How to Charge: By the Hour or By the Project

A freelancer who has seen the light makes the case that charging by the hour does not make sense, at least not if you are an efficient worker. Charge by the project, instead.

I had just created a high quality website for this individual, and I had only been paid $180 for it. The client was ecstatic and happy that I had finished so quickly, and we both parted ways after the project. That was a tipping point in my mind where I realized something was wrong.

I knew the site that I just created for that client was worth far more money. I knew people were charging thousands of dollars for sites of equal scope. I knew I had to change my pricing.

When you charge based on the project, you are tying the price of the project to the client’s end result. The end result is all that the client cares about. Clients don’t care if it takes you 20 minutes or 20 hours to complete the project. Clients care that the work is done and it is done well.

I like this idea, because the way we get paid — freelance or regular — is ass-backwards.

What if freelancers were paid by the project and office workers by the hour? Right now it’s basically the other way around: back in my office life, I made my five-figure salary, and got my Thumbs Up performance reviews, regardless of what I accomplished or how efficiently I worked. It was a flat fee. Yet I almost never had enough work to keep me busy for eight hours every day. I filled the extra time with news, crossword puzzles, advice columns, gchats, and blog posts (like the Billfold, natch). What was my incentive to do otherwise? I got my stuff done, and I did it well, but, like, then what?

If they paid me by the hour at a commensurate rate, I could have gotten the same amount done most weeks in half or three-quarters of the time and gone home to have a life when I was done, instead of wasting time and electricity “liking” cute dresses on Modcloth. (And occasionally money, because cute dresses! Who can resist?) Or I could have decided, other weeks, to ask for more projects and done even more in order to get that bonus paper.

Now as a freelance-y type, if I don’t work from 2:00–3:00 PM, I don’t earn money for that time. Turns out the situation is slowly undermining my sanity. It also puts me in situations like the one I found myself yesterday, where I realized I had written 1500 words — as part of a rush job, too — for a total of $150.

There has got to be a better way.

Image of “The Clock” via Lumiere.net.nz

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