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Do you charge your clients Hourly? How is that possible?

6 years ago from , Freelance Web Designer

I'm in a country where nobody is working for Hourly basis. But I know that in some countries like US & UK..., follow Hourly basis.

But I don't know how its possible for a Creative Work like Designing. I know many clients from these countries ask how much hour do you want? Then I will stuck there. I don't know what to say, because I don't know how much hour it will take.

May be designing in the Photoshop will take an hour, but for that getting an idea / Inspiration is crucial. Surfing the web for 5-6 hours, thinking while having Coffee, In the bed etc..

So If I should charge hourly, How can I calculate the price in this kind of scenario ?

34 comments

  • Mike BusbyMike Busby, 6 years ago

    I work on retainer, I wouldn't do it any other way. (unless there is no other option) Fixed price is awful. Projects are dynamic, things change. Communicating this to the client gets ugly pretty quick.

    Clients pay up front for a block of my time, say 80 hours. I then work up to 80 hours and repeat.

    This is fair for both parties and clients can change there mind as many times they like, or see as many revisions as they want

    24 points
    • Claire Lines, 6 years ago

      That's a very interesting and clever way of skirting the issues of pricing hourly/per project basis. Its basically like flex per project.

      Just curious: Do you ever find that you can't get done what you wanted with the block of time the client paid for? Are there scenarios where the client is difficult and wants to change a lot of things but still expects a final solution at the end of that block of time and is grumpy/unwilling to pay for more?

      3 points
      • Mike BusbyMike Busby, 6 years ago

        There are usually many items of work within a block so I've never had that issue.

        I've never really had an unhappy or grumpy client, I explain in the beginning to the client the reasons behind my billing process, they understand that it's fair, and the best way to get the most out of me. Far less issues with this process I've found.

        2 points
    • Clark WimberlyClark Wimberly, 6 years ago

      This.

      Lately I've been treating each retainer/contract like a development sprint. They bring me on for a certain number of hours, I prioritize against that number of hours, share my progress as I go. When the deadline is getting close, we re-evaluate what we've completed and what we still want to do.

      3 points
    • Sacha GreifSacha Greif, 6 years ago

      I've always worked like this too. You might make less compared to billing by the project, but you're also not going to lose any money. And it's far less of a hassle.

      0 points
    • Andrei GAndrei G, 6 years ago

      This is also the same way I billed when I was freelancing: estimate a block of hours and bill for that, then when we're at 75%, we review what else needs to be done and estimate the next block.

      0 points
    • Owais FarooqiOwais Farooqi, 6 years ago

      Hi Mike ,

      Do you have contract sample for Retainer?

      I am looking for it if you have please share the sample with me.

      Thanks

      0 points
    • Pedro Ivo HudsonPedro Ivo Hudson, 6 years ago

      But how do you explain this method to the client? Because I mean, I imagine myself in this situation:

      "So client, I'll charge you by the week, ok? At the end of the first week, we'll have a meeting and see how I advanced in your project, then we'll figure it out if I'll need one more week or maybe more, ok? You're gonna have to trust me on this one!"

      And the client pay every single week or at the end of all weeks? What about contracts? Is it week based?

      0 points
  • James StiffJames Stiff, 6 years ago

    "Pricing hourly punishes efficiency" - Jessica Hische, The Dark Art of Pricing

    17 points
    • Daniel WinterDaniel Winter, 6 years ago

      I would like to upvote this so much, and I read a few books about that. But the sad truth is that here in Austria it's absolutely not common to charge for licensing. Unless you deal with very experienced all companies want a fix charge which is the sum of a few hours multiplied by your hourly rate. The usual Jon Doe asks if you're mad when you charge 5hours for logo creation and 2.000€ for licensing. I really have the feeling that there have to be a few companies who really enforce that kind of thinking.

      0 points
      • Amelie LamontAmelie Lamont, 6 years ago

        Daniel, if you have people asking you if you're mad when you charge 2.000€ for 5 hours of work, it might be worth thinking about how you position your work to clients.

        As designers, I think it's easy for us to believe the every day person might be the source of our woes, but I personally believe that it takes two to tango.

        When I realized that, I started talking to clients differently, asking different questions–implemented Socratic questioning.

        Basically, you figure out what their business pain point is, how much money they're losing from said pain point, and show it to them. This works for small businesses up to large businesses.

