Package Pricing vs. Hourly Rates - Which to Choose
When you're deciding how to price your work for your clients, it’s not always easy or straightforward. By charging an hourly rate, you are setting the standard for how valuable your time is which can give you a bit of flexibility if you're not sure how long a project will take. On the other hand, if you are able to outline the scope of work ahead of time, offering a package price may be best - some clients even prefer this because it tells them exactly what to budget for and what to expect.
Whether you're a new freelancer, side-hustler, or entrepreneur it's always smart to have a firm grasp on how much you want to charge and how to hit your income goals. There's nothing worse than being unprepared when a client asks you how much you charge and you throw out a low-ball number. Then, your client will expect your future work to cost the same, which essentially puts you in a box that's hard to break out of once you set that standard. In order to avoid undercharging, here are a few things to consider when deciding if package pricing or hourly rates are best for you.
What type of work do you do?
What kind of work you do is a huge factor in the pricing formula. As you know, time is money and you want to price in a way that makes the most of your time. So if you are a creative, say a designer, and your process can vary greatly from project to project, then charging an hourly rate is a good idea.
On the other hand, it might look different for you if you're a web designer and very experienced. Maybe you know that a website takes you exactly X amount of hours to design and you prefer a flat rate since you don't want to penalize yourself for being a quick and efficient worker.
So remember, think about the type of work you do along with your level of experience. Are you experienced and efficient? Maybe try set project rates for your clients. If you're new and not sure how long your projects take (or if it just varies greatly from client to client) try an hourly rate that you feel good about. It's always a good idea to give your clients an estimate of how many hours a project will take based on the deliverables, but let them know that extra requests, edits, etc. will cost more.
What is your experience level?
Again, if you are highly experienced, working on an hourly rate can backfire if you are very fast and efficient at what you do. But just because a project doesn't take you as long as someone with less experience doesn't mean you should undervalue yourself. So how do you avoid this? Charge a package or flat rate. Someone who knows that you are an expert and is serious about working with you will probably not question your rates anyways. Just give them a fair heads up about where your rates start at so when they talk to you more about the project, you'll both be on the same page
To reiterate here, if you are charging a flat rate, it's a good idea to know exactly how long something will take you. This way, you don't end up working so many hours on a project that you feel like wasn't even worth your rate one you finish. If you are new to freelancing and come from a more traditional 9-5 job, it may take you some time to figure out how long your tasks will actually take you. One of the benefits of contracting out work and working for yourself is that you have more flexibility and control of your time -- think about how many interruptions can happen at a traditional office, including meetings, calls, your boss calling you into their office to chat. So give yourself some space to evaluate how much time you need to successfully complete your work, and then determine how much you would like to be paid for it, and go from there. Pricing your work is a learning process, but after some trial and error it will pay off for you in the long run in terms of money and confidence in your business.
Ultimately, the goal is to feel valued in the way you get paid. Remember, too, that in many cases your value is not dependant on your time, but your expertise. So, what is your expertise worth to someone else?
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