At some point all virtual assistants ask themselves, should I charge by the hour or by the project?
Now before you go making any changes in the price structure of your virtual assistant business let’s hash this out. Here’s an example because this will help you understand why it’s important for you to think this through carefully before you go from an hourly to a project rate.
Click on the image video to listen to what I have to say about this topic!
Charge By The Hour Or By Project?
Let’s take graphic designers. Nearly all graphic designers quote project rates and deliver the final product (let’s say this product is a website) at an agreed upon deadline.
The client and the website designer sign a contract agreeing on deliverables and a deadline and the project starts. Let’s talk about what happens over the designer’s house.
Maybe this website is easy peasy and will only take the designer three hours to build out.
There is no way the designer is going to tell the client “hey this is going to be an easy site and it’s only going to take me three hours SO instead of charging you my normal fees I’ll knock down the price for you”.
No way! That would reduce the designer’s profit margin and why would they do that?!
Graphic designers have mad skills and they are hired because of their experience and perceived value and probably because they have a boatload of projects in their showcase. But what if the designer is new to graphic design? What if instead of taking 3 hours it takes 2 weeks to build out this website?
So the problem is obvious.
The designer has got to know without a shadow of a doubt that before he/she can charge a project rate he/shes has to know exactly how much time it’s going to take (more or less) to complete the project otherwise it will cost her money (time wasted, money lost).
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If a client wants you to work on something you’ve never done before or something that isn’t’ in your realm of excellence than you shouldn’t offer a project rate.
Stick to an hourly rate.
But what if you’re charging by the hour and it’s taking you hours to complete a project for a client. The client sees how much time it’s taking you and is angry (within reason).
They feel they could have hired someone to do it in less time for less money.
The answers? Just don’t get yourself into that situation!
If you know that you’ve never worked on a specific software before and the client is asking you to complete a task let them know that you don’t have expertise in that area but you’re willing to train yourself. See if they will pay you for your learning curve. If it’s a software that most VAs use than you should train yourself on your own time.
Continue by saying that you will not transfer your learning curve back to the client and will only charge your client for the time you spent on completing the task/project, NOT the time learning it. Your client will appreciate you and in return you’ll get more work in the long run.
If however your client is asking you to learn a software that is specific to their business only, they need to pay for your learning curve – nuff said!
So, are you charging by the hour or by project or do you do a combination of both and why? Let us know in the comments below because some of the greatest conversations happen there.
Rock on, Reese
0 thoughts on “Should You Charge By The Hour Or By Project?”
Thank you Reese for the Information. I charge by the hour and detail all my activities on Freshbooks so my client can track how the hours are used.
You’re welcome, Osho!
Thanks for that amazing tip! There have been times where I have been stuck and not sure how to charge a particular client, but analyzing how long a task or project will take and adding in my expertise, hourly is the way to go!!
Indy, you’re welcome! Hourly is great for as long as it works for you and your clients. 🙂
I am so glad I read your blog post. I have been wrestling with which method of payment, hourly or per project, but now I see that it should be hourly.Thank you!
Sara, that’s great! So happy I helped you figure it out.
Great blog post and glad to hear that I’m not in the wrong on this. I’ve done this very exact thing for several of my clients and they totally appreciate this. Later down the road I can charge the project or hourly rate depending on what they need.
Leona, exactly! Come back and let us know how it goes when you start charging by the project.
Great article. Yes, I have been there wondering how I should charge and been asked if I would give a quote by the project. That doesn’t work for me, but I may give them an estimate of how long I believe it will take – and I give myself extra time. They’re happy if it takes less time 🙂 I’ve also told them I would be glad to do an hour’s worth of work and let them see where we are and then they can decide if it’s worth it for them for me to continue. This is great for data entry!
Hi Reese.What is your best recommendation to convert an hourly client over to a flat fee as far as time tracking?
If you’re moving a client over to a flat fee than the only person that needs to track time is you. You could still use Freshbooks and their timer to see how long a project takes so you can start analyzing how much time you will need for similar projects. If the project you’re working on will take you 6 hours and you’re hourly rate is say $30 than by the hour it would come out to $180. Perhaps you charge more because you need to account for revisions and unforeseen issues. Come up with a number that resonates for you.
I’ve done both and I’ve had times where I made the wrong decision (charged a flat rate and really should have charged an hourly rate and vice versa). Most of the time when I ended up making the wrong choice it was with a newer client and I didn’t realize that they were going to change their minds a million six times.
Sometimes you have to weigh the information you have, ask questions and then make a decision on the information available to you. Most of the time that works great. And when it doesn’t, it helps to look at it as a learning opportunity.
Exactly, Laura! 🙂
I charge by the hour. That works the best for me.You never know how involved a project is until you get into it.
Paul, I couldn’t agree more.