Satisfy Clients and Keep Your Freelance Biz Whole with “Hybrid” Pricing

Ask any freelancer; pricing projects is a bit of an uncertain science. It requires a degree of research. Before you can offer a client quotes, you need to gather enough information from them so you’re clear on everything involved. Typically, most freelancers bill their clients in one of two ways:

Flat project fee
When you charge a flat rate that includes all things you’ll do in relation to the project.

Hourly rate
When you track your time and bill your client an hourly rate for all the hours you’ve spent on the project.

Laura Spencer recently wrote a very helpful article about flat rate project pricing vs. billing by the hour. As she shares, generally a project rate reigns as most attractive for both clients and freelancers. But there are times when billing by the hour stands as the best option. I’ve run across all three of them (coaching/consulting gigs, projects with unclear scope,  and onsite work) and agree applying an hourly rate works best in those scenarios.

But what about clients who want project rates even though they’re unclear about the scope of work and the extent of your involvement?

It happens, usually because they’ve got a specific budget to abide by.

That’s where a hybrid pricing solution can help you satisfy the client’s needs and keep yourself whole.

Hybrid Pricing: How Freelancers Can Combine the Best of Both the Flat Project Rate & Hourly Rate Worlds

By gathering as much information as you can about the project and what it will require of you, quote a flat project rate, but set a limit on the number of total hours you’ll spend on the project for that rate.

How to do that:

1. Estimate the time you’ll spend on all aspects of the project.
2. Calculate your project rate by multiplying your desired rate per hour by the hours you expect to spend.
3. Add language to your proposal that states the project rate includes all work related to the project “not to exceed X hours.” X, of course, is the number of hours you based your flat project rate on.
4. Add language to identify that any hours beyond that threshold will be billed additionally at $X per hour. X = your desired rate per hour for that overage.

You’ll also want to include information about how and at what point in time you’ll inform your client if your time on the project is exceeding the hours allowance.

For example, here’s some of the  hybrid pricing language I use when approaching projects where I believe it will be the best fit:

Project rate includes all work related to the project (info gathering, review of materials, collaboration, writing/revisions) not to exceed X hours in total.

Work beyond X hours will be billed at an hourly rate of $XX per hour.

If time appears it will extend beyond X hours, I will notify you before conclusion of the X hours so you can decide if  you want me to continue with the project and bill additional hours at the hourly rate stated above.

If the project goes beyond the hours cap in the initial project rate, I will provide a detailed project time report when submitting my invoice to you. 

[Please note, this is an example of what I’ve used, but you should consider checking with a legal professional before you present any contract language to your prospects and clients.]

While I think pricing will always remain a challenge for freelancers, it doesn’t have to be all or nothing when considering flat project rates vs. billing by the hour. You really can appease clients who need to know dollars and cents up front, and at the same time minimize your risk of accidentally working for far too close to minimum wage because you underestimated the time a project will require.

Your turn – In what situations do you think hybrid pricing could work for you and your clients? If you’ve found other ways to creatively price your work, I’d love to hear about them. Please comment here to share. 

By Dawn Mentzer 

Want to read more about pricing? Here are a few more articles on the topic:

Why You’ll Fail at Freelancing if You Suck at Math by Jennifer Mattern

20 Pricing Principles for Freelancers by Laura Spencer

The Complete Guide to Setting and Negotiating Freelance Rates by Tom Ewer