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Hanifmr.com - When the self-employed are fighting for a new customer, an important point in any offer is the price. Because even if many other factors play a role in the customer's decision for an offer, the price is one of the most important.

However, the price is not only important in terms of the amount but above all in terms of the calculation. Fixed price or billing by the hour?

Many self-employed people and start-ups are faced with this decision. Today I would like to take a look at both methods and highlight the advantages and disadvantages.

Hourly Billing vs Fixed Price - the Crucial Question?

Hourly Billing vs Fixed Price - Win New Customers with the Optimal Price

Fixed price or billing by the hour? This is an important decision that the self-employed and start-ups have to make.

Both variants have advantages and disadvantages and one should be aware of this before making a decision.

Because the effects on customer acquisition and customer satisfaction should not be underestimated.

Pay by the Hour

One variant is to bill a project based on the effort, in this case, based on hours. This means that you determine the scope of the order with the customer and then give him an estimated hourly effort.

However, the provider is not bound by this calculation. In the end, he calculates the hours used times his hourly rate. And the end price is more or less different.

Advantages:

• Fair Remuneration
  Often the customer has special requests in the course of the project according to the motto: "It was clear that this was part of it." Then you simply bill for the additional time.
  
  
• Flexible
  There are always projects where the effort is difficult to estimate despite extensive planning. A fixed price would be risky.

Disadvantage:

• Unfriendly to the Customer
  This form of billing is rather unfriendly to the customer. Who would want to place an order without exactly knowing the final costs? That makes customers a lot of customers nervous.
  
  
• Time-Consuming
  As a self-employed person, it is very time-consuming to measure exactly to the minute what you have done for which project. (It is, however, to some extent important for analyzing orders.)
  
  
• Less Productive
  Billing by the hour could ensure that service providers are not quite as productive, to put it mildly. At least that's what customers might suspect, and that can disrupt trust.

Fixed-Price

The other variant is billing according to a fixed price. This means that after a service specification that is as precise as possible, the customer is given a fixed price for the implementation.

Advantages:

• Little Effort
  As a service provider, you do not have to carry out extensive hourly accounting. However, you should still do a time recording for yourself now and then to analyze your projects. This is the only way to check whether the fixed price was calculated correctly.
  
  
• Standard Projects
  Especially when you implement projects that you have already done often, a fixed price is also a safety matter for the service provider and easy to plan.
  
  
• Customers Love Fixed Prices
  Customers just love to know exactly what something is costing. Often they choose this “safe” option.

Disadvantage:

• Miscalculated
  Of course, it is generally the service provider's problem when he miscalculates. With a fixed price, however, you have fewer opportunities to correct this.
  
  
• Customers Take Advantage of This
  Fixed prices are tempting for customers. You can add something later and here too. Service providers have to be very attentive and clearly define everything beforehand. In addition, it is easier to compare fixed prices with other offers.
  
  
• You Are Set
  Customers tend to know and ask for fixed prices in advance. In doing so, you don't pay much attention to the real benefits behind it.

The Price is Your Decision

As you can see, both methods have advantages and disadvantages. It all depends on what is most important to you and where you focus.

Many self-employed people use a combination of both methods. A fixed price is agreed for a clearly defined scope of services and an hourly rate for the more flexible part of the order. Both benefit from this and that is often a very good solution.

In the past, as a web designer, I mainly made fixed-price offers but defined very precisely in the service description which services are included and which are not. Once there was trouble creating an online store. The customer believed that the maintenance of 4,000 products is included in the fixed price. I refused and we then agreed. But you should pay close attention to something like this beforehand.

Today I use fixed prices for placing banners on my blogs and websites. The number of visitors is quite stable and there are fixed monthly banner prices. That means little effort and it is also accepted by the advertisers.

A while ago I evaluated a survey among more than 500 readers. There was also the question of whether they bill according to the hourly rate or a fixed price. The result was very even.

Do you bill according to a fixed price or by hours?

• Sometimes like this, sometimes like that (40%, 203 votes)
  
  
• After hours (30%, 155 votes)
  
  
• Fixed price (30%, 154 votes)

Number of participants: 512 (1 vote)

More Information About the Price

In the following two articles, I have already examined the subject of hourly rates in more detail. So if you are interested, read on here:

What price should you ask for your services?

Enough to live or how much money should you make?

Related Video: Hourly Billing vs Fixed Price - Win New Customers with the Optimal Price

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