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Don't cheat
yourself: Charge by the project
Teacher: David
Perlstein
Prospects and new clients often
ask, "Do you charge by the hour or by the project?"
With rare exceptions, I charge
a set fee for each project.
Billing by the hour for a project
can lead to two unpleasant possibilities:
- 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.
1. Use your hourly rate as
a starting point. Decide what you are worth on the open
market and consider your financial goals.
When I started freelancing in
1979, I figured that every job had to bring me a minimum of
$25 an hour. Today it's $125-plus. Nothing less is acceptable.
2. 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.
3. 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.
4. 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 I bill the client for everything
else, from out-of-town travel to rush messenger charges caused
by my client's schedule changes. I also add purchased research
materials over $50 to my fees.
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 can
work and is in everyone's best interest. But what about the
times you have to work on an hourly basis?
I'll cover that in my next column.
About the teacher:
David Perlstein
has been a freelance advertising copywriter in San Francisco
since 1979. He is the author of Solo
Success: 100 Tips for Becoming a $100,000-a-Year Freelancer,
Crown Publishers, New York.
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