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Freelancers: Should You Charge By the Hour or By the Project? | Invoice Ninja

A look at the pros and cons for freelancers of charging by the hour and by the project. Which is best for you?


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    Interesting article, Shalom.

    I agree with the analysis quite a bit - the "scope creep" as you call it is the main deterrent for me in using project-based pricing. I think a lot of projects go south because of that.

    It is so tough to scope out complex projects to the T and then everything seems to fall into the ambit of the project requirements.

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      Outcome based contract needs to be established to ensure customers get right attention and quality service. However for the provider an payment schedule with combination of fixed + % of outcome needs to be modelled...Final payment mapping to final deliverables and payout getting closed with 100% max..

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        It's a good topic and worth discussing. 

        In my experience, it depends. If you're doing the more tedious work (like the translating example) or you don't have any way of bracketing the scope, then hourly makes sense. 

        But for projects where you can clearly define the deliverable and manage expectations, a fixed fee is a better model IF you can explain your costs as a percetnage of the overall ROI. They spend X on you and get 4X in revenue or cost savings, for example. And the more of the same thing you're able to do, and reuse past materials and effort to accomplish the project, the easier it is to move your proposals towards this approach.

        There's a lot to this discussion and there are a lot of things to consider it you move towards fixed-price engagements (that's all I do), but it is definitely worth it for the right project(s). Please reach out if you have questions.

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          I've tried several, and as a translator it is common to be paid per word (which I don't always agree with because depending on the context and intended result, 5 words can take longer to work on that 1,000), so to me, the fairest is still by the hour.

          Time is the one thing we're giving that we can't ever get back again, not to mention one of our most precious "possessions" in life overall, so I'd say definitely by the hour 😊

           

          eta: of course, it's important to have an idea of how long it takes me to perform a certain job to charge by the hour - that's not always possible because the client doesn't always share the entire material with me beforehand. Also, there is always the unexpected. I recently worked on a Powerpoint document that seemed pretty simple to work with (in my case, text-wise), but the Powerpoint was full of hundreds of elements to deal with and tweak around as I changed its source language to the target one, so it took me at least twice the time to work on it than I had originally thought. You live and learn 😂

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            Great points Alda - I am a strong believer that freelancers should be paid by the hour. I have the most context around software development and can say that time estimates must be viewed merely as indicators or approximations. Actual payments must happen basis the amount of time you spend on the project.

            Honestly, time estimates are a bane of freelancing and the root cause for all problems - incomplete projects, no payments, patchy work etc. I've managed software projects on a fixed cost basis and it's been a nightmare. You can never accurately estimate the amount of time it will take for research, design changes or bugs that show up unexpectedly. Plus, it also somehow rids the client of all responsibility for the project - the freelancer is pretty much on his/her own to figure & solve problems.

            The same is true for content writing & translation, as you rightly said. But sadly, it's a norm to get paid per word or per article in content writing and not by the hour.

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              Honestly, time estimates are a bane of freelancing and the root cause for all problems - incomplete projects, no payments, patchy work etc. I've managed software projects on a fixed cost basis and it's been a nightmare. You can never accurately estimate the amount of time it will take for research, design changes or bugs that show up unexpectedly. Plus, it also somehow rids the client of all responsibility for the project - the freelancer is pretty much on his/her own to figure & solve problems.

              This!  

              I can't imagine the number of unexpected problems that show up when developing software or managing software projects. And even if you round up your time estimate by a lot, it seems it is never enough.

               

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            Both modes have their pros and cons.

            I believe it depends on how experienced the person is. Freelancers who are just starting out can base their fees on the hourly rate, as clients would be unlikely to take a huge risk by charging by the project.

            Eventually, after gaining experience and becoming more structured, you will have bigger clients who don't care how much time you put in, but instead on the value you deliver.