There is a discussion heating up over at the Creative Freelancer Conference LinkedIn Group started by this question:
Which method do you use to charge clients? Is it based on projects, by the hour or on retainer?
Creatives are commenting on both sides – some for project-based fees and some for hourly pricing.
I agree with the line of argument that supports project-based fees instead of hourly rates, which is addressed extensively in "The Designer's Guide to Marketing & Pricing." But I think pricing goes far beyond project-based fees.
In my book in progress, "The Creative Professional's Guide to Money: How to think about it, how to talk about it and what to do about it" (for Spring 2011), here's one of the ideas I'm working with:
The most important element in your price is not necessarily how you present it. It's the perceived value of your services to your client or prospect, and that you cannot determine without talking to them. Sure, you can give a price based on what you need to earn or what the job is worth to you. But if that number, whether it's an hourly rate or a project fee, doesn’t fit with what your client has in mind, the conversation won’t go further.
The operative word here is "conversation." It is through conversation that you will find the overlap between the fees that fairly compensate you and what your client is willing to pay, rather than simply setting prices for your work in a vacuum. That’s why, underneath it all, dealing with money as a creative is in large part about relating to other people. And if you have a problem with that, you'll have a problem with the money part.