How do people charge hourly?

[LaneMan]

I did some research and found that all of the successful agencies charge hourly. For example, A Nerds World charges $120/hr.

Hourly billing is interesting because you can provide rounds of revisions easily. For example, you can tell the clients he's get 2 rounds of revisions at 1 hour each.

What I don't understand is, how do you prove to the client that his project took X hours to complete?

 

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[GoodluckChuck]

You track your time and then bill them for it. If they don't feel like they got enough value for their $ then they won't hire you again. Trust is a requirement. Contracts might help as well.

 

[LaneMan]

You track your time and then bill them for it. If they don't feel like they got enough value for their $ then they won't hire you again. Trust is a requirement. Contracts might help as well.

Oh, so it's about trust then. Makes sense.

 

[GoodluckChuck]

Any sort of freelancing business is going to revolve around relationships and trust is the foundation for relationships. Trust is what gets you hired. Positioning is what allows you to charge 120/hr.

I've been charging 120/hr for 3 years now. Why that much? Because that's what I decided my time was worth. Some people have said no because that was too expensive. A lot of people have said yes.

It's always about the transaction. Someone will gladly pay 120/hr if they think what they're getting is more valuable than the $.

 

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[LaneMan]

Any sort of freelancing business is going to revolve around relationships and trust is the foundation for relationships. Trust is what gets you hired. Positioning is what allows you to charge 120/hr.

I've been charging 120/hr for 3 years now. Why that much? Because that's what I decided my time was worth. Some people have said no because that was too expensive. A lot of people have said yes.

It's always about the transaction. Someone will gladly pay 120/hr if they think what they're getting is more valuable than the $.

So, when you give them your estimate of the amount of hours required, do you have then pay a percentage upfront or something? For example, if a revision requires 3 hours, how would you proceed?

 

[GoodluckChuck]

I try to avoid charging by the hour and usually only do for clients that are already paying a monthly retainer. Once in a great while I'll charge hourly for something really small.

Sometimes I'll have them pay for x hours upfront and bill for any additional hours afterward. It just depends on the situation.

Is there a specific situation you're trying to figure out or are you philosophizing these scenarios?

 

[LaneMan]

I try to avoid charging by the hour and usually only do for clients that are already paying a monthly retainer. Once in a great while I'll charge hourly for something really small.

Sometimes I'll have them pay for x hours upfront and bill for any additional hours afterward. It just depends on the situation.

Is there a specific situation you're trying to figure out or are you philosophizing these scenarios?

I'm curious about these monthly retainers too.

I've got a few clients right now who keep asking me to change stuff on their websites and I can't refuse them because I billed per project. So, basically, I'm doing free work. I would like to avoid that for my next clients if possible, that's why I'm contemplating billing per hour.

Do you have any good resources about billing? I know there's a ton out there but I don't know which ones to trust.

 

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[biophase]

I'm curious about these monthly retainers too.

I've got a few clients right now who keep asking me to change stuff on their websites and I can't refuse them because I billed per project. So, basically, I'm doing free work. I would like to avoid that for my next clients if possible, that's why I'm contemplating billing per hour.

Do you have any good resources about billing? I know there's a ton out there but I don't know which ones to trust.

Don’t you have an official project end date? After that revisions cost money.

 

[LaneMan]

Don’t you have an official project end date? After that revisions cost money.

I made a mistake by telling them the project ends after they're satisfied with the work. But now they keep telling me to try new stuff.

I don't mind doing it because I aready told them I would but I'd rather be working on new projects.

 

[biophase]

I made a mistake by telling them the project ends after they're satisfied with the work. But now they keep telling me to try new stuff.

I don't mind doing it because I aready told them I would but I'd rather be working on new projects.

That’s fine. But you need to tell them that they need to find all issues by a certain date. There’s also a difference between what they prefer and what is a bug.

 

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[Fox]

I did some research and found that all of the successful agencies charge hourly. For example, A Nerds World charges $120/hr.

