This may be a surprising episode title for you considering everything you hear me talk about in regards to hourly billing, sucks!
Yet there are times when hourly billing is good and I wanted to share the other side of the coin from yesterday’s show with you today.
Quick / One-off task
If you are a designer or developer and have bandwidth or time in your schedule where someone presents you with an opportunity to do some quick task. Something you know you can bang out in a few hours, or maybe have even done it in the past for a previous client.
Or if you are a developer and another developer needs you to write some code. Or a designer and another designer asks you to design some simple elements.
Hourly billing may be an option for you.
To be honest, this is even a stretch, because I would argue that you would know what the outcome is and be able to put a price on it.
However if it truly is something that only takes an hour or 2 and both you and the client know that, it’s going to be hard to say “$1000 for that Facebook share image.”
You are terrible at estimates / Inexperienced
I get it, I’m a realist and if you are just starting out, your estimates are going to suck. You won’t know what you don’t know until you get into it.
Which means, you may have to take on hourly work at the very beginning by way of sub-contract work or just because you can’t define how long it will take for the scope of work.
What I would suggest though is that when you do take on the hourly work, track any and all time on the project. Be as detailed as you can so that you learn and get better at estimating and scoping out work.
As you grow your business, you’ll want to expand your services. Sometimes this means expanding into areas of unfamiliar territory.
Depending on what sort of services and market you are expanding into, your research may tell you that there’s a certain expected price. Especially as you are trying to break into that market, you’ll want to pay close attention to your own cost, as much as the client’s.
Therefore you may have to charge an hourly rate to the client just so that you get a better understanding of the value of your service to the client and cost to you.
Please note here that expansion of services doesn’t mean that this is the majority of your business. Chances are that if you are a solo shop, you’ll expand with one or two clients in this new market at any given time.
It should be in a very controlled environment. This is a part of business development and should be closely monitored to see if it’s a viable option for you and your business.
To wrap up
You’ve heard me before say that I’m a realist. If someone told the young Jason to start value pricing, I wouldn’t even know where to start. Back then I just needed to get some clients in the door and the easiest way was to set an hourly rate and go with it.
As I said though, in Why is hourly billing bad?, I put myself into the feast or famine cycle as soon as I did that. Twice, in fact, one resulting in me having to go back and sit at someone else’s desk for a few years.
Hourly billing should be thought of as either supplemental or experimental income for your business.
Start a Freelance Business
More episodes in this topic:
What are the costs involved in becoming a freelancer?
Is the income from freelancing reliable?
What payment structure should I do?
How do you build a good freelancing profile in the field of web development considering the competition?
What are skills you can learn fast and have high freelancer value?
How to start freelancing?
Should you do free work to build a portfolio?
What is freelance?
How can I start freelancing without experience?
What does it take to be a freelancer?
Why did you start freelancing?
What is the very first step to work as a freelancer?
How do you set the boundary of work you do and work you don't do?
What are your client red flags?
What should you be able to create as a web developer before starting in your freelance career?
When starting out freelance, should I just be a generalist to get my feet wet, or should I go for that niche?
As a developer, should I throw my projects on Github or build a site from scratch to grab attention?
What can I use for social proof when starting as a freelancer?
How can I start freelancing as a web developer?
Should I use my name or create a business name when starting?
Should I call myself a “freelancer” (definitive answer)?
Why should you not be a freelancer?
How do you collect online payments as a freelancer
How much money do I need to make?
Why is hourly billing bad?
Why is hourly billing good?
What are the biggest mistakes a freelancer can make?
How to adapt and change to the WordPress climate?
How to budget as a freelancer?
What is your marketing plan?
What is your sales process?
What do you do to position yourself as an expert to leads?
How do you balance your time for sales and marketing?
How do you get high-quality clients?
Should I offer my services as a web designer/developer or specialize first?
What do you do again?
What is the best freelancing website?
What do you do for a follow-up sequence for leads?
How to attract clients with big budgets?
How not to be annoying in sales?
How do you convince someone to sign a contract?
What to say when a client is late on a payment?
Best of Season 3 - Get out of the comfort zone
Best of Season 3 - Building Relationships
S06 E12 - Undercharging, Targeting the Wrong Audience, and What You Should Do About It with Alex McClafferty
S03 Bonus - Tom McFarlin on Blogging, Balancing Work and Family, and Building a Business that Lasts
S09 E11 - Differentiation, Reputation, and Pivoting From the Top-Down with Peep Laja
S01 E11 - Kai Davis helping freelancers get more clients with outreach