Respond to Questions About Your Hourly Rate

by Ilise Benun

Creatives get this question all the time and often give the easy answer: a number, unadorned. $50 or $150 or $300—the number itself is irrelevant. What’s relevant is that it requires no conversation.

It can be tempting to answer this way, even a force of habit, especially if you don’t like talking money. But, when it comes to something as subjective as creative services, talking about hourly rates (or any other quantifiable unit of measure) diminishes the perceived value of your talents, cheapens the enterprise and turns it into a commodity that your prospect can get for less (often much less on the Internet).

If you respond to the question with your hourly rate, they may start immediately comparing you to other creative professionals, despite stark qualitative differences, essentially comparing apples to oranges. Or they may stop listening to the carefully constructed explanation of your creative process and start calculating what they think it should cost or, worse, how much you earn, perhaps compared to what they earn. Don’t let them go there.

Unless you’re talking about on-site freelancing, which is commonly paid hourly, it will serve you best to respond to this question by proposing a project fee as an alternative and framing it as “good news” for them, which it actually is. Here are a few variations to try:

  • “I don’t charge per hour because it’s not good for my clients. What’s far more helpful to you is to know what this is going to cost. We’ll agree on a scope of work and a fee for it and you’ll know what you’ve got.”
  • “We quote by the project, not by the hour, and I’m going to come up with my best estimate and I will give you a number, a fixed fee, so you don’t have to worry that once things get under way, I’ll throw up my hands and say, ‘Sorry, but now the meter is running.’”
  • “I don’t bill my time that way. It’s far better, for me but especially for you, to give you a fixed fee. It’s all too easy for a simple project to turn into more hours because the meter always feels like it’s running. That way, you don’t go into a project wondering how many hours are going by. Instead, you know this job is going to cost $X with these stipulations. You have a clear line item in your budget, barring some unforeseen addition of work or scope creep.”
  • What Do They Really Want to Know?
    Sometimes, when a prospect asks first for a price or your hourly rate, that’s not necessarily what they want or need to know at that moment. To find out what is, you must listen for the question underneath. Do they want to know how you bill? Are they asking about your process? The amateur clients especially may be unfamiliar with the way creative services work; others are trying to get a sense of where you fit in the world of creatives.




    Talking about hourly rates (or any other quantifiable unit of measure) with clients Can diminish the perceived value of your talents, and cheapen the enterprise, turning it into a commodity that can be found for less

    Illustration courtesy of Branden Vondrak


    Quick Tips!
    1. User experience design consultant Mona Patel believes, “It’s not smart to discuss actual prices too soon, because once you do, you’re both stuck with the numbers you’ve put on the table. The longer you wait, the more information you gather, the more accurate your price will be. By talking about the project and its scope without mentioning price, you are essentially buying yourself more freedom in the pricing. If you name your price too soon, it will be harder to negotiate down, even if you want to.”

    2. If you take the lead, you can engage your prospect in a different conversation. In fact, be like a politician: don’t accept the premise of the question. Instead, direct the conversation where you think it needs to go before you talk about price— essentially positioning your price before you give it.

    3. Mona recommends this response to buy you time: “I would be happy to provide a competitive price; however, I can only develop that once I understand your requirements better. May I ask you more questions?”


    Dig Deeper!
    1. For more information like this, pick up a copy of Ilise Benun’s new book, The Creative Professional’s Guide to Money: How to think about it, How to talk about it, How to manage it.

    2. Check out Ilise’s blog, The Marketing Mix, and sign up to receive her bi-monthly Quick Tips via email. Plus, get freelancing tips.

    3. Want to try a free mentoring session? Sign up here.


12 thoughts on “Respond to Questions About Your Hourly Rate

  1. Zach Inglis

    I completely disagree to fixed project fees. The problem with this is that:
    a) Often they will want to know how you came to this figure, and that point you discuss that it’s by hourly rate.
    b) Chances are they’ve shopped around. They will compare you against other quotes they have. So by hour still doesn’t matter.
    c) Scope creep is a huge problem with fixed hours. Someone is going to feel an issue when priorities or features are changed down the line.

    Ultimately if your reason for not taking on hourly projects is because you think you’ll be beat by someone cheaper you have far more problems at hand.

  2. James Young

    I agree with Zach 100% about fixed fees.

    Nobody knows every element of a project which makes it almost a nonsense to try to quote as such to be honest. Projects change, they flow, requirements and technical issues alter, get added to, removed etc.

    We wrote a big blog post on why we use feature based development to create more accurate quotes to our clients. I’d love you to read it and let us know your thoughts.

    http://offroadcode.com/blog/2011/9/14/how-we-use-feature-based-development-to-give-better-quotes/

    James.

  3. Chris Garrett

    One other issue that’s not been mentioned is post-project support. We’re often put on small support retainers with our clients (4-5 hours a month). A client needs to know our hourly rate before the project commences to ensure that future support is going to be sustainable, even though the upfront design/build of a project may be done on a fixed cost.

    There are plenty of development shops that will argue support retainers are un-necessary, they’re generally pretty naive…

  4. Lisa Loving

    I agree with Zach and James. I am planning on freely stating my rates on my website soon as well as explain my process more clearly. Fixed rates are not a good idea, projects are constantly changing and growing into something more. From a logo to a business card, to a website then even product photography. I’ll give an estimate on how many hours a project could take but I will always give an hourly rate and never a fixed.

    Lisa

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  8. Courtney Eliseo

    I have to disagree with the previous commenters. First, your fixed fee shouldn’t be entirely based on your hourly rate. If it were, I agree with the notion that the hourly rate is easily discernable from the fixed fee. However, for me anyway, my rate is based on all sorts of things depending on the project—the project specifics, the timeline, the size of the company involved etc. A fixed fee definitely doesn’t make a whole lot of sense if you’re simply going to multiply your hourly rate times ten to get to a final number, which is why it shouldn’t be that simple. Second, I agree that scope creep can definitely be a problem in our line of work. However, that’s exactly why you need to have an air tight contract in place that outlines specifically what that fixed fee includes, and what happens if services are added or changed. That way when the client signs with you there is no question as to how the financial aspects of the project will be handled.

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  11. Paul

    If a situation turns from bad to worse and litigation seems to be the only solution, a trail that shows an hourly rate will be of great benefit in court if one expects any compensation for time spent.
    Most people expect that experienced people will work more efficiently.

    I really enjoyed the part: What Do They Really Want to Know?
    Thank you for great information.

  12. Creative Junkie

    Great subject. Fixed fee is the only way to go. Hourly rates devalue the profession. It’s all about the VALUE you bring to the table, not the number of minutes you spend. This is how I protect myself from scope creep and excessive revision cycles in my Terms & Conditions in my contracts, see below.
    Revision Policy & T&M fees:
    Approvals are needed at certain milestones throughout the life of the project. If the number of substantial client edits exceed 3 revisions, the total estimated hours allotted for each task will increase. This additional time needs to be captured and billed at a $90/hr T&M flat rate (Time & Materials). Typically most design projects do not require more than 3 revisions to finalize. Note: Clients will be notified well in advance before incurring additional fees on open projects.

    Time for a story. I recently spent less than 30 minutes designing a logo for a long term client. I nailed it and she LOVED it. I asked her what it was worth to her to have it completed, and have her boss squeal with delight. We agreed it was worth at least $1000. She agreed and paid with a smile. If was working hourly, I’d only have gotten 50% my T&M rate: $45 bucks. Long live fixed fees!

    – your Creative Junkie

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