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Inquiring minds want to know: Should I charge by the hour or by the project?

There are, generally, two business models that service-based businesses work from. The first is based on an hourly rate. A business quotes a client a rate of, say, $75 an hour, and the client is then able to request the number of hours in their budget. The second is based on a package or project rate. In this business model, a client and business work together to detail everything that needs to be done, and the business quotes a rate for the entire project.

New businesses, particularly freelancers, are forever debating what type of business model is best, but there are pros and cons to each. Read on, and read to the end to learn what we think the best option is.

Pros and Cons of the Hourly Rate

An hourly rate has some major benefits and situations in which it’s most useful:

  • It’s a small amount of work, such as website updates or editing a single page of content.
  • It’s a new project type and you’re not certain how much time it will take.
  • You’ll get paid for the exact number of hours you work on the project.
    • This helps you get paid more accurately–instead of allowing yourself to imagine a project will only take three weeks, though it will really take four, you’ll be paid for the exact time it does take.
  • The requirements and goals of the project are somewhat unclear. If you quote a project rate, in this case, you could easily end up doing more work than you anticipated.

But, an hourly rate does have cons:

  • You’re trading time for money. You should be trading value for money.
    • It’s also worth noting that as you become faster and more skilled, you’ll be doing the same amount of work in less time. If the average time to complete a job, industry-wide, is three hours, but it only takes you two, you actually lose money charging by the hour.
  • I’d argue this makes it somewhat more difficult to change your rates, as the client will very blatantly receive charges per hour–so when you decide to double your prices, the change will really stand out.
  • This isn’t exactly a con, but you must accurately track your time to stay above-board when reporting to clients.

Pros and Cons of a Project-Based Rate

The main pros are:

  • The client is given a total cost up front. There are no hourly or hidden fees to surprise them later. They are then able to budget for 50% down and the rest in payments (or however you’ve agreed to set up the payment plan).
  • The client is focused on the perceived value they’ll receive, not the amount of your time they receive.
    • This also helps keep freelancers and other business owners focused on providing strong value.
  • It’s easy to raise rates because clients are not focused on what they pay you per hour.
  • If you’re particularly fast or particularly slow, it doesn’t matter–as long as you complete the work by the deadline.

Cons

  • Project rates require discipline to keep both parties happy–which means setting up a clear contract. The contract should clearly state what your business will provide, by what date, what revisions are allowed, etc. Otherwise, you could end up with a real mess–a client asking for 20 revisions or additions and a contract that doesn’t put a limit on those changes. In that case, you could wind up losing a significant amount of time.
  • If you’re not careful, you could end up undercharging yourself when the amount of work you initial thought was involved was a lot more when you actually go into it.

What about Packages?

There is another business model that plenty of companies use, likely in addition to hourly or project rates: packages, though they’re more often called retainers. These are typically charged by businesses that provide some sort of ongoing service. For example, CloudZen Designs provides website maintenance. For a set fee each month, clients receive maintenance that will be completed regularly. If we find a problem that will take significantly more time than their retainer fee covers, we bill by the hour.

Packages are useful in grouping services that clients will likely need on an ongoing basis. It’s sort of a combination of hourly and project billing, as the package is often determined based on the number of hours you think that ongoing work will take, but it is billed as a single monthly fee.

Value and what CloudZen Designs thinks about the different business models

CloudZen Designs is focused on providing value. We want to help businesses achieve their goals and look good doing it. While we use project rates for very specific cases (such as SEO and maintenance packages), we always quote large projects with a project rate. We aim to be transparent in pricing, and we want every client to come to the end of the project feeling they received even more value than they’d hoped for. And that’s probably what you want to do, or you wouldn’t be in business. Keep that in mind, and remember–nothing is permanent. If you try one business model and it doesn’t work for you, try another, or combine the two in a way that fits your particular business and industry.

For more reading, check out this post on Bidsketch. It’s a great read that digs deeper into the psychology of client decision-making.

A new or redesigned website doesn’t just need to be attractive, usable, practical, and responsive—it needs to provide clear, straightforward information about the businesses’ services, information about the business itself, and convey a sense of authority so users feel they can rely on the business for information about their product or industry.

The Basic Copy

A website does this in a couple of ways. First, consider the basic copy. Content that is sloppily written, with excess or imprecise language, misspellings, or grammatical errors, is the first red flag readers notice—and it’s one of the easiest to avoid. After all, you want your reader to continue browsing your site for as long as possible. Unfortunately, many consumers will leave the site after finding a second or third error, because they’ve begun to be concerned that if your business can’t manage correct spelling and grammar, incorrect information about your product or service may also be present.

The Message

The second part of well-written content is the message itself. Grammar and mechanics are easy to fix if errors are present, but the content is where your expert knowledge, perhaps with the help of a professional writer, comes in to play.

For example, when visiting a new site, a user may first go to the “About Us” section. The information contained in the “About Us” section shouldn’t just function as a biography of the owners or a history of the company. Instead, purposefully chosen information can immediately instill in the reader a sense of trust. Instead of providing the minimum number of details, developing a narrative about the company, its founders, its mission, and the ways in which it is moving toward the future can go a long way toward helping your customers identify with who you are and what you do. Why waste the opportunity?

Dynamic Content

Much of the content above is semi-static, that is, it won’t change very often. But there is a third area of content—dynamic content. This type of content is usually on a blog, which will be updated every month, every week, or maybe even every day. Blog posts are no longer journal-type entries, though those may be used occasionally. Instead, blog posts have become more like proper articles. They are generally longer (from 500-1000 words) and are often written from an expert’s perspective.

 

When you take combine the need for regular blogging to increase SEO and share information with the need for accurate, well-developed copy on the rest of the site, you’re looking at a lot of words. All that content has to come from somewhere. Your web designer will, ideally, work with a professional writer to create a usable design and fill it in with content that’s solid. Though content marketing is much more complex than just a good website, that’s the first place a consumer will often be exposed to your web marketing.

Examples:

 

1. Well-written content provides real value to your customers:

A new visitor/consumer comes to your website. They peruse the “About Us” page, look at the products or services you offer, and find everything well-written and proofread. Your blog functions not as an attempt to sell them something, but as a real effort to provide information that will help them.

2. That well-written content builds brand authority:

When your brand name comes up in conversation or when the consumer sees your brand in other marketing campaigns, they acknowledge your brand as an authority in the industry, one that’s genuinely trying to provide as much assistance as possible.

3. That authority builds brand trust:

When a question comes up regarding a related service or product, the consumer trusts that the information provided by the authority (your business) is accurate. When it’s time to make a purchase decision, the consumer remembers your company as a reputable one whom they would trust to provide not only strong information, but a solid product or service.

 

For just a moment, imagine this went another direction—a new consumer visits your site, finds spelling or grammatical errors, or finds a blog that hasn’t been updated in a year, even though you’re supposed to be an expert in your field. Worse, maybe your website doesn’t have any information about who you are and doesn’t take any steps to help the consumer feel comfortable with what you provide. What do you think the chances are they’ll stick around long enough to do business with you?

If you have any questions about content or content marketing, web design, or how a web designer can help you navigate these important issues, contact CloudZen Designs. We can schedule an analysis of your site, whether you need a new website, a website redesign, or content help.