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What to Charge: Pay-per-Project vs. Hourly Wage


Something many freelancers struggle with is whether they should charge by the project or have an hourly wage. There is really no clear cut answer, and it is entirely up to you. Here are some important things to consider when trying to make this decision.

Pros of an Hourly Wage

Hourly wage will give you guaranteed income for each hour you work. It's a great way to ensure enough money is made every week to pay the bills, invest in the business and have extra money for savings or fun.

Setting an hourly wage puts you in control of the income, and the wage can be set based on the standard of living and competition in the field, rather than what jobs in your area are paying.

Cons of an Hourly Wage

The drawback to setting an hourly wage is that may project owners will be reluctant to pay it. Due to the telecommuting nature of the work, clients will not know if you are working on their project or not, and will not be able to truly verify the number of hours on the invoice. For this reason, it is difficult to convince many clients to go with an hourly wage. There may be debate over what constitutes a work hour. For instance, some people may want you to deduct time spent checking email from your work hour.

There are programs available that will allow the clients to see the computer screen (when you elect to work on their project) so you and the client have proof of billable hours. However, explaining this procedure and convincing clients to use this method may be difficult.

Pros of Per Project Pricing

Pay-per-project offers a great flexibility in allowing you to maintain control over your workload, booking projects of various sizes and rates until you reach the maximum load you are willing to take (or the desired financial goal). You can work at your own pace, prioritizing projects by deadline.

Cons of Per Project Pricing

You must work fast and efficiently to finish the project within a reasonable amount of time, because no matter how long the project takes, the pay is still the same. If a project pays $400 with an estimated 20 hours to complete, the hourly rate of $20 per hour is more desirable than dragging the project out to 100 hours, at $4 an hour.

Choosing the Pricing Method

When figuring a project price, it is best to consider how many hours it will take to complete and then bill based on an optimal hourly rate. For instance, if you want to average $15 an hour, you could bid $150 for a project estimated to take 10 hours. As long as you stay focused, the project pricing will be worth it.

The pricing option you choose will greatly depend on the client base, the nature of the work you are doing and your preference. The per project pricing is a great way to sneak an hourly type pay into the project without the client realizing the hourly pay is still a factor.

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