[marcomassaro]

Good article but it fails to address two huge issues with hourly pricing and why I don't price by the hour.

1) Something that use to take me 10 hours to design may now take me 2 hours. Should I discount the knowledge and skill it took to learn that? I'd be earning a fraction of what someone else gets because I'm more efficient.

Raise my hourly rate you may say? You can really only go so high with your hourly rate until clients will look at you funny. $100, $125, $150, $200 - anything above that as a freelancer and you'll have problems landing clients.

2) Hourly rates also limit how much you can bill - there are only so many hours and days in the year. I prefer fixed pricing as well as calculating in variables to increase the price. So if I can tell a client takes long to respond or give feedback, I add on 10%. If there are 3 or 4 people who are giving feedback, I add 5% - etc.

[MetaCosm]

1) Nonsense, you raise your rate as you prove yourself, as someone who bills at $185+ -- clients aren't idiots. They understand that if you can do it in 1/5th the time and cost 3x the money, they are still saving money. Clients can do basic math. The only time you need to worry is if you can't prove your skill (bad references or new to market).

2) No professional ever uses the phrase "hourly" -- it is always T&M (Time and Materials). Most professionals with enough experience work in 'standard days' or 'standard weeks' on longer contracts. Last contract I did was billed at 7700 a week, no hourly accounting.

... some of what you mention (variable bill adaptation) is tricky as hell, and on FFP (Firm Fixed Price) contacts, it can be outright illegal without clients signatures at every change point. This is a reason home renovators always have change request forms with them.

~ Beyond all that, FFP puts you at odds with your client, you want to fuck them by charging as much as you can and working as little as you can -- they want to bleed you for as many hours as they can while keeping you bound to the initial contract. Nothing like starting a contract as sworn enemies.

[grzaks]

Exactly. I was just going to raise the same issue as #1.

From freelancer/agency point of view: why are we supposed to charge less only because we have skills to do things faster?

From client point of view: what's their motivation to do things as fast as they can? I'm paying them for each and every hour anyway so why would they rush?

[emp_]

Agree wholeheartedly, I wrote something similar in a comment above, but the title of OP made me cringe really hard. If you are in an ocean of samesies it might be worth to fight in hour prices, but if your fixed price / competitor hour is cheaper, with you making 10 times more, DO NOT LIMIT YOURSELF.

[iktorn]

1) That is a big problem. Really hard to convince people you are more than 3x as good as the 3x cheaper alternative. But than again lawyers manage to do it. Why would web developers not figure it out? ;)

2) Yes. It does not scale in a way "startup people" are used to. It's just part of the deal :(

[lifeisstillgood]

This is exactly why you might want to consider moving to weekly billing. Bill for a weeks work, as long as the deliverables come in does it matter if the week was only a few hours long?

You can either charge a lot per week, or less per week and still fit in more clients

However there is still a lot or marketing to do

[marcomassaro]

So are you essentially telling the client that you are billing them for the week - which means you are dedicated to their project for the week?

[lifeisstillgood]

no, you are saying that next week I will work on the deliverables we agreed for the week. And I will deliver them. And they will bring you this much benefit.

If I need to go and hire two guys and work nights to do it, I lose. But I only lose a limited amount.

SO, I guess I really am saying work fixed bids of one week projects.

[marcomassaro]

So if you finish them in one day - you don't send them to the client until Friday?

I imagine if you did them in a day or two the client would be asking why they paid for a week of work and if they can use the rest of the time somewhere else

[lifeisstillgood]

Why not keep them till the scheduled Friday meeting?

The client is expecting it Friday, probably does not have time to talk to you on Tuesday afternoon.

Its not lying, its not cheating, its saying I will build X and doing it in a professional manner.

[porker]

Are you sure?

> Bill for a weeks work, as long as the deliverables come in does it matter if the week was only a few hours long?

"Hello Mr Client, this job will take a week to do, so I need to bill you for a week of my time". 4 hours + 1 meeting on Friday, job done.

That sounds like lying and cheating to me. Which is a nuisance, as I'd like to do it.

[LanceH]

I agree...but. You probably only ever get to fixed pricing (successfully) once you've learned to value your hours, which you probably learned by years of selling them.

[marcomassaro]

Of course - been at it for 8 years and have learned a lot. It also depends on what the market can handle.

[j45]

Design is billable work. Just because we can build a shed without a blueprint doesn't mean we should attempt anything on/in a house that's major.