• Art VandelayArt Vandelay, almost 6 years ago (edited almost 6 years ago )

    I'd say go against hourly billing at all costs. And go for some kind of project pricing/value pricing if possible.

    Hourly Rates kill your relationship with a client from the beginning. They can judge time, but they can't judge the time it takes you to work. Which means when they hear 10 hours for something that "looks simple" they start to wonder (fading trust in your work). In any instance that you give an estimate (with price based on hours) and you go over, now you're at odds with your clients. At no point in your work relationship do each of you see the same value in the project when billing hourly. You get paid more if the project takes longer and the client feels cheated. Client pays less if the project is under estimated hours and they feel great but now you can't pay rent.

    Project Pricing seems better to me (its actively how I price). It's a mixture of fixed rate and value sort of. I basically just try to get an idea of the value of the project, the clients budget and how long I think it'll take me to complete said project. From there its a 50% kickoff and 50% on final delivery. 50% / 50% means equal trust throughout. There isn't a change in price only in time which is okay. Often times too, when the client sees a site will cost $5000-$1000 vs $50-100/hr they understand the seriousness in the project and step up their side of the relationship.

    4 points
  • Aaron StanushAaron Stanush, almost 6 years ago

    I just saw Dan Mall present his excellent Pricing Design talk at Owner Summit 2015. He makes very strong arguments against hourly billing and gives tips how to switch to value-based pricing.

    Slides: http://d.pr/f/QIEM

    2 points