One of the most active discussions on the CFC LinkedIn Group lately is on the pros and cons of pricing hourly vs. using a fixed fee.
(BTW this was one of the main topics of conversation in my Business Bootcamp for Interactive Design Projects at the HOW Interactive Design Conference, which starts today. I'm sure it's not too late to sign up on site!)
Here are the Pros and Cons of each, as proposed by the designer who posted the question.
Hourly rate PROS:
- Deposit (good for late paying clients)
- Cost of the actual time you work
- Less client hesitation on decision taking or changes
- If a bigger client comes I can't change my rate for them, because my clients usually know each other, so I end up underpricing.
- New clients seem to accept proposals more easily with a fixed fee. They don't have to go through the process of trusting my honesty about how many hours I work and charge.
Fixed fee PROS:
- You can add any extra amount if you consider that your work for any specific client has more value.
- Instead of a deposit there is the advance payment (50%) but there are times when clients disappear or cancel once its all finished.
- If you calculate the time of your work wrong, your screwed.
What would you add? What do you agree and disagree with? And, most importantly, how do you actually charge? Does it depend on the client?