        0 points
        • Shane BolandShane Boland, 6 years ago

          How do you initiate this conversation? aka how would you ask for a meeting like this? "Hey can we sit down and talk about your pain points?"

          1 point
          • Amelie LamontAmelie Lamont, 6 years ago

            Haha, I love that image!

            To initiate the conversation, you need to set up a consultation call/meeting with the prospective client. A consultation call/meeting gives you an opportunity to learn about what it would be like to work with a potential client and also gives you the power to say "yes" or "no", in terms of working with them.

            An example: I'm a designer with a focus on building brands. If I ask a client "what is your target market?" during a consultation meeting, and they reply with "oh, you know, people," that's a red flag and it likely means we'll be incompatible working together.

            From the client perspective, the consultation meeting also shows your knowledge and gives you the opportunity to crunch numbers with the client instead of sending them a proposal with what they feel is an "arbitrary number."

            An example: I have a consultation call with a client, and I discover that by not having a logo, they're missing out on brand exposure. Increased brand exposure could lead to about 7 additional leads a day. 1 lead costs about $2,000 when it converts.

            That means this client is losing out on $14,000 worth of leads a week. That adds up to $728,000 worth of leads in a year. I work that math out with them on the phone. And I also mention that in the proposal after the call:

            "By not working on your branding, you're losing out on $728,000 a year."

            By the time I bring up a $5,000 logo in the proposal, spending $5,000 for a logo is totally worth it to bring in $728,000 in revenue.

            1 point
            • Mike A.Mike A., 6 years ago

              How you can tell that logo, website, whatever can bring them X leads? Just guess?

              0 points
              • Amelie LamontAmelie Lamont, 6 years ago

                Every business owner who is in tune with his/her business should have a clear idea of what holes may be causing the ship to sink.

                That's where forecasting and projections come in when making budgets and goals for each quarter. It's our job as designers (if we want these clients) to ask questions that help them discover opportunities where they can be making more money.

                So for a website (or even a logo), you wouldn’t guess on their behalf, you'd ask them a series of questions:

                1. "How many leads per day (or week/month) do you think you're missing out on not having a website?"

                2. "Okay, so you think you're missing out on x leads per day by not having a website, right?"

                3. "How many conversions do you usually get for x number of leads per day?"

                4. "So y conversions for x number of leads. Got it. And how much money does your business make when a lead converts?"

                5. "I see. So you're saying that you make y amount of money when a lead converts, is that right?"

                Keep in mind, these are numbers that they're giving to you, because you're asking the right questions. From there, you can do a quick back of the napkin calculation for them on the spot that helps them connect the dots while also seeing your service as valuable.

                As a business owner, it's hard to justify a cost for anything unless you can see a value in it. Most of us don't come with value–we just come with design and ask for money without empathizing with their needs.

                1 point
    • Alex KetchAlex Ketch, 6 years ago

      Definitely can be the case, however if you find you're idling time away to be able to charge for extra hours just to make ends meet you're not charging enough per hour.

      I usually play it by ear and charge either a project sum or by hour depending on client on type of project.

      One thing that I'd definitely recommend is that you start logging hours for everything, even if you're paid by project or day, this way you can review and start to get rough patterns for how long certain types of projects take. From here it's easier to calculate what's the bare minimum you need to charge for a project for it to be worth it.

      Also while I wouldn't blindly follow the numbers on this site, it asks some important questions to consider whenever taking on a project. How Much Should I Charge?

      1 point
  • Brian DelaneyBrian Delaney, 6 years ago

    I did project-based and hourly work for years and hated it, then I switched to daily pricing, and eventually weekly pricing, and haven't looked back. I have a very basic ongoing weekly agreement with clients where I put in "approximately 40" hours a week in exchange for my weekly rate (mid thousands). Either party can cancel with 2 weeks notice. Some weeks I work a bit more, some weeks a bit less, but I always feel like I'm part of the team while I'm on the assignment, and it allows us to be much more flexible with the inevitable changes that will happen after the first spec was created. If you can't find one client to do the weekly thing with, then stick to daily rates for multiple clients. That worked pretty well for awhile, but I found that the mental overhead of managing multiple products effected my work.

    5 points
  • pjotr .pjotr ., 6 years ago (edited 6 years ago )

    Having an hourly figure simply means using that in your project estimate, for which you want a high and low.