There are plenty that don’t.

Check out The Futur on YouTube also.

Hourly can be simple/effective for certain projects but often doesn’t work so well on larger complicated projects.

When you are good at what you do you can often do it faster. If you charge by the hour your profits would drop.

There are times for both approaches but don’t think “always hourly” is the best strategy.

 

[CareCPA]

We try to do flat-fee as much as possible. This removes all anxiety from the client as to how large their invoices are going to be. It also motivates us to be more efficient.

However, sometimes we just can't define the scope well enough to be flat-fee, so we switch to hourly. I just don't like doing hourly all the time because the clients never know how much they're going to pay until the invoice arrives.

As a consumer, hourly stresses me out and makes me wonder if I'm overpaying for the time is took them vs the time I think it should have taken. With an upfront price, I can decide if I think the project is worth what I'm paying.

 

[GoodluckChuck]

I made a mistake by telling them the project ends after they're satisfied with the work. But now they keep telling me to try new stuff.

I don't mind doing it because I aready told them I would but I'd rather be working on new projects.

Ahh, I see. You should come out and say it sooner so we can help you faster.

You are in a common situation. I've been there before. How I handled it was this: I told them that we've gone through 2 rounds of revisions and they get one more, but after this, the project is complete.

When I do larger projects my contract includes "two rounds of revisions". This helps me avoid scope creep.

Another thing is that the clients that are willing to pay higher prices tend to ask for less revisions. They pay you to know more than them so they trust your judgement.

It sounds like you're just experiencing some common growing pains of being a freelancer. Learn from the situation and move on. There is no one size fits all solution to this. Some people charge hourly and do it quite successfully. Others never charge hourly and are just as successful. It's not about how you charge your clients. It's about your mindset and how you and your clients view your knowledge and skillset. If your client is telling you how to design their website, then they should not have hired you to do it in the first place.

You'll learn to avoid those kinds of people next time!

 

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[Johnny boy]

do flat fee work

my company mows your lawn for $150 a month. Sounds alright doesn't it?

We're there for 15 minutes for 20 visits a year.

150x12 is 1800
15x20 is 5 hours

1800/5 is $360 per hour.

Nobody would signup if we charged over $300 an hour.

 

[LaneMan]

That’s fine. But you need to tell them that they need to find all issues by a certain date. There’s also a difference between what they prefer and what is a bug.

Setting an end date sound like a good idea.

There are plenty that don’t.

Check out The Futur on YouTube also.

Hourly can be simple/effective for certain projects but often doesn’t work so well on larger complicated projects.

When you are good at what you do you can often do it faster. If you charge by the hour your profits would drop.

There are times for both approaches but don’t think “always hourly” is the best strategy.

Yea I came across a guy named Jonathan Stark on their channel and he's got some interesting ideas.

 

[Andy Black]

I don’t charge hourly and I don’t take on piecemeal work. I charge a flat fee per month and only work with clients who want a monthly arrangement.

Lots of businesses charge flat monthly fees.

 

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[LaneMan]

I don’t charge hourly and I don’t take on piecemeal work. I charge a flat fee per month and only work with clients who want a monthly arrangement.

Lots of businesses charge flat monthly fees.

That's interesting. I might try doing that once I've built a sizeable portfolio and gotten a handful of testimonials.

 

[Andy Black]

That's interesting. I might try doing that once I've built a sizeable portfolio and gotten a handful of testimonials.

Why wait?

 

[LaneMan]

Why wait?

From my experience, prospects need to talk to their wives or the tooth fairy before hiring you when they don't trust you. That's why I'm gonna do my best to get some good testimonials.

It's also going to be good when I build landing pages because a landing page that doesn't have any social proof won't convert well.

 

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[Jon L]

I made a mistake by telling them the project ends after they're satisfied with the work. But now they keep telling me to try new stuff.

