Hourly Rates

The majority of American freelance developers and designers bill by the hour. At first, it seems like the most obvious way to do things… divide your former salary by 2000 (a year working 40 hours a week adds up to about 2,000 hours), inflate the result to compensate for the administrative, sales, and time-off overhead, and you’re good to go. And because you’re billing by the hour, if the client decides to change course midway through the project, you’re protected.

You’re pretty much a faucet; you can be turned on, and you can be turned off. When you’re plugged in to your keyboard (or telephone) and doing stuff for your client, the meter’s running. Every few weeks you sum up your time logs, multiply them by your rate, and send them over to your client.

Pros:

• It’s normal. Clients who have hired freelancers in the past expect to pay by the hour.
• You get to charge whenever you’re on the phone, in a meeting, or tapping on your keyboard or mouse.
• You can take days off or work half days without getting into murky discussions like you might with things like weekly billing contracts.

Cons:

• You’re penalized for your experience. If you’re 2x faster than a more junior person, you’re billing half the time they are.
• Clients tend to like to comb through invoices, and aren’t usually happy to see “non valuable” entries like meetings or bug fixes / design tweaks.
• For sizable projects, it becomes very tricky to accurately gauge a realistic hourly estimate.
• You need to be vigilant in how you track time, lest you undercharge.