Charging for freelance design: by the hour or per project?

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Have you ever found yourself pulling your hair out over how much to charge for a design project? It can be very frustrating and usually ends up costing you more time (and thus money) than it should.

There is some debate on the merits of having an hourly rate that you charge for everything, or setting prices for certain design services and sticking to those. There are definitely pros and cons to both methods, and it really ends up depending on what you do, and how efficient your design process is.

I’d love to hear what approach you’ve taken. Leave a comment and tell me: do you charge by the hour or a flat-rate per project?

Hourly rate

If you can convince a client to pay you an hourly rate for a design project (preferably your preferred rate), then that’s probably the way to go. The great thing about it is you know you’re getting paid for every bit of time you put into a design project.

Just be honest about how much time you’re actually spending on the project and how much time is spent checking Facebook, setting up your fantasy roster for the week, responding to other clients’ emails, etc. While some design clients have no idea how much time a given task will take, some might get suspicious if uploading a new banner image for their site costs them 9 of your expensive hours. Being a design freelancer, you rely on your reputation, so suspicion is not a good thing. Plus, you want to run a respectable design business, right?

Flat rate

Many design clients (at least the ones I’ve worked with) want a flat quote up front, and it can be difficult to convince them to shell out more later if you underestimated. While it’s great for the client to know what cost to expect, it can be very taxing to the designer if you aren’t sure how much time you’ll be spending on the design project.

If you go this route, be clear in your contract that any work outside the original scope will be billed in addition to the set rate. Be sure to make clear exactly what services you will be providing, how much, and how many rounds of design changes you will allow. If both you and the design client are on the same page as to what is expected, it will be easier to determine what is within the project scope and what is outside. It’s worth the extra time spent forming your work agreement so you don’t shoot yourself in the foot later!

Determining a project rate

But how do you determine set rates for a project? I’m sure there are other ways, but the way I set rates is by estimating the time I anticipate spending on the project, multiplying by my hourly rate, and adding an extra percentage to account for the inevitable time spent that I wasn’t expecting. Starting out, it is very difficult to accurately predict how much time a task will take, so I’ve come up with a few tips that have helped me.

Keep track of your time. The best way to predict your time allotment is to base your figures on previous projects. Keep careful notes of how long each task takes, including changes and revisions. It will take awhile to build up a library of projects to reference, but it will definitely save you headaches in the future. Try using some time tracking software, or online tools like Freckle to help keep track of your time.

Break it down. To make estimating as easy as possible, try breaking the project down into smaller pieces. For instance, if you’re designing a webpage, you could take into account all of the following: emails and dialogue with the client, setting up the template, initial mockups, setting up a presentation file, revisions, client changes, setting the file up for coding, actually coding the page, further revisions, packaging up the final files, etc. Though it may take longer to think about it in such small steps, breaking it down can give you a better picture of the total project scope.

Overestimate. Do yourself a favor and leave a bit of breathing room. Underestimating can lead to the frustration of watching your hourly rate plummet as you plug along on the project. But if you guess too high instead, congrats! You’ve earned some extra cash. It may even be a good idea to knock a chunk off the final bill–while you don’t see the instant reward of cash, the client will certainly be happy, possibly leading to more work or better referrals.

Know your client. Keep in mind that every client is different, so a lot of the timing will depend on how picky they are, how clear they are in telling you what they’re looking for, and the speed at which they return your calls and emails. As you get to know your client, be flexible. As you work with them more, you’ll begin to figure out how they operate, and that can give you a better idea of how to distribute your time.

Calling all freelance designers!

Does the way you quote design projects depend on the client or do you always stick to a particular method? Any tips that I’ve left out? Leave a comment and share your thoughts with me!

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About Dan Sweet

Comments

  1. I charge by the hour, but give a low and high estimate on the project up front and keep my client informed when we near the high mark but aren’t finished with the project yet.

  2. Thanks for the advice! As a newcomer to the field this is quite valuable.

  3. Sherm Stevens says:

    I charge a project rate. Most of the work I produce I’ve done many times, so that makes it easy to estimate. It’s still loosely based on an hourly rate x the number of hours I think it might take me x 2 (as a fudge factor).

    I developed the following attitude towards hourly work a long time ago:
    If it takes you 10 hours to do a project the first time, but the 2nd time you do the project it only takes 5 hours, and you charge hourly, you’re actually getting paid LESS for being BETTER at what you do.

    Where’s the justice in that?

    • @Sherm Stevens: Good point about getting paid less for getting better at what you do! I have actually thought about this as well over the past few years. I’m not sure what the right balance is, though, because inevitably, the second I charge a flat rate for a project, the client doesn’t know exactly what he/she wants (changing his mind in the middle, requesting multiple changes, etc.) or is especially difficult to work with, and the project gets more complicated from the get-go. I have decided to charge by the hour, but there have been many times when I feel like I’m underpaying myself by doing so.

    • I think the justice is, that as you get better you should be able to charge a higher hourly rate.

      Of course, the world isn’t always just, so we do what we think is best. But with a regular client, being honest helps. They know the quality they are getting, and some will request more work, filling your time with more paying hours at your higher rate. With an established relationship, they’ll pick the quality designer they know they can count on over taking a risk with someone unfamiliar just because they’re cheaper.

