Hourly vs. by project billing practices: Which is better for your business?
Freelancers, creative directors, branding experts and marketers weighed in on hourly vs by project billing practices in the graphic design industry on the RGD LinkedIn Group




1. Michael Barker RGD, Acme Art & Design 

"One of the key differences between a transparent hourly billing model, and a project fee, is relating the fee to the value of the work. A familiar example of pricing on value would be the price structuring models stock agencies and some photographers use that are dependent on end-use...Since becoming an RGD, I have been trying out a totally transparent hourly billing model. As a sole-proprieter, by disclosing my hourly rate, it's difficult to price for value, because I have to justify the accompanying hours to support any fee. I think there are easier workarounds for this for larger firms where you can assign a team with varying billing rates to a job, you have more opportunity to fudge the numbers. Changing from project fees to an hourly model hasn't made any real difference in my project fees (for the moment), but it has increased the transparency of both my working and pricing process (and my paper work!) and I think this has value for my clients.


2. Marc Rogall Prov RGD, Kingston

 "As a freelancer, I give the client stipulations that there are to be no more than 3 rounds of revisions, and indicate when these revisions are going to happen during the process. I also give a ballpark range of hours the project would likely fall into, including any hours I might require for additional learning. This gives the client a ceiling regarding final cost to them, provided we adhere to the stipulations" 


3. Katerina Lyadova RGD, Creative Director, MoPals

"Hourly definitely. In my experience, clients become more appreciative and come to value the designer's opinion more when they know the timer is ticking. It completely eliminates comments like 'I know you are saying it won't work but let's do it anyways just to see what it looks like' and it also adds to transparency: the client knows how much it will cost, how long it takes and what adding extra features will mean for them."


Project Fee


1. Ilise Benun, Founder, Marketing Mentor

"Although there are some exceptions, hourly billing often has the effect of devaluing your services. Clients often perceive hourly workers as "a pair of hands," rather valuing your brain and experience. In fact, I have an article coming out in the HOW Business Annual (next month) called, "Stop Charging By the Hour" which is a primer on how to price based on value. I've been writing a lot on this topic of "value-based pricing" on my blog. Here's the latest post, with an example of how I use the technique with some of my clients. It's not for every situation, but it's worth experimenting with: http://www.marketingmixblog.com/2013/08/value-based-pricing-in-action.html


2. Sherri Gallowitz RGD, Designer & Cause Marketer, G Strategic Branding

"I try to get a fair project fee negotiated up front. On my quote I indicate three rounds of changes included, with changes beyond that billed at my hourly rate... Usually this works pretty well in that it keeps clients conscious of minimizing changes, but not always. Sometimes these changes are beyond the control of the person I'm dealing with, such as when there are multiple authors for a publication, etc."




1. Holly Christine Schmidt Prov RGD, Markham

"It certainly depends on the scope of the client's requirements. I use both hourly and by the project billing. It improves my math skills...and it also builds respect among clients, who appreciate a willingness to be flexible and negotiate without compromising the design work" 


2. Elia Kanaki RGD, Creative Director, Rossul

"It depends on what you sell and how you want to be viewed by your clients. If you sell time and want to be perceived as a necessary expense - then hourly billing is the way to go. If you're selling a solution to a problem and want to be viewed by your clients as a partner who helps them achieve their goals though design - then you should bill based on the value you bring to the table. The second way ultimately requires taking on much more responsibility and committing to an in-depth understanding of the short and long time goals, but it also allows you to create a much more productive connection with the client."


We invite you to add your thoughts on RGD's LinkedIn page


For general information on salaries and billing practices in the communication design industry, check out the CreativeEarners Survey of Salaries and Billing Practices