Thursday, December 10, 2009

To Charge Hourly, Or Not To Charge Hourly...That Is The Question!

(Hourly rates vs. fixed rates)

There it is, the moment you have been waiting for. All of your tireless self-marketing efforts have finally paid off. You are now sitting across one of the few prospective clients whom have asked to meet with you to learn more about the services you provide.

Your mind is already running through all the persuasive things you can say about what you can offer, and why you’re the perfect person for the job, as he or she looks over your impressive portfolio. “I think I would like to move forward with you, but before we go over the particulars, I would like to know what your normal pricing policy is” says the client.

Whoa! What is my pricing policy? Most freelance fashion newbies struggle with this subject: Which is better to charge, by the hour or fixed per-project rates? Unfortunately, most fashion design schools don’t go in depth about pricing yourself as a freelancer. Luckily for you, I will cover the basics of both pricing models.

Charging by the hour is pretty self-explanatory. You, the freelancer, would get paid for the time spent working on a specific task or project. This is usually done with a time sheet, and billing the client the result of (hours X hourly rate). The advantages of charging hourly, is getting paid for what you’re doing in terms of time spent on that specific assignment. This kind of charging is usually more favorable for the freelancer.

This pricing model can also be tempting, as some freelancers like to try to slip in a few unearned hours in the invoice. Remember to always remain ethical, and keep the best interest of your clients in mind. If you are caught being dishonest, it can be detrimental to you as well as your business’ reputation. Some clients even like to go as far as thoroughly covering what is considered an actual ‘work hour’ meaning subtracting lunch coffee breaks etc.

Fixed pricing simply means one set rate you charge the client for the entire duration of a project. The price is usually agreed upfront, normally after a quote is given. When the work is done, the client is billed. It is that simple! Usually the problem with this is you get paid the same amount no matter how much time is invested in the assignment. Fixed projects usually require more paper work. This is primarily to protect you from worst case scenarios, which we will cover in another diary entry.

Be sure to be mindful of longer-running projects that may develop over time. For example, a small design company may hire you as a freelance fashion designer to sketch technical fashion flats for an upcoming collection. You and the owner have decided on a set price, but after several revisions a two week project has developed into a two month project. In addition to this, you have acquired more client work, and this assignment is starting to crowd your already busy schedule. In these cases, I suggest using milestones, which are a specific set of features you get paid for as you go.

You can also have the best of both worlds. You may be charging a client an hourly rate on a project, but they may ask you to complete a few additional tasks. In this case, you have the ability to charge them a fixed price for this additional task. Both fixed and hourly rates have its pros and cons; it is all up to you.

If you have decided to charge your clients consistently with a fixed rate consider the time frame it will take to complete the assignment, so that you do not end up selling yourself short. Once more whether you have decided to go with hourly, fixed or both, remember to always remain ethical as well as practical with your pricing model(s). It may seem a bit overwhelming at first, but over time pricing will become a breeze!

Fashionably Yours,


Creative Conceptz Ltd.


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