      • So glad I found this. I’m reading everything. I don’t get gigs like this often but this one kept yelling at me so I am feeling a bit lost. I’ve charged my the project & felt as others I underbid. This time I am shooting for hourly. I took into consideration my area & the economy. I think I will always struggle with my needs vs. my desire to help others. I know, don’t use your heart but I don’t want to bid so high they will think I’m trying to take advantage of them. Is it just me? lol

  4. Thanks for the advice!

  5. I charge by the project whenever possible, but yes, it always varies based on the client. Going in, I’ve learned to slightly underestimate in order to be competitive. Then, yes, always clearly add into contract what they get for estimated amount and how additional requests/changes will be charged. After 30+ years, I know full well that the project never holds exact to what was originally communicated: ie…”we just need a quick design and simple this or that.” So, say ok, no problem, go in under the wire based on the supposedly minimal needs and then send additional fee estimates as the client changes the parameters or adds additional items. You’ll be very happy when your complete final bill for much more than originally estimated and the client will be fine because you gave them estimates along the way and they especially because they absolutely love the final results and know it will help them increase sales!

  6. Amy McD says:

    I charge by the project, but I include an explanation of hourly rate charges in the contract for additional services that go beyond the agreed upon expectations of the projects. (ie, exceeds agreed number of revisions, additional presentations, added meetings & printing set-up etc….)

  7. I have an hourly rate that I quote, and then quote how many hours a design will take. I always let them know it is the initial set up with one approval (or two choices or what have you) and any additional changes will be charged additionally. The point being, have a good solid conversation up front. Know as much as you can about the client, what they want and/or what they want to convey and then use your skills as a designer to bring it to print -When the project goes in a totally different direction after the initial idea is presented, begin again with your quote.

  8. This discussion comes up fairly regularly in freelancing circles. You’ll change your opinion forever of charging by the hour if you read Alan Weiss’ book Value Based Fees (http://www.amazon.com/Value-Based-Fees-Ultimate-Consultant-Pfeiffer/dp/0470275847/)

    I think both the Ultimate Freelancer and Wealthy Freelancer talk about project based fees as well.

    They say this gets easier with experience, estimating projects, and it does. Ask anyone that’s done this a while and inevitably you’ll get horror stories of blown scopes and feature creep.

    There’s definitely a delicate balance to strike between rigidly following the letter of the scope of work. Alan’s book talks a lot about value and the end goals you’re trying to provide for an organization, so there are ways to approach this that will help you get paid for new work and give the client more value.

    There’s also a strategy to presenting the estimates. Most talk about providing 3 different offerings, each one with value adjusted accordingly. I’ve also seen it mentioned to present the most expensive offering first so the next offering seems like a bargain.

    wow, lots to think about.


    Freelance Funnel (http://freelancefunnel.com/) More Leads, Better Leads, Delivered Daily.

  9. Another excellent article, thank you.

    It’s a difficult subject as over-pricing may mean that you don’t get the job at all.
    One thing that can save time and stress with pricing, is to ask the client if they have a budget. Alternatively, what rates they usually pay or expect to pay. This can be a useful guide.
    If the client hasn’t a clue or is way off, it’s worth explaining the value of the service, so they see the fee as an investment rather than a cost.
    I’ve found that it often helps to explain the design process to the client, so they are aware of the time involved and how much thought, work and care goes into the designs.
    This does get easier when a relationship is established between designer and client.

  10. Most clients prefer to know exactly how much they going to pay per project and eveluating this is the problem.
    So, I have a piece of software that monitors everything I do and costs it accordingly by the hourly rate that I set.
    What this does is give me information for future projects and as time passes, I have a bank of projects and the timescales and costings to use as a research module.
    This makes costing jobs so much easier and using the software lets you know if you are taking too long on projects and how profitable you are in the process.
    Keeping a tight grip on time and costs are not the usual skillsets of a creative, but using software in this way can keep you between the guidelines and stop you overspending on time.

  11. As it can sometimes be difficult to estimate how long a project will take what I do is use my hourly rate, which is based on my last-earned salary. There are times, however, when you must estimate especially if you are entering bids on guru.com, as many of the projects have budgets of no more than $250.

  12. Depends on what I’m doing…. graphics, video, events, websites, but…. i lean toward the “by the job” way. I believe that In a prospective client’s mind, knowing what they will be paying, gives them security…and that, in my opinion is a selling point, especially for the budget conscious client… also, for me, it’s incentive to get the job done faster and to be better at listening, learning and knowing what the client wants, the FIRST time..(second) that way, the better I get, the more im getting paid. Everybody is happy.

    The answer to the, “if I charge by the hour, when I get faster, I make less money” conundrum is simple….. charge more by the hour as you get better. I hope you are awesome and find clients with unlimited budgets. However, I haven’t found that to be a good plan. Again, depending on what it is.. I have found that there are only two kinds of people who want to “pay more” than the going rate….. snooty people who want to brag about how much it cost them or morons who think that because it cost a lot it MUST be good….. wait… ok…i guess that’s pretty much the same group… so… there’s only ONE kind of people who want to pay more. Unless the sun shines out your butt and angels sing when people look at your graphics, I’m guessing that one pretty much wants to stay with the going rate. About clients that don’t want to pay, I think we can learn a lot from reading the clientsfromhell.com website…. or at least have a good laugh at the slings and arrows of our chosen professions.

    good article.

  13. Tony Egami says:

    A good and informative article

  14. If a client pays a flat fee for a one time use design (a shopping bag design for instance) and they later want to use the design for another application (tee shirts)- should I charge them “another usage” fee?

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