Freelancer Custom Quoting: How to Quote per Project by Secretly Charging per Hour

by in Articles on 2nd Apr 2010 · Comments

As a freelancer, one of the things you're faced with figuring out is whether you're going to charge by the hour, or by the project. There are two sides to the discussion and both sides will make valid points for the decision to charge one way or the other. But, what if I told you that you didn't have to choose?

Freelancer Secret Custom Quoting
Image credit: Ben Zweig

What if you can charge people for the project, while quoting secretly by the hour? Would you want to do it? Would it benefit you in the long run? That is the issue we will discuss in this article. There are both pros and cons to either method you choose.

The Benefit of Charging Per Hour

Charging by the hour ensures that you will not face the problem of a scope creep because you get paid for how much time you put into the project regardless of the changes. This is especially beneficial if the projects you’re working on are not set in stone in terms of the process and the details of the project.

The Benefit of Charging Per Project

Quoting your clients per project allows you to pad the prices a little to cover any possible scope creep you might encounter with the project. Clients favor this method of cost quotation because they feel safe and do not need to worry about any additional hidden costs they have to deal with later on. They know right from the start how much to budget for the project and what they can expect to receive at the end of the project.

The result is a tie between the two methods. However, fret not; you do not have to choose between the two. You can quote your clients based on the project while still charging by the hour. If we’ve got your attention, read on.

The Best of Both Worlds

It really isn’t hard to have the best of both worlds when it comes to providing quotations that will satisfy you and the client. Outlined below are some key points to take note as to how to get the best of both worlds. So pay close attention and soon you’ll be able to enjoy the benefits of both per-project quotations and charging by the hour.

Having Best of Both Worlds
Image credit: danimal42

Step 1. Estimate the Hours Needed For the Project

Do a rough estimate as to how long the project might take you to complete based on your previous experiences. This will allow you to quote the client a total sum for the project while taking to account the number of hours you will take to finish it and quoting the project at an estimated per hour rate. On average, based on my past experiences, it takes about 15 hours for me to finish designing and coding a WordPress theme. If you’re new to the type of project you’ve been asked to give a quotation for, ask fellow freelancers for advice regarding the number of hours you might take to finish the job.

Step 2. Set an Hourly Rate

Once you’ve figured out approximately how many hours you’ll take to complete the project, you can decide on an hourly rate for that particular project. For example, if you decide to charge $50 for each hour you spend working on the project, and the project will take you approximately 12 hours to complete, the total base sum you start with is $600. However, that’s not the end of it. You have to take into consideration scope creep and the additional costs that might surface while working on the project.

Calculating In the Head
Image credit: troutfactory

Step 3. Work In Extra Costs

Work out the additional costs you might incur based on what the clients expects from the project. If you need to buy stock images for the site, you need to add those costs into your base quotation. If you are building a WordPress site off a pre-existing WordPress theme that costs money to download, you need to factor these costs in as well. If you need to purchase any fonts for the project, these are more costs you need to consider. Add all these extra costs to the $600 basic sum you’ve calculated based on the estimated number of hours of labor you will have to put in for the project, and you have a proper estimate as to how much you should charge your client.

Calculate the Extra Cost
Image credit: stuartpilbrow

Step 4. The Emergency Reserve

Give yourself room for unforeseen circumstances; quote above the sum you’ve worked out as a proper estimate. Although some people pad their quote by 30-40%, the reasonable rule of thumb is to take 10-15% of the full estimate you’ve calculated in the first three steps and add that amount into your final quotation. Remember to inform your client that any work requested for but not stipulated in your contract is subject to additional costs.

Is it unethical to Price Pad? This is a much debated issue that is not as sinister as it seems. Of course there are people who have every intention of making big profits with the price pad. However, the real aim of the price pad is to work as an emergency reserve you dip into only if your original estimation is off the mark. If you up your quote by 10% (cost: $1,000 + pad: $100) and you complete the project ahead of schedule, or if there was no scope creep, you can offer your client a discount. This will kill two birds with one stone. You will have built good working relationships with your clients by making them happy with your service and efficiency while still being able to maintain your ethics.

Pick the Best Fit

Everyone has a preferred method of giving quotes to clients. The most important thing is to be comfortable with the methods of working out quotes to clients. If you prefer to charge by the hour, by all means do so. If you prefer to quote per project, don’t hesitate to do it that way. We hope that you can benefit from the ideas in this article and consider applying the steps we’ve mentioned here the next time you have to present a quote to a client. Find out what works best for you.

Weighing Your Options
Image credit: Matt DeWitt Photography

Discuss with Us

Are you already using the steps we’ve mentioned in this article when calculating your quotes? Feel free to join in the discussion regarding the ethics of price padding, or to promote either one of the methods of quoting clients with us.

Aidan Huang is a web enthusiast and ingenious blogger who loves all things design, interesting and technology. He is the editor-in-chief at Onextrapixel and have founded several other interesting blogs. Do keep in touch with him on Facebook and follow him on Twitter.