Do you ever feel that you are working harder than you are getting paid for? You are certainly not alone. More often than not, freelancers feel like they are on a roller coaster ride that they did not consent to when it comes to that age-old question of flat rate vs hourly rate pricing.
One wrong move, and suddenly you are doing twice the work for half the money. Finding the right balance changes everything, though.
So, how do you control your pricing and avoid being taken for a ride? We will dissect flat rates vs. hourly rates in detail and see which is best for your freelance hustle.
Flat rate vs Hourly rate: More like Pizza vs Salad!!
Let’s make this fun: imagine pricing your services like food.
Flat rates are like pizza. You order one pizza, it costs a fixed amount, and you know exactly what you’re getting. No surprises. You finish it, and you’re satisfied. Similarly, with flat rate pay, the client knows what the entire project will cost, and you get paid a fixed amount, no matter how long it takes.
Now, think of hourly rates as a salad bar. You start with the basics—lettuce, and tomatoes—but every extra topping (or task) adds to the final cost. Croutons? Another charge. Dressing? You bet. Just like at a salad bar, when charging hourly, each extra task or revision bumps up the total cost, but it also offers transparency and flexibility. Clients know exactly what they’re paying for, and you’re compensated for every additional minute spent.
So, which one should you pick? That depends on your appetite (or your project).
The Benefits of Hourly Rates: Let the Meter Run
It’s simple- you work, you track your time, and you get paid. Clients like it because they only pay for the actual time you spend on their projects. It’s so transparently flexible. And then there’s that protection from projects spiraling out of their original scope: If your client adds extra tasks, guess what? You get paid for that extra work.
Freelancers on an hourly retainer are less likely to fall into the trap of doing more work for the same pay.
According to Freelancer’s Union, around 60 percent of freelancers charge by the hour; they often have less of an issue with scope creep, too.
However, the hourly rate sometimes creates a pressure factor on the freelancer who delivers jobs faster. It might even feel that for completing a project in less time than allocated, one will be penalized and receive lesser remunerations.
The Perks of Flat Rate Pay: No Surprises
Flat rate pay is the pizza option: simple, straightforward, and predictable. Most clients love having a crystal-clear idea of exactly how much they will pay upfront. Flat rate pricing is more profitable for quicker, more efficient freelancers compared to hourly billing. The faster you get done, the more you make per hour.
Here’s an example: If you quote $2,000 to design a website and complete it within 20 hours, that equates to $100/hour.
In this context, a flat rate simply pays for your skills and efficiency because you are free from the clock.
However, working at flat rates carries its risks. If your project ends up taking more time than you estimated, or in case you wish to revise and re-submit many versions to the clients, then there would be overtime from you for the same flat rate.
Therefore, it becomes highly essential that clear terms inside the contract, such as how many revisions are included, outline the scope of work for this contingency.
Flat Rate or Hourly: Which One Won’t Leave You Crying in Your Coffee?
At times, there is no clear-cut option to choose between flat rate vs. hourly rate. So here is how you can decide which would be best for your freelance projects:
Project Scope: If the project scope is well-defined with a clear list of deliverables, then that could work well for the freelancer. But if the scope is vague or likely to change, then you should always have an hourly rate so you don’t undervalue it.
Client Behavior: If the client is a tweaker who has to continually adjust an element, then an hourly rate is safer. For those who like predictability, flat rate offers peace of mind on your end.
Your Efficiency: If you are super fast and can deliver what you do quickly, you can earn a lot more using the flat rate system. If you’re still improving your process, an hourly rate could be the safer bet so you get paid for all hours invested.
Industry Standard: Some industries prefer an hourly rate (like coding or consulting), while some industries prefer a flat rate (like graphic design or copywriting). Research about what is common in your industry.
Hybrid Pricing: The Best of Both Worlds
Can’t decide between flat rate and hourly? You don’t have to because most freelancers go a combination way and charge for something core at a flat rate while keeping an hourly rate for extras.
It gives you the best of both worlds- the client knows how much the project will cost, but you still collect all the money for anything outside the scope.
For example, you can charge a flat fee for designing a website, plus an hourly fee for any revisions or additional features. This will protect you from endless tweaks and revisions without sending a bill shock to your client.
Watch Out for Scope Creep
The biggest danger with flat rate pay is scope creep—those “little” changes that add up. A client might say, “Could you just add one more thing?” before you know it, you’re doing twice the work for the same pay.
Avoid this by clearly outlining what’s included in your project scope, setting limits on revisions, and politely reminding clients when additional work falls outside the agreed terms.
And if you do run into scope creep?
You can easily create an estimate for additional work using tools like Billbooks. With features like automatic conversion of estimates into invoices, you can seamlessly adjust your project rates without any hassle.
FAQ: Your Flat Rate vs Hourly Rate Questions Answered
1. What are the best occasions when to charge a flat rate?
A flat rate would be best when you have considerable insight into the project’s requirements and can complete it efficiently. Perfect for projects with specific timelines and deliverables in place.
2. What’s the average hourly rate for a freelancer?
For instance, in the U.S., the average hourly rate will typically run about $31 per hour, but this varies by industry and your level of experience.
3. How do I protect myself from scope creep?
Clearly state the work to be done as part of the scope of your contract and the limits on revisions. For example, if a client wants extra work, you can send them a new estimate and get their approval before doing more work.
4. Can you switch from hourly to flat rate for different clients?
Of course! Most freelancers switch between hourly and flat rates depending on the project. Just make sure that you discuss this with your client beforehand, though.
5. What if my client prefers one pricing model over the other?
You must talk with your client about the pros and cons of each model. Some like the predictability that comes with a flat rate, while others may believe an hourly billing system offers flexibility and does not give the wrong impression when times get rough.
Conclusion: Choose Wisely and Get Paid What You’re Worth
So, what’s the verdict on flat rate vs hourly rate?
Like pizza or salad, it all depends on your taste—and the project in front of you. The best approach is to stay flexible, experiment with both models, and choose what works best for you and your clients.
And when it comes to keeping your pricing fair and efficient, don’t forget to use Billbooks to create estimates and invoices that make your life easier.
Try Billbooks: Free for 30 days, no credit card needed! Because paying for invoicing software before you get paid? That’s just bananas.
