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February 13, 2004
The Freelancer's Guide to Billing - Charge by the Hour or by the Project?
By Sherril Steele-Carlin

Everything is worth what its purchaser will pay for it. Maxim 847. By Publius Syrus. (42 B.C.)

For many freelancers, setting rates is one of the most difficult things they do. Setting the right rates isn't a new dilemma; it's been a problem since the beginning of time. How do you estimate how long a job will take? How do you decide the rate to charge, and if it should be hourly, or by the project? These are problems that all professionals wrestle with on a daily basis.

BY THE HOUR

Charging by the hour is probably the simplest way to charge for services. The freelancer simply keeps track of all the hours worked on a project, and bills the hourly rate. Many employers will want a detailed breakdown of those hours, so they know they are getting their "money's worth." However, there are times when charging by the hour is really the best option. If the project is small, won't last very long, and is very specific in the results, then charging by the hour is probably the best option. It's also good to charge by the hour when the real scope of the project is unclear. What if the bid a flat fee, and then the project mushroomed into something that took twice as long to complete? If the freelancer is unsure about just what the project may entail, then bidding by the hour can be the best bet.

However, charging by the hour can sometimes surprise a client. They might question the rate, or wonder why a job took so long. When charging by the hour, it's a good idea to keep the client informed of the job's progress, and keep a detailed record of the hours worked to back up the charges.

BY THE PROJECT


Charging by the project is the best option when the project is long-term, clearly defined, or is only one specific service. For example, if the freelancer is providing copy for a web site, charging by the hour would be difficult. Should the charge include the time it takes to research the article, or only the time it takes to write it? Should the client pay for research time, when the freelancer can use the knowledge again and write a different article for a different market? Charging by the project is a better idea in situations like these. The client knows what to expect up front, and the freelancer has an idea of how long it should take to complete the project.

Most clients prefer to pay by the project, because then they know their costs right up front. That makes sense, but sometimes bidding on a project basis just isn't viable for the freelancer, or the project.

HOW TO SET RATES?


Many beginning freelancers find this one of their most difficult business problems. For an excellent discussion of how various businesses set their rates see How to Set Rates http://www.provider.com/howtoset.htm. Only the freelancer truly knows their experience in the field, monetary needs, and expertise for each individual project. Using all these criteria to set a rate results in a rate that is fair to the client and the freelancer.

THE END


So, setting rates and bidding on projects takes some understanding and assessment. Freelancers need to understand and assess projects, and understand and assess their needs and talents. There is no perfect answer, bidding an hourly rate or by project really depends on the freelancer, and the project. Understanding the needs of the clients, as well as the monetary needs of the business are the best ways to effectively set rates.


Sherril Steele-Carlin is a full-time freelance writer from Reno, Nevada. She's published numerous articles in print and online publications. She's also the author of the new e-book "How to get a Life by Living and Working in a National Park." http://www.dreamjobstogo.com/titles/dltg0002.html?10402 AND "How to Break Into Casino Jobs." http://www.dreamjobstogo.com/titles/djtg0023.html?10402 Visit her web site at http://www.powernet.net/~carlin
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