Comments on: Why I Don’t Have An Hourly Rate

By: Ed Gandia, Editor

Ed Gandia, Editor — Fri, 08 Jan 2010 14:52:03 +0000

Hi Jodi! Welcome to the blog! Great to have you. What you just described makes perfect sense. I, too, have projects that aren’t conducive to a flat fee and force me to do it on an hourly basis. But try and make those the exception.

Even with small projects, I’ll often quote a flat fee. That may mean I take a risk, but most of the time it works in my favor. For instance, I may charge $300 to write a 2- or 3-sentence testimonial. This includes a brief client interview, some email exchanges, etc. Some take longer, depending on the info I get and how hard it is to track down the client’s customer. But overall, I can get it done profitably for $300. So I’m willing to take the risk. Because if I charged hourly, some may take 30 minutes while others take 2 hours total. Which would cause the client to wonder why the variability.

Make sense?

By: Jodi Salisbury

Jodi Salisbury — Thu, 07 Jan 2010 16:18:50 +0000

I am a graphic designer and I have a couple clients for whom I charge an hourly rate. I do so because they’re don’t generally request “projects” per se, but occasional changes on a website or to change names and contact information on their business cards.

Would anyone recommend a different method of charging for this kind of work. I can’t really imagine how I would charge a “value-based” fee.

Thanks!

By: Michelle Rosen

Michelle Rosen — Sat, 30 Aug 2008 07:15:17 +0000

I’ve done both the hourly pricing (when I started out) and the value pricing. As Nick says, sometimes there is a maximum that someone is willing to pay based on the perceived value of the piece. However, I have learned that regardless of situation, I always prefer to work on a “value basis.” One of the reasons for this is that whether at the end of the day I’ve made $500/hour or $100/hour, I knew going in how much I was going to get paid. If I kill myself and go above and beyond, or if I don’t need to, I still know I’m going to make $xx. That’s worth money to me (even when I go way over on the hours).

Some things write themselves more easily than others. And if you happen to get lucky often on the hours, you won’t on the payout if you charge an hourly rate. I have a rate that I will tell clients when forced, but I almost never accept a project on an hourly rate anymore.

By: Paul Lima

Paul Lima — Fri, 29 Aug 2008 13:17:49 +0000

I never tell clients my hourly rate unless asked. And if a client balks, I tell them I am more effective and efficient than other writers – so they will get great copy from me and pay about the same as they would pay a writer who charges less. In other words, I don’t have a fee schedule. There are good reasons for not having one. If Company A wants me to write a media release and they want to chat on the phone a bit and send me background reading from which to pull the material, the job will take ‘x’ hours. If Company B wants me to write a media release and they want me to come in for meetings and interview a client or two as well as chat on the phone and do background reading, that will take ‘y’ hours. So before I issue any quotes, I define the scope of the project, calculate how many hours the job should take, build in a contingency, multiply the hours times my rate and round up.

By: Sarah Webb

Sarah Webb — Thu, 28 Aug 2008 23:58:33 +0000

Value pricing makes sense to me.

I’m just starting out and am trying to figure out how to present my fees to potential clients. Does anybody have any thoughts on whether it’s a good idea to have a fee schedule stating my fees (probably given as a range) for each type of job I will handle?

Thanks for your advice!

By: Adam Hill

Adam Hill — Fri, 22 Aug 2008 02:09:33 +0000

I’ve always quoted work with a max price, but always shown my hours I think it will take as a matter of transparency… however I’m never going to get rich that way and this is an interesting concept. I’ve recently tried to go back to hourly rate with a substantially higher rate so I can work on my pricing structure.

Not dropping your price on pricing by value I believe is only OK if you do have the demand to be able to do so!

By: Bob McCarthy

Bob McCarthy — Wed, 20 Aug 2008 16:11:33 +0000

Great blog –
Pricing is by far the most difficult part of being a freelancer. I’ve changed my pricing structure so many times over the years.

I agree value pricing is the way to go, but to be honest, when business is slow and I am scrambling for work, hourly rates and negotiated fees are in play.

But let me ask this – projects are one thing, but many of my clients also ask me to handle smaller tasks – develop some new headlines, write a few paragraphs for an existing piece, rework a short transactional email. Sometimes no more than hour to do.

I find it awkward to stop and estimate these smaller assignments – especially when I also get larger project work. I usually just bill this out an hourly basis without an estimate.

Any thoughts?

By: Nick Usborne

Nick Usborne — Tue, 29 Jul 2008 13:18:17 +0000

Paul hi

Great feedback. While my post was taking a “position” on pricing, you have provided balance by looking at both sides. You’re right. Value pricing is the way to go whenever it’s possible. But certain types of work do have a “recognized value”. Like you say, if you’re writing a brochure and know that your competitors will estimate $1,250 for that job, you’re unlikely to get the gig if you think, “I deliver more value” and estimate at $3,500.

Nick

By: Paul Lima

Paul Lima — Sun, 27 Jul 2008 23:16:46 +0000

I am enjoying this thread, and want to take a slightly contrary position (notice only ’slightly’). I have an hourly rate and I use it to calculate the price of a great deal of the writing I do. When I’m asked to quote on creating a slogan or tag line, a one-page advertisement, or a 30-second broadcast commercial, my rate goes out the window and I think ‘value’. However, most of the writing I do does not have high marketing value. (It is important to the client, but it does not have a direct impact on the bottom line.) If I quoted $4000 to write a 600-word product brochure that would be used on a website, or a media release that will be sent to a number of journalist, I’d not land the gig. When I quote $1,250 to write the brochure and $750 to write the release, I tend to land the gig and feel I’ve earned a decent fee for the work. But how do I come up with the quote? Before I issue my quote, I define the scope of the project: how many meetings (if any), how many interviews and background reading, how long to write, what’s the approval process like, how many revisions. If I can can earn $125 to $150 per hour, I feel like I am generating a decent fee for myself and giving the client fair value. Again, if the client asked for a 30-second TV commercial script, I engage in value quoting. But for most of the work I do, I need to know how much I charge per hour and approximately how many hours it will take to do the work. Then I issue my quote — without telling the client my hourly rate or my estimated hours. In other words, I give the client what he or she wants: a bottom line price on the gig. And if the client says, “That’s too much” I too move on, because my price is my price is my price.

By: Michael Temple

Michael Temple — Sun, 27 Jul 2008 21:59:10 +0000

I have been applying some value based pricing for a couple of years now and I find it works pretty well. When you do this you will definitely find those prospects that almost pass out when you quote your value based fee, but I have also found, through hard won experience, that I don’t typically want those types of prospects.

For those that are interested in this form of pricing Alan Weiss who wrote the book Million Dollar Consulting wrote an entire book on value based fees. In the book he lays out the argument why you want to do this, how you do it and even how you present it to your clients. I found it one of the best books I ever read on the topic. If you are interested the book is called “Value Based Fees” and is part of his Ultimate Consultant series which you can get off Amazon.