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Hourly rate? Worth it?

Discussion in 'General Business Forum:' started by Julian KNott, Feb 10, 2009.

  1. Julian KNott

    Julian KNott Junior Member

    Hello all

    I am currently doing a couple of projects for two clients. Both have asked to pay hourly/day rate.

    My problem with hourly rates is that in real terms (ie based on my experience, knowledge etc etc) it seems they are getting a lot of little cash.

    Is it worth adding a good chunk of hours to make up for what I professionally perceive as what the job is worth? I know if I quoted for each project separately as a job lot then I know I would be making what the work is worth.

    Am tempted not to do hourly/day rates unless there is guaranteed x number of days up for grabs.

    What say you?
  2. I love hourly rates- you can account for each hour you work and know how much you are earning for the time spent on that project.

    ie: if I quote for 500 quid on a job and my hourly rate is at 10 quid, then thats 50 hours....but if its a flat rate of 500 (not hourly) and it takes me 80 hours then I have effectively lost money because I have spent too much time on the project.

    I calculate my hourly rate depending on what my expenses are, eg:
    Rent+rates+salary(always pay yourself something fixed every month)+transport etc + 25% (for profit) divided by the amount of hours you can work in a calender month (eg: 30 days less weekends at a 40 hour week and so on) and this shall give you your hourly rate.

    I hope that makes sense! :p
  3. berry

    berry Active Member

    It's hard to compare Apples to Oranges. What one person can do in one hour another could do in 15 minutes.
    It's better to try and give a whole project cost and then your hourly breakdown. Then they can see how skilled you are. My view is when clients start talking 'hourly' charges and rates then I'm on a loser as it's cost not quality or experience or expertise. A steak from a Beefeater is £4.99, a steak from Ramsey's Maze Grill is about £20.
    one will be cooked perfectly and make the meal worthwhile, one will taste of meat.
  4. tim

    tim Senior Member

    wow, useful insight Berry. I'm glad you've posted this BTW Julian, as it's something that's always confused me.

    Personally, I have never and will never give per hour rates. I've heard from potential clients that hourly rates put them off as they're no longer controlling how much they pay, but instead the designer is. The designer's mood depends on their bill, and so they lose total control of their budget.
  5. I see your points but I am a firm believer that its only fair that I am paid for the amount of time and effort I have put into the project....

    Yes, the client should be (or at least feel like they are) "in control" but fair is fair.....I mean, when I was starting out I quoted $60 for a job and ended up spending over 20 hours on the project because the client wanted TONS of changes....

    Not cool- hourly rate is the way for me with a ballpark figure of how much it would cost the client.
  6. tim

    tim Senior Member

    The number of changes is all in the contract. I got my latest e-commerce client to sign saying over 5 hours a week of changes means a quote at the end of the month about the extra work I'd have to do.

    Anyway, to oppose your first point, if clients feel safer with a fixed price, then surely you have room to "up" it a bit at the start..? Instead of saying £500 for 80 hours of work you'd do £650 (or more) for the same hours. That way you secure their trust and their money.
  7. Adam

    Adam Senior Member

    How old are you tim? Just wondering as you seem to have a wealth of experience for someone who's at school/college! Just wondering, you say you'll never charge by the hour, but what if a client asks for it?
    I charge by however I think it should be, if its easier to work it out at an hourly rate i'll use hourly rate, if its a set job and they have a set budget i'll see if I can offer a flat rate.
  8. At the end of the day its each to their own I suppose...

    I find it easier to track my income by charging hourly (even if its a "fixed" price for the client)....

    It does come down to the client as well- I will consider doing work for someone at a slightly cheaper rate if there is a prospect of ongoing work from that client.
  9. berry

    berry Active Member

    We sell Value and Worth. It all come down to how much value the client has in our experience, OR how much value and worth we assign to that job as businessmen. Everything in life is negotiable, it's business.
  10. True, we have to be flexible and negotiate but at the same time I know how much I need to make in order to cover the overheads and I think thats important too.

    The client has a budget but so do I and if we can't meet somewhere halfway with each other then its just not worth it...
  11. tim

    tim Senior Member

    I'm 16 now, yay for me. I don't know why I have experience in all this, my dad's helped me a lot in everything, and my previous clients have given me some good things to reflect upon when I've met up with them. I've also had quite a few clients turn me down because of my age, and apparently my prices, despite the fact I'd not charged above £150 until I got a big e-commerce job.

