If you’re new to the business of freelance content writing, marketing, or SEO work, then you may have some questions about billing. You can bill your clients by the hour, by the project, or even offer flat monthly fees. What’s the most efficient and profitable option out there for freelance writers and small SEO/marketing agencies?
There’s definitely no single solution that works across the board. However, many small business writers and marketing consultants choose to start out by charging an hourly rate for their services.
The PROs of Charging an Hourly Rate
There are a number of benefits to charging an hourly rate for your work…
- Have a difficult assignment to tackle? Projects that take twice as long to complete get charged twice as much.
- If your client wants you to do heavy revisions, rewrites, or add additional material that wasn’t initially agreed upon, you just charge them for more hours. (Well, we do our re-writes for free!)
- If you’re a slow worker, an hourly rate is in your favor. (Then again, slow workers don’t last too long without being really, really good at what they do!)
The CONs of Charging an Hourly Rate
But charging an hourly rate isn’t all rosy. Here are a few reasons you may want to think twice before attaching a dollar sign to each hour…
- You set a ceiling for yourself. Let’s say you charge $50/hr for your content writing services. Getting your clients to agree to a bump up to $65/hr may be a hard sell.
- Let’s say you want to make $50,000 a year as a small business writer. Working 40 hours a week, you have to charge $25 an hour. In order to maintain your income level, you must spend 40 hours per week doing billable work. Other professionals work 40 hours a week, so what’s the big deal? Well, as a freelancer/consultant, you’ll end up doing a lot of non-billable work on top of those 40 hours!
- People don’t really like paying others a higher hourly rate than what they themselves make. Small business writers and consultants, who usually deal directly with small business owners, may have a hard time securing a competitive hourly rate.
- In the words of lawyer Matt Homann, “When you bill by the hour, your once-in-a-lifetime flash of brilliant insight that saves your client millions of dollars has the same contribution to your bottom line as the six minutes you just spent opening the mail.”
The PROs of Charging By the Project
As you can see, the cons of charging an hourly rate can really add up. Here are some reasons why charging by the project is appealing for many writers, SEO consultants, and marketers:
- When charging by the project, you can come up with your own ideal “hourly rate.” Let’s say you would love to make $80 an hour. A client asks you to create an SEO campaign, which you estimate will take 10 hours. So, you do some quick math ($80×10), round up a little to give yourself some room, and quote the client $900. The client knows exactly what the cost will be ($900), which is a lot easier to commit to than an indefinite figure of $80 per hour.
- As you get faster (and better) at your job, you can complete projects in less time. The quality of work your client receives will also go up. When you charge your old project rates, but get the work done in less time, you make the same amount of money working fewer hours. When you charge an hourly rate, on the other hand, you naturally speed up and spend less time billing that hourly rate, thereby shortchanging yourself because you improved at your job!
The CONs of Charging By the Project
Of course, charging by the project does have some drawbacks…
- Project rates tend to be negotiated more than hourly rates. When you charge by the hour, you provide a very basic “service.” The concept of paying for a project will likely be more up-for-negotiation in your clients’ minds. It’s easy for a client to counter a $900 proposal by saying, “What about $850?” But it’s less likely that a client will ask you to drop from $80/hr to $75/hr.
- Clients can easily take advantage of you when you charge by the project. You’ll hear a lot of, “Oh, just one more thing!” when you have a flat fee. You can prevent this by drawing up a very strict and limited contract beforehand that defines the project’s parameters. Protect yourself!
Are you a small business writer or consultant of some sort? How do you charge for your services?