As a contractor, there are two main ways you can set your pricing. You can either charge your clients an hourly rate or a per-project flat rate for your work. So which one should you choose? There are benefits and drawbacks to each method, depending on the nature of your work.

PER HOUR PRICING

If your designer is charging per hour for your project, that means you’re charged an hourly rate upfront that you agree on in advance.

It’s the most common choice of new freelancers, and it’s also straightforward to communicate without even checking the project. That way, they can send offers as much as possible. Choosing to charge by the hour often feels like the safest option, and it’s pretty much accepted as an industry standard.

THE BENEFITS OF CHARGING PER HOUR

• You pay directly proportional to the amount of work done; if you’re working with a new designer or on a project that is not well defined or has the potential to get dragged out or bogged down by multiple revisions —less risk on the designer side.

• It seems easier to compare your proposal to others. Prospective clients will be looking at other freelancers to see who’s the best fit for their needs. Providing an hourly rate upfront makes it easier for the client to compare, but it’s misleading most of the time as we’ll share the reasons for the disadvantages.

THE DRAWBACKS OF CHARGING PER HOUR

• Designers are penalized for working efficiently. The more experience designers have, the faster they’ll get at doing specific jobs. It doesn’t make sense to be paid less for getting better at something.

• The designer is charging for the value of their own time, not the value of their work.

• An hourly freelance rate makes her seem more affordable – psychologically, it can feel safer to pay someone $30 per hour, rather than $150 up-front, even if the work ends up taking 6 hours and costs more in the long term.

  Charging an hourly rate is preferable in some scenarios. If the scope of work isn’t clear from the outset and the designer is not familiar with the client’s typical feedback process, going with an hourly rate is a safe bet.

PER-PROJECT RATE

This type of payment involves setting one rate for the entirety of the project. It’s almost always agreed to before beginning.

THE BENEFITS OF CHARGING A FLAT RATE

• The designer won’t get penalized for working quickly.

• You can avoid surprises. Agreeing on a rate with your designer upfront will help to avoid pitfalls on either end. You won’t get an invoice for an amount you weren’t expecting.

• Designers won’t have to track time and fully concentrate on the work. Keeping track of your hours can get tedious.

THE DRAWBACKS OF CHARGING A FLAT RATE

• Most freelancers have experienced some form of scope creep, where the client requests more revisions than expected or the nature of a project changes entirely midway through. Therefore it’s crucial to define the project with a detailed scope/ brief and set the number of revisions included in the project.

• Some clients are more hesitant to agree to a flat rate. Presenting one flat rate before any work is done can make some clients nervous.

When we know a client is paying for results rather than time, we’re much less likely to spend our day doing mindless admin tasks. Nothing feels better than creating a fantastic visual within the scope and finishing a project early, knowing that we’re not going to sacrifice our pay just because we were extra productive.

Charging a flat rate makes the most sense when the project brief is clear and structured. We can avoid possible issues in the middle or end of some cases by including the number of revisions in your project proposal or estimate.