Is it better to charge per project or per hour?
When you charge per hour you make sure you are getting payed for all the work you are performing. However, I often see it recommended that you charge per week (best) or per day (next best). I believe the rationale behind the per week (or per day) pricing model is that it weeds out the customers that are just looking for the cheapest labor they can find, leaving only those that are serious about a project and can commit to paying reasonably for the work.
Per hour is not adequate for this type of work; you're delivering a product or service that will increase your client's bottom line, you're not a seat-filler who punches a clock. I charge in the smallest increment of time that I believe I can provide a meaningful impact or deliver a complete solution. When asked for a quote I translate my billing into weeks, as in $X000 per week. Accounting for admin tasks and paperwork, back and forth emails and phone calls, plus showing off the work completed and waiting for approval/notes, a week often seems like not enough time (I can't count the number of times a client asking for a simple font change took literally a week to order and get approval on). There are very rare instances where I know I can accomplish a task in days instead of weeks and if the client asks, I will bill in days instead.
"My rate is $X000 per week and my initial estimate is that this will take XX weeks to complete. I require an up-front retainer of X weeks to get started and I bill every two weeks after. Who should I address the initial invoice to?"
I would typically never reveal this tip, but here it goes: "I bill weekly and my normal rate is $X000. For you I would be happy to reduce that to $X000-20%." The client is told up front that they are getting a discount without having to ask for it and the Discount line item on the invoice(s) very much help in getting that invoice paid faster. The secret is that the rate quoted is always 20% higher than what my ideal number is. I make it rain discounts on everyone.
No one wants to have the rate conversation but I've noticed that clients who don't shy away from that talk or flinch at your rate will not be a problem. Clients who complain that you cost too much will be a problem. Politely suggest you are not a good fit for their project and end the call, you're better off. If you get to the point that your non-flinching clients say yes a little too fast to your rate, increase it. You want a little resistance, but not much. Saying yes too fast means you need to charge more.
And lastly, this is not about what work "costs" or "market rates", this is about what your completed solution is worth to your client and how much it will increase their bottom line. You're playing a different game so stop charging like you're mowing lawns or digging ditches. Charge more.
One thing I disagree with is the automatic-discount thing. Firstly, I think it's cheesy. Makes me think of street vendors saying "...But just for YOU, I have a SPECIAL price!" Secondly, I think it cheapens the perceived value. As in, "Why is Joe throwing around 20% discounts? Is he desperate? Is he not confident in his abilities?" Etc.
That being said, if you’re working with someone who actually deserves a discount - a client referred by a friend, a startup on a budget, etc., then it’s totally fair. I’d just be wary of tossing around discount claims to everyone.
In this instance what’s the tactic to increase the price you’re quoting the client? Are they not going to think it’s weird you’ve changed your mind about the price?
One may try to calculate (in their mind) how much time they will take to complete the project and then quote a fixed amount based on the no. of hours that came up.
I'd feel more comfortable presenting a fixed project quote for a creative project than a software project, because in the case of a creative project I can choose to dedicate a fixed amount of time, and have the result - to be judged subjectively - that I was able to produce in that time.
In the case of software, I would need to keep working until it objectively meets requirements. The quality of software I deliver doesn't degrade smoothly under time pressure, it falls off a cliff.
which is the whole point of the agile manifesto
which is why agile fails under most circumstances, as having fixed time, requirement and budget but under scrum and sprints is anything but agile.
And while both need to deal with unclear goals, figuring out what it is the client and truly needs, in one case you're selling what they have, or what they are, in the other you have to make something they want and will be able to use, support and sell.
That's very often a tremendous amount of uncertainty to work through.
Edit: also what this comment says https://news.ycombinator.com/item?id=21729677
Edit 2: And this one, featured some time ago on HN https://erikbern.com/2019/04/15/why-software-projects-take-l...
Don't punish yourself by charging only $100 for the hour you worked on it.
Know your value - which in capitalism depends on market demand - and charge accordingly.
When you are a distinguished expert you can charge more of course as well.
Make a name for yourself and ensure that everybody knows upfront that you are not a "cheap outsourcing" drone.
Why wouldn't ur hourly rate be 100k then (vs $100) ?
- what if it takes you a bit longer, 2 hours, is it fair to charge the client 2x?
The point is, the client wants a car, not an hour of car-making.
Also, the moment you provide an hourly rate you get compared to other hourly workers, whether it’s fair or not. “What?! $100k an hour? Even our lawyers cost less!”
Except most clients don't know what they want in such clearcut way before the project begins.