I don't mind doing it because I aready told them I would but I'd rather be working on new projects.

Its fine to tell them this, but you also need to tell them up front that:

"Its really easy for a project like this to increase in scope. I always end up doing a bit more than what was in the quote, and enjoy doing that, but I need your help so that I don't end up doing a $100,000 project for $50,000 (or whatever number makes sense for your situation). So, when we get to something where its tempting to blow the budget, we need to talk about what makes sense."

At this point, you need to understand the following:

What are they unhappy about with what you built? Is it not expressing the vision they had? Is it not bringing in the right results? Then, say something like:

"I'd like to make sure that we're doing the right thing for this project. There's a difference between building a great website, and then experimenting with it to optimize it. A great website is not something that is static. Its ever changing. You try what you think will work based on best practices, and then see what happens. If you need to adjust, you look at the data coming off the site, make adjustments and re examine the data. Doing this continually will allow your website to continually match the current needs of your customers. The initial site build and the subsequent tweaking are two different projects, though, and I feel like we are starting to stray out of the initial project scope."

Or whatever fits the way you speak and the situation.

See what they say. The goal is to bring up an issue unemotionally, examine it with them and see if you can collaborate on a solution.

At the end of a discussion like this (maybe one that lasts a few days), its ok to put your foot down and say, "I'm going to need to start charging for additional tweaks." If they object, "I understand, but I am a single freelancer and this is what I use to support myself. I can't afford unlimited revisions."

I had the following conversation with a large client once:

Client: "Support for this should be free."
Me: "I hear you. I can't afford to support something this complicated for free for years on end though. Software systems like this are very complex. Things will come up. Its a bit like building a custom car. The car is beautiful and works well, but also needs periodic maintenance."

Since we'd had a really good relationship up to that point, and I'd demonstrated my willingness to bend over backwards for them, this worked perfectly. They started paying for support, and I kept the client for several more years.

I have since learned to have that conversation up front.

 

[LaneMan]

Its fine to tell them this, but you also need to tell them up front that:

"Its really easy for a project like this to increase in scope. I always end up doing a bit more than what was in the quote, and enjoy doing that, but I need your help so that I don't end up doing a $100,000 project for $50,000 (or whatever number makes sense for your situation). So, when we get to something where its tempting to blow the budget, we need to talk about what makes sense."

At this point, you need to understand the following:

What are they unhappy about with what you built? Is it not expressing the vision they had? Is it not bringing in the right results? Then, say something like:

"I'd like to make sure that we're doing the right thing for this project. There's a difference between building a great website, and then experimenting with it to optimize it. A great website is not something that is static. Its ever changing. You try what you think will work based on best practices, and then see what happens. If you need to adjust, you look at the data coming off the site, make adjustments and re examine the data. Doing this continually will allow your website to continually match the current needs of your customers. The initial site build and the subsequent tweaking are two different projects, though, and I feel like we are starting to stray out of the initial project scope."

Or whatever fits the way you speak and the situation.

See what they say. The goal is to bring up an issue unemotionally, examine it with them and see if you can collaborate on a solution.

At the end of a discussion like this (maybe one that lasts a few days), its ok to put your foot down and say, "I'm going to need to start charging for additional tweaks." If they object, "I understand, but I am a single freelancer and this is what I use to support myself. I can't afford unlimited revisions."

I had the following conversation with a large client once:

Client: "Support for this should be free."
Me: "I hear you. I can't afford to support something this complicated for free for years on end though. Software systems like this are very complex. Things will come up. Its a bit like building a custom car. The car is beautiful and works well, but also needs periodic maintenance."

Since we'd had a really good relationship up to that point, and I'd demonstrated my willingness to bend over backwards for them, this worked perfectly. They started paying for support, and I kept the client for several more years.

I have since learned to have that conversation up front.

Yea it's true that you need to specify everything upfront. This is the mistake I made.

