When should you bill hourly?

You can't offer fixed prices every time. Actually, I disagree, but there are situations where hourly billing does make a bit more sense than others.

If you don't know what you're doing1.

If you know that the client is going to change their mind over and over again2.

But really, the only time when it's OK to offer hourly billing is when you include it as one of a set of options.

I'll speak more on options in a few days, but the idea is that your options let you spread the risk of the project. Some (not many) clients are comfortable with risk. Others are risk-averse. Likewise, each project has risk for you - how certain are you that you can deliver something amazing?

So hourly billing is useful as a low-risk-to-you-high-risk-to-the-client option. If the project overruns, if it turns out to be difficult, the client pays extra and you're not out of pocket.

But, as I say, risk-averse clients are quite rare.

Take action: How do you price your projects?

  1. Although what you're actually doing here is asking your client to pay for your learning. Maybe you're comfortable with that. I don't know if your client will be.
  2. Of course, you should stipulate that the client gets 5 revisions. Or all revisions must be submitted within 30 days of the start of the project. Because you're the expert and should be in control of the project. But if you don't want to take control of the project and want the client to run you all over the place, then bill hourly.
Rahoul Baruah

Rahoul Baruah

Rubyist since 1.8.6. Freelancer since 2007, dedicated to building incredible, low-cost, bespoke software for tiny businesses. Also CTO at Collabor8Online.
Leeds, England