Before finalizing any agreement with a contractor, you should lay out the specific deliverables that you expect to receive from them at the end of the project. Using this method, it may also be a good idea to include a provision that only allows for a certain number of revisions or changes to the final product, so that your pickier clients don’t drag you into endless rounds of revisions that hurt your bottom line.Īs a customer, the project you’re assigning should be very well defined so that you don’t have to worry about making too many revisions or changes once you receive the final product. Accurate estimates are especially important using this pricing method: you’ll need to factor in every aspect of the project, from the time it takes to communicate with the client to the time the job takes to complete. This way, you can accurately predict the amount of time and energy it will take. If you quote a flat rate for a particular project, it’s usually best if you have experience with similar projects. Regardless of the amount of hours-whether you work for two hours or ten-you’ll be paid the same amount.įlat rate billing is generally ideal for short, well-defined projects. If your prediction is inaccurate and some aspects of the project take more time than expected, you won’t be compensated for the extra hours. One agreed-upon price is all there is to worry about-no need for time tracking, specific documentation, or other proof that you worked the hours you claimed.Īs a contractor-whether you’re a freelance writer, plumber, or electrician-it’s important to accurately predict how much time and effort you will need to put into a project before giving a flat rate quote. The flat rate pay system is appealing to both businesses and customers because it’s so simple. Now this pricing structure has been taken up by dealerships and many types of small businesses. Flat rate pay was popularized by the automotive industry, and has long been the industry standard, because it allows auto techs to operate more productively. This means that, unlike hourly billing, you’re being paid for the final product itself, not the time you put into creating the final product. Hybrid billing: How to combine flat rate fees and hourly ratesįlat rate billing is a pricing method where you charge a client a single fixed rate for a project.Which is better: flat rate or hourly pricing?.If you’re interested in a particular section of this article, use the links below to skip to it. Read on to learn more about the pros and cons of flat rate billing and hourly billing-we’ll even go over how you can combine these two methods into a single hybrid billing system. Each pricing system comes with its own unique advantages and disadvantages, and understanding these differences will help you determine which method is right for you. It can be difficult to determine if flat rate billing or hourly billing is more suited to your needs. Hourly billing, on the other hand, is when a business charges an hourly rate for its work, and maybe even adds extra charges for any materials needed for the project. Flat rate billing refers to the practice of charging a single, fixed, up front price for all the time, effort, and materials that go into a project. Flat rate billing and hourly billing are the two main types of pricing systems used by businesses to determine how much they’re paid on a given project.
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