    If a client asks for me to charge by the hour, I will, sure, but out of desire, I'd rather charge a fixed price. I'd be gutted for the client if their business spent 3 times what they were originally planning because I could be greedy enough to charge whatever I wanted. (I'm not saying this about people who do charge by the hour BTW, it's just how I see it. Everyone has different schemes, right?)
  12. Julian KNott

    Julian KNott Junior Member

    Having had the evening to think about it (and read all your comments), I think its probably dependent on the type of job. I mean I've laid out 150 page reports at an hourly least if there are changes it gets added. However say I design a logo which takes a few hours - not always the case but bear with me - that's £90 (£30 p/h being my rate). Now, to be honest, I feel that no matter how long it took I should still charge £300 as that's my cost when costing for a logo as a one off charge. If I were to charge by the hour for everything I'd be a very poor church mouse. I shouldn't work so quickly thats it! I should slow down. Speaking of I approach my big 40 my mantra "work less for more" is something I'd like to adopt. Maybe an increase in hourly rate is in order (something I was going to do this year but given the current economic climate that may be shooting myself in the foot).

    Anyhow good to know there is a great forum to discuss this stuff.
  13. tim

    tim Senior Member

    I like that idea. If only I was good enough to charge that much!
  14. Yes that is true...It does depend on what work you are doing.

    I do a lot of layout- its the bread and butter of my business and hence charging hourly is perfect for me.

    Then again, stuff like logos are a different animal...3 hours for a logo is pretty standard...but I have worked on logos with a development time of 3 months!
  15. tim

    tim Senior Member

    wow, you'd be stonking rich at £30 an hour for 3 months...

    geekiness here + calculator... 15 hours a day 5 days a week for 3 months (let's say 4 mondays-to-sundays per month)

    15x5x16=£36000. i'd happily go slow if it got me £144,000 a year!
  16. rossnorthernunion

    rossnorthernunion Senior Member

    Thought we stopped talking about Little Chef?

    For me its got several factors - understanding the length of a job and understanding the client (including their needs and budget).

    Having a set price in mind for the job beforehand usally helps too.
  17. Come on! Be realistic Tim!

    First off: £30 is pretty hefty (well, what I do anyway- my rate is between £18 and £20)

    Second: 15 hours a day? you must be NUTS. So thats no eating, no relationships, no fresh air, no breaks. Get real.

    Rule of thumb is take a normal 8 hour working day and divide by 2 (cos as a freelancer you have to make allowances for lean times and that way if you work the whole day then you make a nice profit).

    So lets recalculate Tim:

    4 hours per day (say £20 an hour).

    4x66 days x£20 (3 months approx 30 days per month less weekends which equals 24 at 8 days per month for weekends this is all approx) = £5 280 for 3 months

    Note: this is the bare minimum income- I usually work an average of 6 hours per day.
  18. Julian KNott

    Julian KNott Junior Member

    £30 isnt really that hefty. I've been involved in design for 18 years and freelance for the past eight. Look through the pages of design weeks annual income supplement and its actually about average. Next year it will go to £35 as its been £30 for the past four years.

    And as Peter pointed out a typical day for a designed isnt necessarily work, work, work. If it was I wouldnt be a freelancer (that's not to say I don't do a full 8 hours a day...just I pad it out and work late nights and weekends). In terms of what I earn well that's all over the month could be £1000 another £6000.

    Actually quoting for jobs is probably the hardest part of all this. Some people do have a warped idea of costs. Have considered writing a quotation for 50p and see what client says...;-)
  19. Fair enough about the hourly rate but I have only been freelancing for a year (into my 2nd year) so am not yet looking to command large hourly rates.

    hehe, 50p? i am sure the client would ask: whats the catch! :up:
  20. Sunburn

    Sunburn Active Member

    I generally prefer flat rate, simply because I'm very accurate on costing and know what I can and cant achieve within any given timeframe, suppose it boils down to experience, but as someone has already mentioned before, its more about having a good contract with the client so that any request for work that is supplemental to the initial agreed upon spec is properly costed and accounted for.


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