Hourly or Not?

I make my living writing, but I should get paid for talking. I do a lot of it. One freelance friend and I commiserate regularly (yes, that’s the right word) on the ills that befall the profession. We also chat up ideas and tips, including this most recent one – don’t quote an hourly rate.

Honestly, I’d never heard this. Yet there it was apparently in some magazine or website post. As he read it, I scratched my head. The notion, according to what he’d read, was that quoting an hourly rate gets clients in the “justify your time” mode. It seems like a pretty logical leap from hourly to that, doesn’t it? But in practice, that’s not happened to me.

I won’t say entirely. Some clients are concerned because they don’t have a lot of budget to work with. If they want to hold onto the purse strings a bit, why shouldn’t they? We’ve already had the discussion and talked about their ceiling prices. If they want to forgo this for that, fine. But in cases where this is a new-to-me client or project, no way I’m quoting a flat fee. Let me tell you a story:

Once upon a time, Lori took on a juicy new project. She was to create instructional content – a set number of study hours, which totaled a set number of pages. This was new content, and the client was assuring that the resources were readily available and the work was easy.

You see where this is going already, don’t you? Not only was the work nowhere near easy, the resources were like the Mojave – dried up and barren. And the page count? Yea, that wasn’t for your “standard” page. No, that turned out to be for a page that equaled 44 lines per page. Check out Word. Single-spaced pages are 36 lines each. And getting 44 lines on that page? I don’t know about Word 2007, but Word 2003, if it had referenced it at all, would have referenced something like “What? Are you joking?” Much of my time, my otherwise billable time, was wasted trying to figure out how to manage the impossible. And that was for the content too, mind you. The sources that were so plentiful were outdated.

So that project that I estimated would take 4 months to complete took 8 months. I hired on other writers to help. In the end, I don’t think I broke even. So no, I don’t think quoting a flat rate is a great idea. Not in this case, anyway.

It’s true that sometimes we can make a good estimate on project length and our costs. But it’s not always so. My rule has been if I haven’t worked with them before, if their project scope isn’t easy to determine from one or two conversations, I’m quoting hourly.

Which do you prefer? How have clients responded?

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Comments

  • Devon Ellington February 19, 2010 at 1:50 pm

    I quote a flat fee based on the hourly rate plus a little more for the unexpected, which always comes up. This includes two rounds of revisions, and a clause stating that further revisions or change of direction will be billed hourly at X dollars per hour.

    For critique and editing, I do a per page fee.

    I'm still figuring out the right way to do the script doctoring fees — I've played with several different ways to create a rate, and none of them are quite right.

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  • Eileen February 19, 2010 at 1:52 pm

    I don't quote hourly, except in extremely rare cases (can't remember the last time I quoted an hourly figure). I find that clients like to know exactly what they're getting for a set price. The trick is in speccing out each project accurately. If I quote a fee of $125/hour, clients think I'm way too high priced. Same project, framed as a $4000 fee for the whole kit and kaboodle, and they're fine with that.

    Early on in my career, a prospect really pressed me for an hourly rate vs project fee. So I quoted $70/hour. She said, with great umbrage, that she was the president of her company and didn't earn nearly that much an hour, and so it wasn't appropriate for her to pay anyone else that, either. I've had others seem to think $30/hour is a generous rate.

    Hourly rates penalize you if you're fast and brilliant, and penalize the client if you're having the kind of day where thinking is like trying to swim through jello. Project fees make it easier for the client to evaluate the value of what you deliver. From their point of view, copy for a 24-page magalog is either worth $15,000, or it's not. As long as you meet the deadline with a quality product, they don't care how many hours you do or don't spend on it.

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  • Valerie Alexander February 19, 2010 at 4:12 pm

    Eileen's experience is exactly why I hesitate to quote my hourly fee. When I was in that first rush of excitement about freelancing, the business contacts I talked to responded with that specific statement. "What? I don't even make that much an hour!" So I switched to discussing project fees instead.

    My general guideline these days is this: if I'm dealing with someone like a PR agency, I have no problem quoting my hourly rate. They're already well-versed in the industry and aren't going to be shocked. (And they usually ask, too.) If I'm dealing with a client who doesn't know anything about freelance market rates, I quote by project. I did get burned in one case – I spent hours chasing down interviews from incredibly recalcitrant people – but otherwise it's worked nicely, in part because I build wiggle room into my estimates.

    That said, in the last six months I've had more prospects ask for my hourly rate than ever before. No doubt that relates to the general cost-consciousness rising in businesses everywhere.

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  • Wendy February 19, 2010 at 5:12 pm

    I have to admit that I generally give a per project rate for the reason mentioned already in the comments- because clients are more receptive of it.

    However, there are some projects that I can't give a per-project rate for, such as editing. If I tried a per-project rate there, I would end up screwing myself over. It's hard to do that when you don't know what you're getting yourself into.

