Project vs. Hourly vs. Retainer — How should freelancers bill their clients?
If you’re a freelancer or run an agency, the age-old topic of how to bill your clients is something you’re constantly thinking about. Many people feel very strongly about billing hourly, while many others feel quite the opposite, and believe you should never bill hourly. I’m pretty sure, though, that the one thing we can all agree on is you should charge more, like a lot more (a topic for next post!). No matter what you need to have good cash flow, wine is getting expensive with all this working drinking from home, after all.
Here’s how we think about billing clients and why as with most things, it pays to be flexible.
This is when you track your time, and bill the client on some specified interval, like at the end of each month. Payment timing and terms are negotiated when you start, and payment is after the work is done.
My personal “get to know you” type of project, this helps to control costs for the customer and control scope for the project as an agency. The key here is being really good at scoping.
The elusive retainer. They aren’t always that great to be honest, and can be really hard to sell. But when they are a fit, it’s like hourly billing, with better payment terms and a prenegotated number of hours.
So what do we do at Mayven Studios? Well, the answer is all of the above. Why? Because clients prefer it.
As a freelancer or agency, you are usually the small fry relative to your clients. This means you have to negotiate with them and meet them in the middle on things like billing and payment terms. Maybe it’s really hard for your client to get their boss to approve a retainer, but they will use up way more hours and pay on time. Maybe they will pay 10% more for a fixed rate than they might have hourly, just for the risk reduction.
Unlike selling a physical product, like a house or a car, when you’re selling services, you have the luxury of being flexible with your pricing if the relationship is still mutually beneficial.
The most important thing is to create a relationship between your client and your business and cash flow needs. You want (need) to get paid in a timely manner, and they want the work to be on time and done well. The bureaucracy can sometimes get in the way, so best to build a good relationship with your client and work closely together to avoid obstacles along the way.