How to price freelance projects for maximum growth and joy
I price jobs by the project, not by the hour. That allows me to maximize value and enjoyment both for myself and for the client. And I include some unusual factors in my pricing strategy to maximize my happiness.
Why price by the project?
If you’re a freelancer, charging by the hour has significant problems:
- It creates an incentive for the freelancer to go slow.
- It causes the client to wonder if you’re actually worth x dollars per hour.
- If enables clients to quibble over whether you actually spent the hours you said you did.
- It makes it too easy for clients to compare you to other freelancers with less talent, or who work slower.
- Time tracking is annoying. It’s particularly difficult when you’re dipping in and out of projects, putting in a few minutes here and there and wondering how to charge for it.
On the other hand, if you charge by the project:
- Your client knows exactly what they will pay, and can budget for it.
- You know exactly what you will get paid.
- You can get paid for value created, not for hours spent. This favors people with more talent, skill, and experience.
The smart way to do this is to ask for a significant portion of the cost (one-third to one-half) up front and the rest on delivery of a few milestones. And of course, you should build safeguards into the contract that allow you to call out and charge more for out-of-scope requests.
Creative pricing strategies
Certain projects are modular and repeatable, requiring the same amount of work each time. For example, for me, a book idea development and title project needs one 90-minute meeting and a few hours of followup work. A writing workshop requires about five hours of prep and three hours of delivery. I have standard prices for those projects.
Larger, less well-defined projects are different. Here’s how I estimate project costs for those projects: I estimate the necessary hours of work and multiply that by a high hourly rate that reflects my experience and value. I know that I have a tendency to underestimate hours but the rate is high enough to compensate for that. Generally, when a project needs extra work compared to what I expected, I still feel like I’m getting compensated fairly.
But the hours-times-rate calculation is not the end of the estimate, because not all hours are equal.
I charge more if:
- The project is of high value to the client.
- The client is rich and is insensitive to a relatively higher price.
- Because of factors that I can’t accurately estimate, the project has a high risk of requiring lots of extra time.
- The client seems to be an asshole. (I generally prefer not to work with assholes, but if the price is high enough, I will consider it.)
- The work is boring. (Again, I probably won’t bid on such projects, but if I need the work, I’ll consider them.)
I may charge less if:
- The work is for a good cause.
- The client is likely to become a useful reference or generate lots of referrals.
- I can create something that is highly visible and impresses other potential clients.
- I can increase the diversity of my client base.
- The work seems fascinating.
- I like working with the client.
- I get the chance to create something awesome.
- I get the chance to learn something interesting.
- I can create something or gain some experience that I will be able to use for future engagements.
Consider what this kind of thinking does for your future work. Your interests and your clients’ are most likely to intersect on projects that are of high value to them, and are interesting to you. That means you’ll spend more of your time learning valuable things, working with interesting people, creating cool stuff, and making clients happy (and referable). And you’ll spend less of your time on tiresome drudgery.
This is how you grow as a freelancer — not just in hourly rate, but in knowledge, experience, and reputation.
So don’t treat all your work hours as if they’re the same. An hour of joy, creation, flow, and learning is worth more than an hour of toil. So you should price it accordingly.
This is great. Very useful to me and made me realize I am not crazy for not wanting to work with certain individuals :). Also encourages me to get working on a solid contract. Thank you.