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  • Paula February 19, 2010 at 5:59 pm

    Nearly ten years ago, a relative who owns a small PR firm was looking to farm out some of his writing work. He asked what my hourly rate was. Thinking I'd give him the family rate, I said "$60 per hour." He seemed shocked. Why? Because that's what he was charging his clients, so he couldn't mark-up the rates like he normally does.

    Needless to say, I didn't get any work from him. But why take a pay cut to do work that doesn't even interest you?

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  • Anne Wayman February 19, 2010 at 7:27 pm

    Mostly I quote flat fees – big ones for ghostwriting books.

    If asked, I'll tell them I base my fee on an hourly, but I mostly just quote a flat fee.

    For coaching I quote an hourly with a three hour minimum.

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  • Lori February 19, 2010 at 9:51 pm

    Thanks, everyone! It looks like the general consensus is hourly sucks, per-project works best.

    I usually do what Devon said – quoting a flat fee based on a hourly rate. I do that in my flat-fee situations, but has anyone come across a project whose scope is so hard to judge that it's just not possible to guess-timate?

    The reason I bring all this up is I have one project pending that's just too large to guess at. Instead, I told them I'd charge them X based on Y number of hours. When I do that, I get "reminded" of my rate by these same clients. But I know no other way to put parameters around these things so that the example in my original post doesn't become the norm.

    Anyone?

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  • Devon Ellington February 20, 2010 at 5:47 pm

    That's when you ask to see some of the pages in advance, to see how much work needs to be done. I don't hand over the work I do on those pages until the contract is signed, but I can look at 10 pages, do a little preliminary work on 1 or 2 of them to see what it feels like, and say, "Based on these pages, X, Y, and Z has to be done on each. When I multiply that by X pages in the overall project, It's Y fee."

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  • Lori February 21, 2010 at 12:56 pm

    In cases where there's an actual page to view, that's super advice!

    I know that sometimes we go in flying blind. That's when I'm most nervous. Those have been the times I've been burned, too. Like creating new content on large projects. It's tough to give an estimate. A recent project I discussed with a client came with a lot of caveats about my estimates being based on a hypothetical scenario. I gave him an hourly price based on that. I had to. Sometimes hourly is your only safeguard.

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  • Jenn Mattern February 21, 2010 at 7:56 pm

    I've found that as long as things like the scope of the project and number of rounds of edits are taken care of up front, per-project always works out better for me. Hourly does indeed sometimes pit the client against the writer, and the time wasted in negotiations and back-and-forth over their budget concerns isn't worth it (and is time you're not paid for). The key is to have that hourly rate set aside for additional work — for example, if I were to quote $2500 for an e-book (something where time can vary quite a bit), I'd note how much consultation time that includes, and what types of formatting. Anything else would be billed at an hourly rate on top of the project fee. This way clients know exactly what they're getting for the fee, and they know up front that if they ask for anything that's going to increase the workload for me, they'll have to pay extra for it.

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  • Jenn Mattern February 21, 2010 at 8:03 pm

    "Like creating new content on large projects. It's tough to give an estimate."

    I do these kinds of projects often, and have never had to quote an hourly rate. I base it on the expected word count, number of pages, etc. Then I factor in the type of research involved — will I have to test their products? Interview their staff? etc. If so, I find out how many people I'll have to talk to up front, and then estimating time involved in research isn't too bad. There will always be some projects that take longer than you expect. That said, there will also always be projects you finish faster than expected (meaning you earn a better rate). The trick there is balancing it all out.

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  • Lorraine February 23, 2010 at 1:14 am

    Coming in late to the conversation–but I agree with most everyone: I try hard not to quote an hourly rate. Clients invariably freak out.

    Yet, as Eileen notes, when you quote a flat fee–based on your hourly rate, mind you–no one blinks.

    My favorite tactic is to preemptively ask clients if they have a budget for the job.

    If they name a ridiculously low price you can get going while the going's good.

    Or you can adjust work–e.g.: edit existing material rather than draft from scratch.

    Lori, á propos of the client who assured you "resources were readily available and the work was easy"–those terms are so subjective, aren't they?

    One marketing director's "lotta background material" might morph into 10 hours of on-site taped interviews on your part.

    It's hard to anticipate every turn that lies ahead, but I ask an annoying number of questions before I price.

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  • Lori March 3, 2010 at 1:32 pm

    Totally true, Lorraine. I remember one guy telling me he had an outline and "a lot" of chapters written for his book. Turned out to be three ranting paragraphs that weren't even loosely related to the subject.

    Maybe this is the solution – quote a flat fee based on XX number of hours. I do that already for most clients, but with these question-mark clients, I feel I still need to protect myself from too much work and not enough payout.

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