Back in 2022, I switched from charging project fees to billing on a time-and-materials basis. It’s been transformative on lots of fronts.
Project rates had worked ok but I’d found it difficult to get the balance right. I’d never felt comfortable with value pricing, either.
The popularity of value pricing has led to pricing by time getting a bad rep among freelancers and independents, so I’d avoided it. Sanctuary Computer’s pieces on value pricing and quoting technology strongly resonated with me, and I felt like this was an option worth exploring.
Benefits of time and materials
Switching to time-based quoting has been a revelation. Here are some of the benefits:
Everyone fundamentally understands the concept time
Whether that’s pitching a week-long discovery period or a three week design phase, I’ve noticed that clients instantly understand that things take time. The concept of time can be lost in a flat-fee proposal – perhaps intentionally – even if it’s broken down into lots of tasks.
In practice, this has meant they’ve accepted time estimates more readily as it’s easier to understand that a task might take a certain amount of effort.
There’s no scope creep or over/under-charging
There’s an inherent flexibility to charging by time. I’ve also found that describing additional features in terms of hours is much easier than the dreaded ‘out-of-scope’ conversations.
Delivering a fixed-cost quote requires a lot of upfront work
Instead of this, I now have a call with clients and usually suggest a short discovery phase as the first engagement.
At the end of the discovery phase, we’ll decide on the best next steps and estimate the days needed for future phases. We adapt the scope/features as we learn more.
When I used to quote flat fees, I’d feel forced to fix the scope before we know what the problems are/solutions might be. This increases the risk of ‘out-of-scope’ conversations or – worse – delivering something we know isn’t the best solution because we fixed the quote before we started working.
A small, flexible initial piece of work lets us experience working together without too much risk.
My calendar is easier to plan
There are only so many days in the month, so I have a decent handle on my availability.
This is helpful, as I commit to not over-selling my availability.
This has also meant I’ve found it much easier to squeeze in time for requests/small projects. When I quoted by project, I felt I had less clarity in my calendar and found fitting these things in more difficult.
Income is easier to predict
I bill every month in arrears for the work completed that month. That means:
The chance of delay for a milestone-related payment is eradicated as I’m paid when I work (though delays can still happen, of course)
The billing schedule is totally clear and predictable for everyone
It’s quicker to see whether a project is viable
When I charged project rates, it would be very tempting to say “yes” to a small project that wasn’t viable. When I put together an estimate in time, it becomes crystal clear when one or more phases are unrealistically short or difficult from an availability perspective.
On the flip side, I’ve also been able to take on some tiny projects. Converting a small budget into hours gives real clarity on what’s realistic, which can be a useful lens to view a project through.
Wrapping up
On balance, I’ve found this billing method to be a positive change. It’s fair, easy to understand, and overall a good fit for the transparent way I strive to run my studio.
