Hourly vs project pricing
Use hourly (or day) rates when scope is unclear; use project fees when deliverables are clear. Both should start from the same sustainable floor rate.
Side-by-side
| Hourly / day | Project (fixed) | |
|---|---|---|
| Best when | Scope fuzzy, ongoing tweaks | Deliverables defined |
| Client likes | Flexibility, pay for time | Budget certainty |
| Your risk | Under-utilised hours; rate shopping | Scope creep if poorly defined |
| Mitigation | Caps, retainers, weekly check-ins | Assumptions, revision limits, change orders |
When hourly (or day rate) wins
- Maintenance, support, or advisory with variable load.
- Discovery phases before a larger build.
- Client insists on time-and-materials and you trust the relationship.
Define the day clearly if you use day rates — especially for NZ clients: freelance day rate NZ.
When project pricing wins
- Outcomes are listable (pages, assets, campaigns, features).
- You can estimate effort from past work.
- You want conversations about value, not “how many hours is that?”
Estimate: expected hours × hourly floor × risk buffer. Formula detail: freelance rate formula.
Hybrid approaches that work well
- Paid discovery → fixed build. Small fixed or day-rate discovery, then a project quote.
- Fixed fee + change orders. Anything outside assumptions is re-quoted.
- Retainer with included hours. Overage at an agreed hourly rate.
How clients hear each option
Hourly can sound cheaper at first and expensive later. Project fees can sound expensive at first and fair later. Present two options when helpful. Packaging tips: how to price freelance work.
Putting either model on paper
Use the quote template and quote builder. Spell out revision rounds for fixed fees and weekly hour caps for hourly work. Common pitfalls: proposal pricing mistakes.
Estimating a fixed fee from your hourly floor
A practical workflow many freelancers use:
- List deliverables and break them into tasks.
- Assign optimistic / likely / pessimistic hours.
- Use the likely estimate (or a weighted average) × your hourly floor.
- Multiply by a risk factor: lower for familiar work, higher for new tech or messy stakeholders.
- Round to a clean number and check it still clears your floor if the pessimistic case happens.
If the fixed fee only works in the optimistic case, either raise the fee, cut scope, or switch to hourly with a cap.
Talking about price without sounding defensive
Lead with outcomes and boundaries: “This package includes X and two revision rounds; additional changes are quoted separately.” Avoid long apologies. If they need a lower number, move to a leaner package rather than the same scope for less. That habit is covered again in proposal pricing mistakes.
Retainers sit between both models
A retainer reserves capacity. Price the reserved hours × rate, or a deliverable bundle per month. State what happens when they under-use (usually use-it-or-lose-it, or a small rollover with a cap) and over-use (overage rate or pause new requests). Retainers fail when “unlimited” sneaks into the wording.
Switching mid-engagement
Sometimes a project fee must become hourly when scope explodes — or hourly must become fixed when patterns stabilise. Put the switch in writing, reset the remaining budget, and don’t pretend the old quote still covers the new reality. Clients respect a clear reset more than silent overtime.