A few people have emailed me asking about how to charge for copywriting work (magazine rates are usually set by the publication so there's less wiggle room). Some freelancers insist on billing by the hour or by the project. I do either one depending on the project specs.
Here's why.
If you charge by the hour, your compensation is practically guaranteed to scale with the size of the project (I say practically because clients don't always pay us as agreed, but that's another story). If the client wants a million little revisions, then you can happily provide them knowing you will be paid accordingly. For some clients, this means they will be very clear about what they want up-front to minimize back and forth later on. Others don't seem to realize that their indecisiveness is costing them money.
When the project's scope is likely to evolve over time, I suggest billing by the hour and invoicing monthly so that I can get paid for the work I've done even if the project is awaiting revisions or gets postponed. (Some clients go for this, and some don't.)
BUT...
Billing by the hour also means there's no incentive to be efficient. Your income is limited by the number of hours you work, so you're essentially a wage slave.
Say I've written a million press releases and could write a killer release in less than two hours. But it might take another freelancer twice as long to write that same release. She would earn twice as much for something that theoretically has the same amount of value to the client. Sure, she might have taken her time to craft something really compelling and concise, but she might also be less efficient because she's not as experienced at writing press releases. And some clients don't like hourly rates because they don't really know how you're using your time.
So, for a project that has a very defined scope (such as a press release, a sales letter, or a blog post), I try to set a flat rate that is fair to the client and, if all goes smoothly, still allows me to earn more than my hourly rate. The client likes knowing they will stay within their budget and I like knowing exactly how much I'll earn from the project.
The thing to be careful about with flat rates is those clients who like to spend lots of time on the phone or email discussing the project or requesting endless revisions. This can seriously cut in to your income, so I try to be polite but not too indulgent. And usually the flat rate will include a set number of revisions, though I've been known to be lenient about that because I want the client to love the finished product.
What about you? Do you prefer to bill by the hour or by the project?
Flickr photo courtesy of suburbandollar