hours youve probably already figured out that it is a massive pain and you always seem to forget something.
There are plenty more reasons for why you should be charging per project and not per hour (don't get me started), mainly because eventually youre probably going to move away from freelancing and running your IM business without the need for it so it is also a good way to start charging fixed rates and testing that youre valuing your offering well enough.

No matter what, there is always going to be pros for and against and it is a personal preference, however freelancers should be aware that hourly rates are not always the best avenue to go down.

I have been freelancing while I have been setting up and growing my business and while it works, individuals do need to take control of it otherwise you end up working for basically nothing and getting taken advantage of.

Any thoughts from everyone out there about this?
#billing #freelancers #hour #note #reasons #stop
  • Profile picture of the author DGSEO
    Personally I charge either per 500 words or per individual word depending on the client and the type of work requested. I did charge hourly for my first two or three freelance writing jobs but now I write so fast that I'd have to charge an amount that sounds completely unreasonable for an hourly rate but acceptable for high quality articles of a certain length.

    When I charge per 500 words(I usually write mostly articles around this length and therefore this is a good system for me) I'm able to make the large hourly rate by completing those articles in around half an hour. Moving away from charging hourly rates is one of the best decisions I've ever made.
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    • Profile picture of the author Kyanna Kitt
      That makes a lot of sense. That's actually really good idea for hourly writers or even people working on larger projects who write fast. I notice that a lot of clients want to know the price per 500 words even if they claim the job is an hourly position.
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  • Profile picture of the author Shawn Arms
    I don't hire freelancers who work by the hour. The thing is I don't know how fast you are.
    If you are slow...why is that my problem?

    At the same time if you take a long time for the project how do I know how to budget.

    So as soon as they say I get paid this amount an hour I say bye bye.
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    • Profile picture of the author CabaMate
      Originally Posted by Shawn Arms View Post

      So as soon as they say I get paid this amount an hour I say bye bye.
      Good call, it annoys the crap out of me when people start asking about how many words they will get for this price and that, seriously if it all boils down to that the whole point of good quality content has been missed.

      It really gets on my nerves and I hope that freelancers value their offering enough to charge by the project and help everyone else out.
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  • Profile picture of the author gpacx
    As a Freelancer, I always charge per word but my estimates are based on my own hourly rate. I've found that this is the best system for myself and it's also the most fair to the employer.

    Basically what I do is when I bid on a project or submit a proposal for something, I estimate how many hours it is based on the scope of work, ensuring that the scope of work is basically accurate as advertised, and then I estimate how many hours it will take me, multiply that by my hourly rate and bid accordingly.

    Practically speaking, at the end of the day, you're just paying for my time, and how much I charge for that time is dependent on how I'm able to sell my own value in the marketplace. When you purchase a 500wd article, all you're paying for is the time of the person who wrote it, and what that costs depends on how good they are.

    So if you're just paying for somebody's time, all quotes are fundamentally on an hourly basis. The only difference is whether or not the Freelancer is taking responsibility for getting things done within the allotted time or not. An hourly rate doesn't mean that you can take 10 hours to do a 2 hour project.

    If I'm justifying a quote, I can be totally transparent about how I'm calculating it and how long I expect each part of the project to take, but it all comes back to my hourly rate and knowing how quickly I can get something done. The difference is that if I quote my hourly rate, I can take as long as I want, whereas if I quote a project fee, I now want to get it done in as few hours as possible. For clients - you never hire someone for hourly work without an expected result, right? So if someone writes for $15/hour, that's fine, but they need to outline what they are going to accomplish in that hour and include that in a proposal.

    What I would recommend for employers is to have Freelancers actually give their rates per hour and then base their proposed project fee on their own estimate of how much time something takes. I have clients that pay me $45 for a 500wd article, but I don't think they realize that I write the article in 30 minutes. They just pay for it because it's good work and I write it as fast as I can to maximize my hourly rate.

    What we're ultimately talking about is risk mitigation for the freelancer and for the client. The freelancer proposes a price and a deadline - if the project goes longer than expected, will the freelancer work extra for free or will it cost more? If the freelancer is super efficient and works very quickly, should they be able to leverage that to make more per hour or should employers leverage that to get the same work done in less time and for less money?

    Personally, I believe in playing for the draw. My best clients show me a lot of good will - they trust my quotes and that I'm working hard to give them the best results and I take great care of them by consistently over delivering on projects. When I say something will take seven hours and it takes eight, they make sure there are no hard feelings, even if it means opening their wallets a little bit.