    For example a super simplified contract might look like:

    • Research, H: 20hrs | L: 10hrs
    • Sketching, H: 30hrs | L: 25hrs
    • Wireframes, H: 30hrs | L: 25hrs
    • UI Mockups, H: 40hrs | L: 30hrs
    • Prototypes and Deliverables, H: 100hrs | L: 85hrs
    High Estimate = 220hrs Low Estimate = 175hrs

    Then simply factor in your hourly rate and you have 2 rough estimates on what the project should cost.

    3 points
    • Hamish Gray, 6 years ago

      I know this is a simplified timeframe, but I'd love to know what sort of project this would be applied to? Is there an example website that you think would have this sort of timeframe for design and build?

      I've done a lot of websites and none of them would come remotely close to that number of hours, so I'm just curious if I'm charging too low, or if this only applies to much larger projects...

      0 points
      • pjotr .pjotr ., 6 years ago (edited 6 years ago )

        but I'd love to know what sort of project this would be applied to?

        Really depends on the client, not the project. If it's a small time startup that's on a tight budget the same project could be half the price. You should always charge for the client, not the project.

        This may sound odd considering I use the hourly rate. How can one apply an hourly rate to a client? It's really difficult if you've never worked for the client before, but you can always guess (which is all an estimated contract is anyway).

        For example:

        • Small Startup = Tighter budget means lower hours spent on sketching and research.

        • Bigger company = More money, so I can spend more time doing research and conceptualizing

        • Difficult client that I've worked with before = Add more time because you know they are going to ask for stupid changes

        It's been my experience that you always want your low-end estimate to be the absolute most time you'd need to spend on the project, with the high-end estimate being the "holy shit something catastrophic happened and it's going to take forever" plan. This way you always charge the lower price (which makes the client happy) and you're still being well compensated for your work.

        Another rule of thumb is that hours charged != hours worked. It's ok to tack on an extra 10 hours if the client sucks or if you feel like you just got something done quick.

        1 point
  • Jonathan YapJonathan Yap, 6 years ago (edited 6 years ago )

    There are tons of good tips here about how to charge and some are really great way of charging if you aren't accustomed to working hourly/daily/weekly.

    On a high level, It takes a little bit of experience to give client an upfront accurate estimation. When I do hours, I tend to overestimate a task by 20% as a quote and work my way towards that. At the same time I make sure they understand that it's an estimate, then log the hours to show them. This way if the task is done quicker and the client are efficient, we get to the bill which is usually lower than the quote. It leaves a little nice feeling for someone who aren't overspending and I usually get paid on what I expected.

    Whatever you do, make sure you get them to sign an agreement before any work begin. Saved my ass tons of time on painful client or those who refuse to pay on time.

    2 points
    • Nathan LongNathan Long, 6 years ago

      I do something similar.

      I have an hourly rate that I use to estimate a project. After sitting down with the client and getting a better idea of the scope I'll break apart all the tasks and start assigning how long I think each task will take.

      My hourly rate fluctuates depending on the client, the type of work, and the value of the work being done.

      I'll then add it all up and tack on an extra 30% to my total for unexpected problems that arise or overly optimistic estimating (I tend to estimate on the slim side.)

      I'll give that number to the client as an estimate based on how long I think the project will take. I'm pretty open with the client about how I reached that number, which takes a lot of the smoke and mirrors out of pricing design/dev work. What I'm working towards is trust. The client is probably already nervous investing in something they may not fully understand, and some clients need a little more assurance than others as to where their money is going. Vague handwavy pricing numbers is an easy way to set a bad tone for the project.

      If I run under (has only happened a few times), I'll charge for slightly less. If the client gets a bit squirrelly and wants to do something out of scope, I let them know where we are in the project budget and how much extra that will cost (hours and price). It's a good test for how passionate they are about the new request. If it's truly important, we'll either cut something else out or tack on more hours.

      Depending on the size of the project I'll take 33-50% up front.

      And I second getting an agreement/contract in place. Saved me several times too.

      0 points
  • Ivan BozicIvan Bozic, 6 years ago

    Usually, I don't charge per hour. Basically, I estimate how much work in hours is something going to take, then add a "safe zone" to that estimate (let's say multiply the very optimistic number of hours by a factor of 1.2 up to 1.5 depending on the scope of the project). This kind of "safe zone" can include everything from researching stuff to iterating a couple of times. Then I sign a contract with the client for a fee for that particular project.

