Should Freelancers Sell Their Time?

Today’s edition of Wishful Working is a 4 minute read.

Hello! This week’s newsletter is a follow up to last week’s edition. If you missed it, here’s the link, and here’s the TL;DR:

Should freelancers track their time? Yes.

Why do I track my time?

1. It makes estimating easier

2. It helps me understand my true hourly rate

3. It shows me where I’m spending my time

4. I ❤️ data

5. It’s a habit from Before™

You may or may not have noticed one big reason missing from my “why” list: 

“I charge clients an hourly rate.”

That’s because I don’t. At least, not usually. Here are three reasons I don’t charge hourly — and one reason I do (sometimes).

1. Charging hourly limits your true hourly rate

When you charge an hourly rate, you’re essentially putting a ceiling on your earning potential. Charging hourly can even have a penalizing effect if you start completing projects faster due to efficiency gains.

When I charge a flat-rate fee I can be rewarded for my increasing expertise and efficiency. For example, my first $500 article for a client might take me 6 hours ($83/hr), but my fifth article for that same client might only take 3 hours ($167/hr) because I’ve gotten familiar with their brand, tone, resources, style guide, etc.

2.  Project rates are simpler and more predictable

I find per-project billing so much simpler than hourly billing. It’s easier to estimate for new projects, and expectations are usually clearer because you have to discuss exactly what is included in the fixed price. I also like that I don’t have to worry about racing the clock or asking a client to approve additional hours when I’m using fixed rates.

3. I don’t like selling my time

There are only so many hours in a day, and I just don’t like selling them off. 😂 With hourly rates, your income is directly tied to your time investment. If you charge by the hour, the only way to earn more is to work more.*

🤢 No thank you.

Project rates uncouple my work from the constraints of time and shift the focus to the end product and the value I’m providing. 

*You can also raise your rates to make more, of course, but I find increasing my hourly rate much more difficult and uncomfortable than increasing project rates. Maybe that’s a me thing, idk.

And here’s my one reason for occasionally taking on an hourly project:

1. Sometimes, hourly billing just makes the most sense

I know, that’s vague. Here are some scenarios I’ve personally been in where I’ve chosen to estimate and bill based on an hourly rate:

• When the scope is unclear or unpredictable: Scope creep on a fixed rate project can kill your true hourly rate, so you might want to think about charging hourly for certain types of projects. 

• When working with an agency: Most agencies bill their clients based on hours worked, so I have charged an hourly rate when working with agencies. It’s still not my favorite, but it can be worth it if you partner with agencies that pay well and provide consistent work.

• When working on a retainer: Retainers aren’t strictly hours-based (they can also be deliverables-based), but hours-based retainers can be a great way to work with clients. They allow for a bit more flexibility than project rates, which can be nice if you’re providing a variety of services or if the clients’ needs change frequently.

I still run into “WTF should I charge for this? And HOW?” situations on the regular, but I hope this helps a bit. I’m always happy to chat through specific $ questions — I know it can be awkward. Shoot me a note any time!

See you next week,

Kara