    My best clients are people I've stayed up entire nights working for because they needed to hit a deadline. We have great relationships, so it no longer matters how I quote because they're going to make sure that I feel like the deal is fair. A good personal relationship makes a good business relationship and you should start off by offering a totally transparent quote that reveals your hourly rate and what value you expect to provide in how many hours.
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    • Profile picture of the author Kyanna Kitt
      "An hourly rate doesn't mean that you can take 10 hours to do a 2 hour project."

      This is so true. I think some people think they can just drag out a project just because the project is hourly. You also pose a good question about working quickly and getting paid more. Outlining what you can do and in how much time is vital for transparency and fairness. I really like your perspective.
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  • Profile picture of the author Kyanna Kitt
    You make a really good point on the topic. I get where you're going. I'm not knocking what you're saying and it actually all makes sense contrary to what some may say, my only problem is if the person isn't willing to pay your hourly rate why would they pay your per project rate? Or are you just speaking on low hourly rates that some of us stick with in hopes of securing more clients? I know freelancers who charges $55/hour for hourly projects. Folks are quick to hire him and he works consistently.

    I think a common fear with charging per project is that a lot of freelancers think they won't be able to charge a fair amount. But if they work per hour with one of those little time keeping screenshot apps the client will be more inclined to pay because there is proof that the person is actually doing the work. I can think of a few people who charge per project and are doing great too.

    I guess I'm trying to figure out if this logic is across the board or just being thrown out there as a general rule of thumb to ensure that the worker/self-employed person gets more money for their work in general?

    Another question I have for you is this: Are you completely against charging per word? Why or why not?
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    • Profile picture of the author Brunofos
      Banned
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    • Profile picture of the author CabaMate
      Originally Posted by Kyanna Kitt View Post

      my only problem is if the person isn't willing to pay your hourly rate why would they pay your per project rate? Or are you just speaking on low hourly rates that some of us stick with in hopes of securing more clients? I know freelancers who charges $55/hour for hourly projects. Folks are quick to hire him and he works consistently.

      I guess I'm trying to figure out if this logic is across the board or just being thrown out there as a general rule of thumb to ensure that the worker/self-employed person gets more money for their work in general?

      Another question I have for you is this: Are you completely against charging per word? Why or why not?
      Kyanna, per word is just plain stupid. I have projects that I do that are valued on the work and the content, not purely on the word count. If you are only basing the entire project on how many words you are punching out and not the spelling, grammar, sentence structure and overall flow then you've missed the point.

      Clients/employers are silly - if you outline what the price is for 10 blogs and offer a bundle it's fairly easy to calculate. If you show examples of your work and offer a deadline for X amount of blogs for $YYY it is clear for yourself and also for the employer.

      Project fees provide transparency, you will get more work and you will get better work. I say this with experience, I would honestly never, ever suggest going back to hourly rates. Not only does it open you up for discrepancies for payment there is no reason to break it down by the hour. Get a project, do it well in the time provided and you should get paid agreed amount. Simple.
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      • Profile picture of the author Kyanna Kitt
        Originally Posted by CabaMate View Post

        Kyanna, per word is just plain stupid. I have projects that I do that are valued on the work and the content, not purely on the word count. If you are only basing the entire project on how many words you are punching out and not the spelling, grammar, sentence structure and overall flow then you've missed the point.
        Yeah, this is kind of a different strokes for different folks kind of deal. I get what you're saying but at the same time you cannot say whether or not someone is charging adequately for the entire scope of the project based off of what kind of payment system they use unless you know what their prices are. I also think that when charging per word or per hour pops up folks assume that very low rates are being charged when such isn't necessarily the truth. Charging per word also does not mean that someone is going to try to slap X amount of words onto a sales page to make X amount of dollars. Conversely, someone can charge per project to rack up on extra cash producing a large quantity for multiple clients and still not produce their very best. I mean, we can't assume that people who use different payment models lack honesty and integrity.

        I think your point in the response to my questions was that charging per word is a slippery slope and is more complex (and quite frankly more difficult) to gauge than setting a solid price. Its pros are outnumbered by the cons because:
        1. Clients can milk more work from you for a lower price.
        2. Freelancers may use hourly/per word gigs to try to get more money which can result in low quality work.
        3. Hourly/per word has more holes in it than a set project fee.

