The Endless Debate: Fixed Price Services vs Hourly Rate

Recently, I bought a microphone so my YouTube videos can sound less like I’m trapped in someone’s dark, bone-chilling basement.

Months ago, I was excited about using it. It took over two weeks to get here and once it did I went through the entire process of setting it up only to realize it needs a power source and an extra cord.

Nowhere on the page for buying it was this mentioned. They just expected people to know. (Pro tip: always assume someone doesn’t know your industry when you’re selling products or services.

Instead of being excited to use it, I now have to spend more money, wait two weeks, and then finally set it up and use it. At this point, it’s been sitting on a shelf in my bedroom for weeks because I’m so annoyed.

There’s a name for this: hidden costs.

I’ll eventually buy the products needed, but will I be thrilled to buy from this company again? No.

It’s like when you go out to a concert and forget that you need to pay for parking, drinks, and maybe some merchandise. All of a sudden your fun night out turns into $100.

Selling a service is no different. When you price your rates, you need to keep the hidden costs in mind. You NEVER want to send a client an invoice with a fee they were not expecting.

There’s an endless debate in freelance circles on charging an hourly rate vs. a flat fee.

I think there’s a more important discussion to be had: Being clear with your client every step of the way.

You need to tell your client how much things cost, how long they’re going to take to deliver, and their total fee all upfront.

Now, of course, sometimes life gets in the way and sometimes the project is much bigger than you originally thought. Sometimes you are clear about your pricing and yet they’re still shocked.

Communication is the way to avoid these potential breakdowns along the line and to keep clients happy.

Healthcare in the U.S. is the same way when it comes to never disclosing fees upfront. You just suddenly get the bill and see things like, “$90 - gauze”, “$200 - holding your baby fee” (WHICH IS A THING). (If you’re not from the U.S. - this is probably unrelatable and also hug your healthcare system for me, thanks.)

This is where a lot of rage comes from, and you can avoid this by not nickle-and-diming your clients to death.

YES, you need to pay your own taxes. YES, you have fees for services you do. Put them all into your total operating costs and price your services accordingly.

Generally, I’m a fan of flat-fee projects:

You get x words for $x fee.

One email sequence costs $x.

A landing page costs $x.

These include a certain amount of edits, knowing when they can reach me, and how they will get it delivered.

When clients go outside of those terms, then it’s time to bust out the hourly rate, but I would never dream of sending an invoice where I hadn’t made that clear.

Have you ever received an invoice that was much higher than you were expecting?

I’m sure, even if you love the service, you’re a bit taken aback because you didn’t see it coming.

When you first sit down with a client, you need to at least ballpark how much the total project is worth. In the beginning of any career, it’s normal to underestimate and then realize you messed up on the quote

In those moments, you have two choices:

  1. Tell the client and then see if they’ll agree to paying more.

  2. Eat the cost and do better next time.

I’ve often gone the route of eating the costs, but I quickly figured what to charge to avoid this problem as much as I could.

This is why I often tell people to offer flat-rate no-nonsense packages. Clients feel comfortable knowing that’s the set price and knowing exactly what they’ll get in return.

However, if you choose to use hourly pricing for your work, be sure to tell clients how long you imagine each project will take. When they know, they’re much happier.

Sometimes all it takes is just a little planning and a dose of communication to avoid the biggest headaches in your business (psst: and also your life).