Should You Just Bill Hourly?

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Should You Just Bill Hourly?

You may ask, why don’t I just keep it simple and bill all my clients on an hourly basis? It seems fair and easy. It’s not wrong to do that—you can incrementally raise the value of your time as you grow and improve.

However, in practice, most freelancers are not well served by billing at a simple hourly rate.

First, you are an artist, and it is highly unlikely that every single hour of your work requires the same skill and effort—or delivers the same value. For example, you might be helping a client with a new strategy for a product that could transform the company, while also doing some copy editing for the website. Billing a fixed hourly rate makes it difficult to vary your pricing based on the importance (retail value to the customer) of the work.

Second, you can’t price jobs in a way that accounts for all of your own internal costs, which are not static day to day.

Finally, it matters how much the client is committing to: the overall size of the job. There is way more overhead to working ten 4-hour jobs for ten clients than one 40-hour job for one client. You’re doing ten times the sales efforts, on top of the mental gymnastics. A short engagement costs you more per hour than a long one. If the scope is starting small but might expand, you can quote a higher rate but explain that you’d be glad to consider a lower rate once the larger commitment is clear.

When you price a job, the first step of your calculation should be to cover your own hours, but your ultimate goal should be to deliver an incredible result at a price that reflects the value you deliver—that’s what your client really cares about.

Trading your time for money isn’t the worst thing in the world when you’re starting out, but you want to work toward decoupling your “input” and “output.” If the quality of your work is excellent and your approach is unique, you’ll create scenarios where your output (the price a client must pay you because no one else can do what you do) is much higher than your input (the hours you spent creating). God bless your grandparents for working the same job for 50 years for flat hourly wages. But this shall not be your destiny.

There are exceptions to every rule; use your own judgement based on the nature of your art. A writer might be paid by the word, for example. But keep in mind the value your words are delivering, and on what scale. A post for your cousin’s blog, although valuable, will impact the world differently than a piece for the Times.

In conclusion, your hours should be tracked and you should internally assign value to them, but keep a flexible relationship between your estimated hours and your client quote:

  • Prices should reflect the true value to the client.

  • Prices should account for, but not simply mirror, your overall expenses.

  • Smaller jobs should cost more per hour, while larger commitments earn a lower rate.

  • Prices can reflect your other priorities and convenience.

This will allow you to work on a variety of big and small projects while keeping your prices fair.

Offering Discounts

There are a few reasons why a freelancer like you would consider discounting your work for a client:

  • You need money. You’re desperate. But like the wise Sheriff in Super Troopers says, “Desperation is a stinky cologne.” If you cave in easily when it comes to your value, you are only learning to agree to what you’re offered, rather than learning what might be possible. And with the stink of desperation on you, you’ll be offered even less. Keep cool and you could walk away with more than you’re willing to accept.

  • You want this client longer term. You believe this client could be a great long-term partner for you, and you want to start off by making them happy. However, what they’re willing to pay you on your first job is highly indicative of what they’re willing to pay you on every job, ever.

  • You’re reading a preview of an online book. Buy it now for lifetime access to expert knowledge, including future updates.
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