        You've provided a lot for people to think of in terms of how they charge their clients. This is a very important discussion to have.
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        • Profile picture of the author CabaMate
          Originally Posted by Kyanna Kitt View Post

          Yeah, this is kind of a different strokes for different folks kind of deal. I get what you're saying but at the same time you cannot say whether or not someone is charging adequately for the entire scope of the project based off of what kind of payment system they use unless you know what their prices are. I also think that when charging per word or per hour pops up folks assume that very low rates are being charged when such isn't necessarily the truth. Charging per word also does not mean that someone is going to try to slap X amount of words onto a sales page to make X amount of dollars. Conversely, someone can charge per project to rack up on extra cash producing a large quantity for multiple clients and still not produce their very best. I mean, we can't assume that people who use different payment models lack honesty and integrity.

          I think your point in the response to my questions was that charging per word is a slippery slope and is more complex (and quite frankly more difficult) to gauge than setting a solid price. Its pros are outnumbered by the cons because:
          1. Clients can milk more work from you for a lower price.
          2. Freelancers may use hourly/per word gigs to try to get more money which can result in low quality work.
          3. Hourly/per word has more holes in it than a set project fee.

          You've provided a lot for people to think of in terms of how they charge their clients. This is a very important discussion to have.
          Thanks - it is a topic I am really passionate about as I think freelancers really run the risk of being taken advantage of.

          There needs to be a level playing field and the fear of not getting the work usually makes freelancers agree to things that aren't really fair.

          The whole idea of doing something when I don't have 50% deposit or even the entire milestone set up and ready to go opens people up to being dishonest (from the employer's point of view).

          When I started out I did plenty of projects for people on a freelance basis and so many of these I was either not paid for or had to fight for fair payment, it really is unfair as it is usually after the employer has commented that the work is perfect and they are really happy.

          I think freelancing shouldn't mean individuals have to get a raw deal. It sound like you have experience in freelancing and you know what you are doing however newcomers to the industry are not always so lucky and it's unfair they have to learn the hard way.

          A good conversation to get out there so people realise they have choices either way.
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  • Profile picture of the author hynds
    In the previous, I'm a develop freelancer, so I charge per hour, I remember that about $12-$18 per hour. I see that almost my friends also charge per hour.
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  • Profile picture of the author onegoodman
    Hourly work is not punishing, it depends on what work for people. Hourly is less accountable. I do't like it personally but you get yourself protect from any under estimation.

    If you agreed per project and then you realized there are things that has been missed in the original estimate. You are in for trouble big time. So, keep that in mind.
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  • Profile picture of the author Matthew Hart
    Hi,

    I have noticed that working by the hour has become cheaper for most clients right now. Sometime last year, I made more by working per hour but for some reason, it is cost effective for them.

    If you charge around $50-100 per hour, then you can be rest assured that you'll be getting a lot of money.

    As for it being the bane of your existence, I can relate in many ways! I have worked on some projects by the hour, and it has been like a waste of time.

    I think one way it can work is for the client/employer to have a particular time frame they need for the task, and create an agreed milestone for the hours you've agreed to work and if you do the job within the time-frame, it should be paid as soon as you're done and anything else can be charged as overtime.

    This is just my 1 cent, and I hope it's worth something!
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    • Profile picture of the author CabaMate
      Originally Posted by Limerick16 View Post

      Hi,

      I think one way it can work is for the client/employer to have a particular time frame they need for the task, and create an agreed milestone for the hours you've agreed to work and if you do the job within the time-frame, it should be paid as soon as you're done and anything else can be charged as overtime.

      This is just my 1 cent, and I hope it's worth something!
      Yep, the agreed milestone for a bank of hours is one way around it and it ends up being a project fee in that case anyway.

      Just the possibility of things going wrong on hourly projects and the misconception employers have of what something actually takes when they are asking for a 'quick job' or even a '5 minute job' leaves people that charge by the hour open to issues.

      Seems like you have made a way around it which is good.
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  • Profile picture of the author apache421
    I think both ways are fine as long as you're providing the best to your client. If you meet all the requirements of your project and provide a good content with all necessary things there's nothing to worry about for both client and the freelancer.
    However some clients are reluctant to give their work on hourly basis, especially to new freelancers, as they are not sure whether they complete their projects within the allotted time. The best way to deal with this is that to firstly show them your previous work so that they may trust you with theirs and if you don't have any you can keep your client update with the work you are doing and giving estimation about the details that you will be covering. This will satisfy your client and make him trust you more.
    It also solely depends upon the speed with which you complete your work as early as possible, so for those who are quite speedy may get more benefit with hour-based projects.
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  • Profile picture of the author atrbiz
    I used to charge a flat fee for web development, currently, I charge on a hourly basis, and I make a lot more money as my clients receive higher quality work and support. It works out for me
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  • Profile picture of the author JohnVianny
    Of course you have to charge on Project not the hour...

    ...otherwise what is the difference between you and a slave?
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