Flat Fees vs. Hourly Rates: Do Both at Once! By Anne Bingham

My contribution to the debate over whether to charge clients flat fees or hourly rates is: Do both – at the same time.

My niche is providing executives, business owners, and professionals with manuscript evaluation and editing, speeches, website copy, product information, and employee training material. My clients are accustomed to reviewing in-depth proposals from contractors, so I provide them with carefully detailed, transparent proposals that are upfront about the fact that my fee is based on my hourly rate multiplied by the time I estimate the work will take.

I lay it all out in black and ecru on my letterhead. The cover sheet summarizes the scope of the project, the fee ranges, and the fine print, including the payment terms. It also includes a place for the client’s signature.

The second sheet spells out the details in a three-column table.

The first column outlines what I will do in each step of the process. To rewrite a speech as a trade magazine article, the first column might read “Adapt 30-minute speech into 500- to 600-word article for American Anvil. Draft one-page cover letter for client letterhead, noting that editor requested piece after client’s address to the 80th Anvil Annual Assembly. Email files to client with specific instructions for submitting per American Anvil guidelines.”

The second column lists my estimate of how long each segment will take to write. I include time for research, transcribing my notes, emailing or phoning the client for clarifications, meetings, etc. For the American Anvil piece, the second column might read “2 to 3.5 hours” since I’m already familiar with the material from writing the speech.

(Indispensable for this part of the process are the time logs I’ve kept for every project I’ve worked on for the past decade, from one-page press releases to product labels, sales letters, and 400-page manuscripts.)

I estimate time in ranges, the low end being the maximum amount of time it could possibly take even if there’s an attack on the national power grid by giant electron-snarfing lizards from Neptune, plus 10% for unexpected developments. This ensures that there are no unpleasant surprises for the client.

The third column contains the cost range for each part of the process, based, of course, on my estimated time ranges multiplied by my hourly rate.

When there are processes I can’t ballpark because I haven’t done anything remotely similar before, or when the time depends on the cooperation and efficiency of other people in the company, I note on the proposal that the cost for this part is based on a specific time allotment, or that due to such-and-such a variable, “this part will be billed at my hourly rate of $XXX.”

And I always, always include a contingency that additional work not included in the current proposal constitutes a change in the assignment and will be billed at my hourly rate of $XXX.

This combined approach is a win-win for both parties. It’s fair to the client because the detail shows the writer understands the scope of the project, and the full disclosure shows that the writer respects the client’s need to keep the project within budget.

It’s fair to the experienced writer because it minimizes the amount of time you end up giving away for goodwill purposes.

Finally, for the writer at the start of a freelance career, it’s good training. You’ll probably end up eating a fair amount of your time at first, but as long as you keep careful records, you’ll be establishing baselines that help you refine your estimates and build your reputation as a professional.

Anne Bingham is president of Working Writers, a confederation of about 30 fulltime freelance writers in southeastern Wisconsin and owner of Anne Bingham Written Communication. She also is the author of Buying Jewelry: Everything You Need to Know Before You Buy.