    I've gotten pretty good at estimating how much is something going to take me, so I usually stay inside the estimates calculated above. Though I've had cases when I did work three times as much as I've estimated but that is my fault and I never charge the client for those additional hours if the work that is done is inside the original statement of work.

    But, even though the project itself is fixed-price, I always include a clause where any additional minor work is then billed hourly and usually at a higher rate than average. But also, if the additional work turns out to be very large in scope, that almost always gets separated into an addition to the original contract.

    2 points
  • Taurean BryantTaurean Bryant, 6 years ago

    What I would suggest is quote projects in days and charge hourly. Estimates don't have to reflect the exact amount of time worked. you just want to set the best possible expectations which means to have your client expect you to work more than you think you will really need.

    Example: Lets say for the sake of this explanation you charge $100/hr and work 6 hours a day. A new client requests a quote and you think it will take you 5 days. Take the number of days you think it will take and multiply by 1.2-1.5 so thats ~6-7 days. 6 days x $600 a day = $3,600.00 for an estimate. Then track your time and bill on the schedule you set for the time worked, hopefully it should actually come out to $3,000.00 in total (5 days like you thought) and now they're happy with the work you did, taking less time than they thought and now they saved $600. Happy client is happy.

    1 point
  • Amelie LamontAmelie Lamont, 6 years ago

    Like a few others here, I don't charge by the hour. I also don't charge by the project unless I have a very, very clear idea of the project scope, which most clients are unable to provide.

    I charge by the day, or by the week.

    Brennan Dunn has a really great article on pros and cons of hourly vs weekly vs monthly vs project here:

    http://doubleyourfreelancing.com/the-definitive-guide-to-project-billing/

    And Thomas Ptacek breaks down how awesome weekly billing beautifully here: https://news.ycombinator.com/item?id=3421770

    You do a proposal for a client. You give an honest conservative estimate of how much time it's going to take.

    Say it's a Rails CRUD app with no special domain code. Ok, 2 weeks, broken out into 2 billable weeks. The proposal says something like:

    Week 1: 5 person/days, $5,000 (Setup, Discovery, Backend) Week 2: 5 person/days, $5,000 (Front-end, testing, delivery) TOTAL PRICE: $10,000

    Accompanying your proposal is a SOW that says something to the effect of: This project will be billed on a time/materials basis, starting Monday January 23rd and continuing for 10 contiguous business days through February 3rd. If additional time is required to complete this project, it will be billed at a rate of $1,000 per person day, provided that notice is provided within 1 week of February 3rd.

    Presto, a proposal for a project that costs $10,000 billed time/materials at $1k/day (again, lowball figs).

    Now, 2 weeks to complete this project is conservative. Also built into every proposal, whether you like it or not, is the collection of moments in every working day where you are not productive. So ask yourself, if I took 100 provigils† and eliminated ALL NON PRODUCTIVE TIME from my schedule for the entire next 2 weeks and completed this project in 7 days instead of 10, who should get that $3,000 of value I just generated?

    The answer to that question is "you".

    You don't generally want to rig your contracts so that they are padded out with unproductive time the client pays for; that's called "rustproofing" and it's bad business. But at the same time, clients actually value determinism more than they value any single billable day. If the client accepts a project for $10,000, they are going to be way more irritated if the project takes 15 days to finish than they are if you finish in 9 days instead of 10.

    You have knobs to turn here too. Say you finish in 9 days instead of 10 because you drug yourself into working 18 hour days. Keep the $1,000. Say instead you finish in 5 days instead of 10 because the project turns out to be way simpler than you expected. Well, in that case, give the client their $5,000 billable week back. Think of this in terms of a minimum billable increment, where you don't credit partial weeks – if you had to work at all in that week, that week is shot for other clients – but will credit full weeks.

    You see now how it's maybe not in your best interests to have your minimum billable increment be "one hour"?

    † Please don't do drugs.

    1 point
  • Nathan ManousosNathan Manousos, 6 years ago

    When I did freelance work, I always charged hourly. It might not be the best way to charge, but it worked ok for me.

    The typical rate for a designer is going to be around $100/hour, could be $50 more or less depending on your experience.

