The second problem is that it makes booking and cash flow unpredictable. If I can sell $X,000 in flat rate work, I know my month is covered. I might be working late nights, or I might have some a windfall of time, but I don’t have to worry about money. I’ve had clients send “a big project” only to find that the project took 2 hours. Then I’m stuck, scrambling to fill up time.

Over the last nine years we’ve worked with over 100 clients on more than 300 web projects. Everything ranging from the simplest web site to complex number-crunching web applications. And now we are able to estimate a project bid with extreme precision. And yet we’ve still chosen not to flat bid. Why? Because billing hourly gives us far more control over the client relationship and protects us from the occasional project that somehow finds a way to spin out of control.

You can be as firm as you’d like with a flat bid, but good luck getting the client to agree on what is out of scope and what is in scope. Even if you have a solid contract and scope there will be disagreements.

What Julie said.

This is flawed logic. If you have a detailed project outline (which you should always have when billing at a flat rate). You can simply email the client (or call) saying, ” I understand that you need this added to the site before launch, but it wasn’t outlined in the project document (which I’ve attached to this email / sent via email for your convenience. We would be happy to add this feature on, it will cost $XXX more.

When approached about a new job, one of the automatic things I have to do is classify the work as either a Project, a Task, or sometimes inbetween.

Project = flat rate; requires a formal estimate (ie, a contract), many tasks involved. Example: Web site redesign

Task = hourly rate; too small to estimate. Example: Web site content updates

Mini-Project: this is the inbetween. Too small for a proposal to be written up, but it needs a ballpark estimate so both parties are on the same page. I might bill this hourly or flat rate; the discrepancy between methods is usually low because the project is small. In the event of scope creep, having an hourly rate to fall back on, is more useful than going back and writing up a “change order” for a nonexistent contract.

Example: design a Web banner ad. I might quote that as “half a day”, which can be viewed as both a flat rate estimate and an hourly concept at the same time… making it easier for the client to accept change than when quoting a dollar amount.

However, the most important point is: ALWAYS TIME THE WORK, even if it’s ultimately billed out using your flat estimate. Timing is not that hard to do, and without that data, collected over years of doing similar jobs, you are flying blind when estimating jobs and paying your team.

1. They can see where all of their money is being spent. Each line item of our estimate becomes a task that we track time against.

2. We are covered in the event of a ‘minor’ change. For example, a week before launching an e-commerce site, the client said “one more thing… we need to enable sales in Canada and the UK… ” What seemed like a minor change at first, quickly became a substantial one as we started hashing out the details. Imagine if we had flat bid it and a week before launch said “no problem! Seems easy enough.” We’d be screwed.

3. Allows us to be the good guys. Instead of just saying “No” and “Out of scope” to additional requests, we are able to provide an accurate estimate for the client. We’ve now given them the option to pay for those additional features.

- – Great idea but I fail to see the reality!

In my opinion, it’s best to do something like this:
Make a price, and clearly state what you’ll do for that price. Euro 350,- for making 3 concepts, 4 revisions, including a CD with the vectorfiles (for example). If the client agree with that, stick with it. If for some reason, the client wants to see a 4th concept, 5th revision, or wants you to do more then the initial Euro 350,- covers, either make a new price, or charge by the hour.

If you do it like this, and clearly state that if they want more, they’ll be paying either an x-amount of money per hour, or a new flat price will have to be made. Either way, it will give the client a clear view on what they’ll get for that money, and it benefits the designer in a sense of them knowing what to do in order to get paid. You’re not working more “because you want to do it right” or “because that’s what the client demanded”. You’re working more (if necessary), because the client wants more ánd knows it’ll cost them more.

First, over the last ten years I’ve gotten very good and efficient at what I do (graphic and web design). What took me 20 hours then may only take seven or eight now because of my experience and expertise. (Which you mention in point 6). There is no way I could triple my hourly rate and charge by the hour. Clients would certainly object. Having a base rate just confuses things for most clients.

Second, I always write a project brief detailing what work will be done that the contract references. If the client makes direction changes or adds features they pay more and know they’ll pay more. Clients only take advantage of you when there is a definitive road-map that they’ve signed up for.

Third, all of my clients are given my hourly rate for any revisions / updates in the future.

Finally and most importantly, billing by the hour tends to favor smaller short projects and tasks that break up your day and make it harder to accomplish large tasks. In my experience, it is these larger tasks that end up being more profitable as long as you are experienced in giving quotes you can keep to.

Tina Russell