Selling our time.
The easiest way to charge for our services as a freelancer is to sell our time. It’s the model most clients in creative fields are used to, and it’s the one we most often use when starting out.
Selling our time has many advantages: it’s straightforward, it minimizes responsibility for the freelancer (we are not affected by a project’s ultimate success or failure) and it is an easy way to manage our time.
But we do ourselves and our clients a disservice when we don’t consider other pricing models, because although easy, there are drawbacks to consider when selling our time:
- We are financially penalized as we become more efficient at our craft.
- Hourly rates discourage experimentation.
- Hourly rates do not foster a sense of ownership for a project.
Let’s take a closer look at each of these drawbacks before we consider an alternative.
1. We are financially penalized as we become more efficient at our craft.
As we hone our craft, we generally work faster. This holds true whether we’re animators, illustrators, designers, etc. What might take a rookie designer ten hours to create, might take an experienced designer five hours.
If the rookie designer charges $60/hr and the experienced designer $100/hr for the same project, the rookie takes home $600 while the latter only takes home $500. The rookie designer takes longer and makes $100 more than the more experienced designer who solves the problem faster. There is also a limit to what a designer can charge before clients start choosing “cheaper” alternatives—it’s an easier sell to hire the $60/hr designer than the $150/hr one, even if the former ends up costing the company more time and money in the long run.
On the flip side, charging by the hour also rewards inefficiencies. Take client revisions as an example. If a client sends through wave after wave of notes, it either means the client is disorganized or we are not addressing the root problem and getting at what the client wants. In either case, the freelancer only has to continue chipping away at the notes and racking up billable hours—there is no incentive to fix more fundamental problems. Continuing to treat the symptoms of a project (addressing client notes) is much more profitable to the freelancer than finding a cure (solving the client’s actual problem).
2. Hourly rates discourage experimentation.
When working on a project, we’ll sometimes be inspired to try a new stylistic approach, or use a new tool to solve the problem at hand. Hourly rates in this case discourage our willingness to try new things, because we won’t feel comfortable billing for hours spent on something that don’t work out. That, or the client has budgeted just enough hours for us to plug into their current workflow and get the job done.
This scenario is bad for both client and freelancer.
Objectively, a client would love if you gave them options that might be better than what they had in mind when they first hired you. But to get to better options, we need time and space to experiment—none of which are encouraged when we keep stealing nervous glances at the clock.
We don’t gain anything, either, because we don’t get to experiment and further our work.
3. Hourly rates do not foster a sense of ownership for a project.
This ties us back to the first point: when we charge by the hour, we’re not motivated to look too deeply into the root cause of a client’s revisions because on some level, we want that problem to keep generating more symptoms for us to spend hours to solve. It’s not malicious, it’s just natural. We’re motivated to nod along, make the changes, bill for our time and move on. We might even suspect there’s a better approach, but we’ve sunk so many hours into the current approach and it’s hard for the client to justify to their higher-ups a change of direction, that everyone agrees to keep playing the game and call it a day.
The client doesn’t gain the freelancer’s expertise, which they’ve spend time and resources to hire. The freelancer has no real stake in the outcome of a project, so we’re not motivated to investigate deeper into client revisions and figure out if there’s an underlying problem to be solved. If the project goes well, this model works for everyone; if the project goes south, all burden is on the client to find additional budget for more hours and potentially source new, available freelancers if their current hire decides to jump ship.
Now that we’ve considered some drawbacks to hourly billing, what is an alternative, equally simple, pricing model for creative freelancers?
Charging by project.
Whenever possible, I prefer to charge by the project for my services. Here are some reasons why I do it, and why it might make sense for you, too:
- Project rates reward efficiency and expertise.
- Project rates encourage experimentation.
- Project rates take some burden of risk away from clients.
- Project rates foster a sense of project ownership.
1. Project rates reward efficiency and expertise.
As we get better at our craft, we get better at intuiting a client’s underlying problems and we can solve them faster. Since project fees are fixed, meaning we get paid the same if we solve a problem in ten minutes or ten hours, we’re suddenly motivated to actually put our full expertise into play to solve a client’s problem as fast as possible.
We’re no longer motivated just to fix a client’s symptoms—we want to find the cure so we can get the project done. This is fantastic motivation for freelancers—if we solve a client’s problem in an hour, we have the other seven hours of our day to do other things.
This is fantastic for the client, too—instead of hiring a freelancer who certainly isn’t motivatd to spend any less time than you budget for, you’re hiring a freelancer who is maximally motivated to solve your actual problem for a fixed budget you both agree on at the beginning of a project.
2. Project rates encourage experimentation.
Control of time flips from the client to the freelancer when we work with project rates. We determine how much time to spend on any given project. If I have an idea for a new stylistic approach, for example, I don’t have to feel bad about using up a client’s hours to explore my ideas. I just go ahead and try it out. If it doesn’t work, the client doesn’t care that you’ve spent a few hours going down dead ends because they’re paying a fixed fee no matter how the problem is solved. If our approach does work, the client gets something new and we might find a faster method of doing the same work. Win-win.
3. Project rates take some burden of risk away from clients
When we bill by the hour, the client is saddled with most of the burden: they have to budget out the hours, they have to make sure we don’t stray too far from what was agreed to for those hours and if there are revisions, they have to come up with a budget for how many extra hours are needed. The freelancer takes on hardly any risk at all: we just show up, do however many hours of work and get paid. If the project goes well, great. If it doesn’t, too bad for the client. If a client wants revisions, we can sell more hours or jump to some other project.
This risk-less approach of hourly billing is what makes it attractive to freelancers. By contrast, when we charge by the proejct, we share the burden of risk with our clients. We share a commitment to see the project through. If we hit a technical snag or we mismanage the project, we have to fix the problem and not get paid any extra for our efforts. We can’t just say we don’t have availabilities and shove the problem onto some other poor freelancer—we need to stick with the project.
Now that we’re directly affected by a project’s success or failure, we come to the last point:
4. Project rates foster a sense of project ownership.
Charging by the project means we align ourselves with the client: we both want the project to go well. If we can solve the problem quickly and smoothly, we work less while getting paid the same fee. If we fail to solve the problem, we are responsible for fixing the mistakes. This causes us to pay close attention to the client’s requests and keep track of how we manage projects. Now we want to solve underlying problems, because solving the bigger problems means saving us time in the long run.
When we successfully deliver projects, the client is happy because they didn’t have to manage our hours and their problem is solved, and we’re happy, because we got to try out new ideas, push our craft and control how we used our time.
And there we have it, the benefits of charging by the project instead of selling our time. As I mentioned at the outset, there are many advantages of charging by the hour. We take almost zero risk and we are free to quit a project at any time. But there are downsides to this pricing method too, as I outlined at the start of this piece. It’s these downsides that we should take a minute to consider as we move along our freelance path, searching for alternate ways of working with clients that make the relationship more fruitful for all involved.