    When you sit down to work on the client's project, start the clock. When you start doing something else, stop it.

    If you are surfing the web for hours to gather inspiration, probably don't count that. Don't count thinking while in bed or drinking coffee. It is assumed that there will be some time spent thinking about the project outside of your billable time, that's sorta just factored into the cost.

    It's not a perfect system, but we need some way to gauge how long people are working on stuff. It tends to work out if you have the right attitude and are being fair. Think about what you expect the entire project should cost and then make a good faith effort to hit that target.

    The nice thing about hourly is that it allows the client to be flexible about the scope. They can throw new tasks at you and it won't matter to you because you just charge more hours.

    With project rates, the project needs to be well-defined before starting which is never easy to do accurately.

    1 point
    • Amelie LamontAmelie Lamont, 6 years ago (edited 6 years ago )

      That's the very reason I prefer a daily/weekly rate vs an hourly rate.

      An example like time searching for inspiration is billable because you wouldn't need to look for inspiration if you weren't being paid to do a project.

      Day or, even better, weekly rates factor in that there will be moments of unproductivity. Much in the same way an employer anticipates unproductivity when you're a salaried employee. Someone getting paid $120,000 a year as a (insert title here) isn't productive for the full 40 hours of the week. Already, 5 hours are spent being "unproductive" during the week for mandatory lunch breaks–and that's just the tip.

      1 point
  • Chris GillisChris Gillis, 6 years ago

    Get this book, it is by far the best book on pricing and running your design/dev shop and will give you strategies on these issues you are having:

    The Designer's Guide To Marketing And Pricing: How To Win Clients And What To Charge Them

    1 point
  • Mustefa Jo'shenMustefa Jo'shen, 6 years ago

    It's interesting to judge blocks of time and rates. Even if you sell time. Does working 40 hours = selling exactly 40 hours? What if you finish earlier? What if you need to take more time?

    We sell resources by the week, and it's all results oriented, but based on projects. So we do estimate for a project, and then sell the projects by the week, and pre-sell 2-6 months at a time.

    During the project, we can provide any changes to estimates based on progress, or updated requirements.

    At the end of the day, you're really charging hourly if you count the hours. If you work full time, you only really work about 25-30 hours a week. So how can you sell 40 hours per week?

    Sell weeks, and give an appropriate amount of work that can be completed in that week, then move on.

    0 points
  • Savelle McThiasSavelle McThias, 6 years ago

    I will send my clients an itemized list of services and charge them per task, what I believe is fair. I don't have a standard price system set up because I get a big range of clients.

    However, if the client insists on hours. I will take my itemized list, break it down into hours. Then I take my estimated hours and multiply it by 2.5. That will give me a safety net.

    If they want to add features or exceed what I deem is fair in terms of my time. I will work that out with the client, and usually provide a new itemized sheet.

    I am very organized and transparent with my clients. I use Trello boards to show my progress in projects. Every client I have, can see where their projects are at any time.

    0 points
  • Tom DurkinTom Durkin, 6 years ago

    The best method I have found so far is to go in-house and charge the company or agency by the hour. This way you can prove how long you have spent working on it, as you have been in their office. It also makes communication a lot easier and the experience much more personal for the client which is generally preferred.

    From my experience fixed pricing sucks, but sometimes its the only method clients will accept.

    0 points
  • Nathan Garvie, 6 years ago

    Try what Mike said above in negotiating a block of time. Like 80 hours or 4 weeks. It's also helpful to break up the work into chunks and associate a amount of time with it so clients can see what they're paying for.

    Ultimately you want to get to a point where you're hired for the value you're creating. I wrote out some thoughts on it here: https://medium.com/@n8garvie/we-dont-sell-hours-here-acb46499bb00

    0 points
  • Account deleted 6 years ago

    I understand the issues with hourly work, and I felt the same way as many others who have commented, but clients always ask me how much I charge by the hour and that works for me.

    As for your PPH, you need to factor in your bills, your tax, VAT if applicable, your equipment. If the client insists on emailing you 30 times a day, factor that in too. It's your time, after all.

    But it's also their money, use that time efficiently and always communicate with the client to ensure that their money is being well spent.

    0 points
  • Mirko HumbertMirko Humbert, 6 years ago

    I usually don't charge hourly for design work, unless it's maintenance and small work (eg.: vectorize some stuff,...).

    0 points