 

[Jon L]

From my experience, prospects need to talk to their wives or the tooth fairy before hiring you when they don't trust you. That's why I'm gonna do my best to get some good testimonials.

It's also going to be good when I build landing pages because a landing page that doesn't have any social proof won't convert well.

You don't need a portfolio more than two or three items. How? Build trust by:

1) Listening to them.
2) Asking questions about their overall business goals for this project: Why this project? Why now? What if you didn't do it? What else have you tried? How does this fit into your overall objectives? How do you get clients? What path do your current clients take between finding out about you, then buying from you, then getting support from you? etc etc etc. Be relentlessly curious about them, their processes, their desires dreams and goals.
3) Drop little tidbits throughout the conversation giving them free ideas about what they could do or how you're thinking about helping them. Disagree with them a little. This will show that you're not just a yes-man. (Yes-men are annoying. I'm not paying you $100/hr to tell me what I already know)
4) come up with a solution to their business problem that talks about their needs using their language.

Your goal should be to get them to not even ask for your portfolio. I've noticed that the prospects that I don't connect to emotionally are the ones that ask for a portfolio. The rest don't even realize they should be asking for one. (This is true for custom software anyway. I have found that websites, people ask for ones just out of habit. But, the idea remains: If you're relying on a portfolio to sell you, you're gonna lose the sale.)

 

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[Jon L]

Yea it's true that you need to specify everything upfront. This is the mistake I made.

You can still rescue this though just by talking to them.

 

[LaneMan]

You don't need a portfolio more than two or three items. How? Build trust by:

1) Listening to them.
2) Asking questions about their overall business goals for this project: Why this project? Why now? What if you didn't do it? What else have you tried? How does this fit into your overall objectives? How do you get clients? What path do your current clients take between finding out about you, then buying from you, then getting support from you? etc etc etc. Be relentlessly curious about them, their processes, their desires dreams and goals.
3) Drop little tidbits throughout the conversation giving them free ideas about what they could do or how you're thinking about helping them. Disagree with them a little. This will show that you're not just a yes-man. (Yes-men are annoying. I'm not paying you $100/hr to tell me what I already know)
4) come up with a solution to their business problem that talks about their needs using their language.

Your goal should be to get them to not even ask for your portfolio. I've noticed that the prospects that I don't connect to emotionally are the ones that ask for a portfolio. The rest don't even realize they should be asking for one. (This is true for custom software anyway. I have found that websites, people ask for ones just out of habit. But, the idea remains: If you're relying on a portfolio to sell you, you're gonna lose the sale.)

Some people told me this in my other thread already. I tried it without success but I'm probably just not asking the right questions or being too robotic because I'm introverted and awkward in general.

I will be practicing this some more then because it seems legit.

You can still rescue this though just by talking to them.

Yea I doubt it because I messed big time up and took the projects out of desperation even though I noticed huge red flags during the sales meetings.

No big deal, I'll just suck it up this time.

 

[Andy Black]

@LaneMan

Be careful of the language you use. Google for “limiting beliefs.

Examples:

all of the successful agencies charge hourly

a landing page that doesn't have any social proof won't convert well

you need to specify everything upfront

 

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[LaneMan]

@LaneMan

Be careful of the languaage you use. Google for “limiting beliefs.

Examples:

I hear ya. Sometimes I think like that out of habit but I'm working on it.

 

[MJ DeMarco]

do flat fee work

my company mows your lawn for $150 a month. Sounds alright doesn't it?

We're there for 15 minutes for 20 visits a year.

150x12 is 1800
15x20 is 5 hours

1800/5 is $360 per hour.

Nobody would signup if we charged over $300 an hour.

This is quite possibly the most profound insight people need to understand when selling specialized labor services -- and how to ramp up your rate of pay in the marketplace.

Mathematically based, not ambiguous. Bravo.

 

[Guest-5ty5s4]

This is a great discussion.

In the industry, we don't say flat fee or hourly, we say "bid" or "cost-plus."

 

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