| Billing by the hour for a project can lead to three unpleasant possibilities
- Project owners prefer knowing the complete project cost at project start
and in most cases select bids that have the complete project cost quoted.
- You quickly develop an idea in a flash of insight and flesh it out. But
if you're honest, you can only bill for the few hours it took to solve the
problem, a fee far below your solution's actual value to your client. You
cheat yourself.
- You work at a leisurely pace to pad your hours, or you do the job half-heartedly,
requiring constant revision. You cheat your client.
Here's how to establish a flat fee that's fair to you and your clients.
- Use your hourly rate as a starting point. Decide what you are worth on
the open market and consider your financial goals.
- Determine the time it will take to do the job right. Factor in research
and travel as well as other related functions.
- Remember, your reputation and business depend on delivering the highest
quality work. Be sure you have the time to weigh ideas and carry them out,
and allow for client revisions along the way.
- Use this formula to start: Fee = Rate x Hours. This is the absolute minimum
you must make for the project.
- Estimate it will take you 10 hours at your rate of $75, and you must charge
at least $750. If your client can't pay this minimum fee, then the project's
not right for you. Going below your minimum lowers your perceived value in
the marketplace and may make it difficult raise it.
- Add non-routine costs to your estimate. I consider one or two FedEx packages
or a reference book to be normal expenses for a job.
But bill the client for everything else, from out-of-town travel to rush messenger
charges caused by my client's schedule changes.
What do you do once you've decided on the fee you'd like to charge?
- Propose the project's market value and negotiate if necessary. If other
professionals charge $1,500 for the job, quote that as your fee.
- If you think you don't have the experience or reputation to ask for that,
propose $1,250 or even $1,000. You can always negotiate and accept a lesser
fee as long as it's at least your $750 minimum.
The fee-for-project concept works and is in everyone's best interest.
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