Charging by the hour or a fixed price per project?

Hourly rate

Positive facts

• The final price depends on the actual number of hours worked.
• If the volume of work increases, so do earnings.
• The customer pays for the number of hours used, not a flat rate.

Negative facts

• An experienced designer will be “punished” for being able to work faster and his work devalued.
• The hourly rate does not guarantee a minimum payment for the project.
• The client does not know exactly how much the project will cost, as the solution cannot be defined to the hour.
• The value of a project is not estimated on the basis of the actual value of the project, but on the number of hours spent. For example: designing a logo may take 8 hours, but its value to the company is much higher.

In practice, hourly billing is appropriate for solutions that are not a stand-alone project but are part of an upgrade or small additional work. Examples: redesigning part of the text in a brochure and adding new photos, redesigning the design and functionality of an online order form, etc. The hourly rate is also suitable for those projects that are more difficult to value at a fixed rate and are not included in the price list for design services.

Fixed price per project

Positive facts

• The client knows the price of the solution from the start, unless the scope of work is extended.
• The designer is guaranteed the amount of the payment, even if he finishes the work earlier.
• It is a fairer approach to evaluating the solution, as the price is set according to the actual value of the service.
• It allows the contractor to make a prepayment (advance payment) and the client to pay in instalments.

Negative facts

• The cooperation agreement must include a deadline for implementation, otherwise the project may be delayed longer than expected.
• The cooperation agreement must also include the possibility of additional changes at an extra cost, otherwise some clients may want additional changes that they do not expect to have to pay for.
• The contractor must have sufficient experience to assess the complexity of the problem and the value of the solution.

Charging per project or a fixed amount is a common and safe practice for design projects. It also applies to recurring projects where the designer can accurately estimate the scope of work.

Important

Fixed-amount billing is a common and safe practice for design projects. It also applies to recurring projects where the designer can accurately estimate the scope of work.

Charging an hourly rate is also wrong because some solutions are more expensive than others, regardless of the number of hours worked.. Those who charge by the hour (for design services) are in fact combine both modes.

Charging a fixed price per project is based on several assumptions. When assessing a project, we take into account the size of the company, which affects the value of the solution, the complexity of the problem and the solution, the local or international use of the solution and the transfer of copyright. The number of units printed or sold and whether the product will be used once or repeatedly also affect the price.

Fixed project price provides security for both parties, as the client is not limited by the hourly value rate and the designer is not limited by the number of performance hours to be allocated within the agreed performance period.

To set a fixed price, it is necessary to obtain from the client all the information that affects the solution and its value.. In addition to all the questions needed to define the problem, the deadline for implementation and any special requirements that may affect the implementation and the price are also important. The number of corrections and modifications that may exceed the agreed scope of work should also be included in the contract and defined in terms of an hourly rate.

Some clients don't realise that, like everyone else, designers have costs to do their job, so if prices are cut, it's important to stay on solid ground.. The price includes years of experience and a breadth of knowledge that gives the designer the skill, credibility and responsibility to solve the client's problem and offer an effective solution. If there is unjustified undercutting by a potential client, sometimes involving “cleverness” and an insulting approach, it is best to reject the project (and the client). In this case, the word “NO” is worth much more than a devalued project. This depends not only on the client but also on the contractor. Let fairness, transparency and professionalism be the conditions of cooperation.

Resources and links

• The Futur
• Hourly vs. Flat Rates for Graphic Design Projects
• Charge a Flat Rate