This freelancing dilemma is as old as freelancing itself - both online and offline. While the debate still rages on which is the best method to charge clients, you need to understand some of the things that dictate pricing before you even take on a certain task. Basically, it is all about value perception and time taken to complete the project. In many cases, premium clients don't have a problem paying work that is of high value and freelancers are always happy about it. On the contrary, many clients will fret when they think a price offered is too high. Here are some main differences that you should consider as a freelancer:
Hourly Rate or Fixed-Price Contract?
Hourly rates
In this industry, there are quite a number of freelancers who will prefer to go for the hourly rates because of the benefits this model offers. These include, but not limited to:
- Better projects; this does not necessarily mean that with fixed rates, you get a bad project. However, proponents for this model argue that with hourly rates, you can build specifications from the word go. This is unlike fixed jobs that can be pretty difficult to estimate duration, and also hard to track progress.
- It is easier to prioritize based on the work that you will be undertaking. In other words, with hourly rates, there are high chances that you can plan better despite the magnitude of tasks at hand. In most cases, you’ll be in line with client’s needs, expectations, and requirements, of which might not be the same as those who go for fixed-priced jobs.
- Start immediately; it is with the hourly rates that you can start working immediately on the project. This can’t be compared with fixed prices that you can take long before you even think of starting. In other words, the sooner you start, the better it is for you as you will be making more money in the long run.
- Insurance and transparency; the hourly rates can act as an insurance for your efforts just in case something goes wrong. Remember, every hour tracked will be paid and you cannot lose entirely even if you fall sick. Furthermore, with hourly rates there is always transparency on the side of clients as they can easily determine what they are paying for. If you are starting out with freelancing, you can opt for this payment model to make your efforts pay off fast.
Fixed-priced contracts
There are a number of benefits that you'll get with fixed price, and so are their disadvantages of this model. The following are some pros of charging fixed rate on projects that come your way:
- Give client reassurance; if you want to work with a client for long term, then trust and reassurance plays a central role. This model offers clients sense of peace in regard to knowing how much is going to be spent. Therefore, you can go for this model if you are working with a client for the first time, or are just beginning your freelance career.
- Reward on efficiency; the faster you work, the higher the profits you generate. In fixed-priced projects, you will be able to generate profits when you complete the project fast and effectively. The remaining time, you can concentrate on other income generation activities, or have time to do pending projects from other clients.
- Time and records; it is easier to keep your time and record with fixed price as compared with the hourly rate model. For this reason, it is highly recommended to go for this set-up if you have problems with tracking hours worked. In the long run, you will save time and concentrate on other productive ventures that are in line with your business.
How to choose?
It is highly recommended to choose a payment scheme that you think, or believe, will best work for you. In all cases, there are factors that you will have to consider so that your working experience is not interfered with in any way. The following are some points that will help you make the best of decisions irrespective of whether you are experienced or not:
Type of project
It is vital that you understand the type of project you are working on. If you think hourly will do you good, do not hesitate to go for it. Importantly, ensure that your client's goals are clear as crystal lest he makes changes that can affect your productivity or scope of project.
Experience
It would be suicidal to choose a mode prior to considering the type of project at hand. If you think that you can complete a project pretty fast, then fixed price model is for you. If not, you can opt for the hourly rates.
Organizational skills
There is nothing as important as having organizational skills. Overall, this will determine whether hourly rates are good for you. If you are not sure about keeping track on time, then fixed types are great.
It is equally important to note that personal preferences play a role, too. However, because freelancing is business, you must consider all important elements before making a choice. Remember, the type of model you go for is pivotal on how much you can earn.