17 Jul

Freelancers: How to bill for your work.

Getting paid for your work should never be a headache. But, as a lot of freelancers know, it can sometimes be a minefield to get right and avoid payment disputes and other disasters. 

There a few viable options for billing for your work. So it’s about picking the best option and making it work for you, the nature of your work and for your clients. 

Our short guide to billing options will hopefully help you get the best outcome i.e. getting paid fairly and promptly for your skills and expertise by avoiding common pitfalls.


Option 1: Per hour

Charging by the hour has its place. In a way, this is the simplest of the options. You decide on an hourly rate then keep a running record of how long a piece of work, or project, takes you.

There are occasions where it’s impossible for either party to estimate how long something should take, therefore making a fixed rate option too risky for the freelancer, and this is where the “per hour” option comes into its own. 

An example could be if a client wants something conceptual like an app developed, you don’t know how long it’ll take, so you agree to work on an hourly rate, and bill fortnightly/monthly with regular updates on progress.

Billing per hour is generally not a client’s favourite option but as long as it’s managed well you can make it work. Communication is key for this option and keeping clients up to date on progress (even if it’s to say that everything is on track). It’s a good idea to offer the client staged payments rather than landing them with a massive invoice on completion. Calculating your ideal hourly rate.

How you decide your hourly rate will depend on a few different factors. Generally speaking, you’ll want to consider your experience, qualifications and what you need to make a living. This handy infographic will help you calculate your ideal hourly rate. Although, if in doubt, you could probably get away with just researching your competitors’ hourly rate and then mirror them. Or undercut them (particularly if you’re just starting out). 


Option 2: Fixed fee

This option works well with experienced freelancers, simply because they will have a pretty good idea what a piece of work is worth based on past projects. The freelancer can confidently quote an amount up front that enough to ensure that they won’t end up short-changed. 

For example, a client wants copy for a brochure, and they have already have reference materials and a rough word count and layout from a previous project - it should be fairly easy to come up with an accurate price.

Freelancers, like experienced copywriters and consultants, are likely to opt for charging a fixed fee. Clients also tend to like this as it helps them budget accordingly, especially if your work forms part of a wider project. 

It can be a bit of a gamble. If it feels too much like guesswork then it might not be the right option. But if it’s work you’ve done again and again then a fixed fee should keep everyone happy. 

Again, communication is key. And a good rapport with clients will help you to communicate the rationale behind your billing. 

Option 3: Value-based

This option is a fun one. It allows freelancer to throw hours out of the window and, instead, think of their work as a product. 

Value-based billing, like fixed fee, works especially well for experienced freelancers. If you’re at the stage where you have a very reliable client base, a good pipeline and your work is in demand then you might find it’s time to introduce fixed prices. 

For example, if you are an HR consultant you may just want to set a price for certain contracts, handbooks and guides - regardless of how long they take to put together. It’s all about the value the client gets out of them, not the time taken.

With regards to clients, this option might really suit them if, for budgeting and project planning, they prefer to see a simple price list. 

Value-based billing is definitely not advisable for if you’re just starting out and pitching for work but it’s a good personal target to work towards - as it tends to be more profitable.

Example pricelist for business services.Pictured above: clear and concise set price list example via www.captivationhouse.com 


Other things to consider…


Tracking your time.

It’s always handy to get a fairly accurate idea of how long work takes you to complete. At the end of the day, you are running a business. Here’s a guideof free project management and time tracking software that could really help. 

Invoicing properly.

This is the awkward bit. (Or the fun bit, depending on your disposition). When do you invoice? How should you do it? And how do you chase late payments? This round upof common invoicing mistakes is worth a read. It’s almost always worth the initial time investment of setting up bookkeeping softwarethat sends automated invoice reminders and the like. It saves you doing it and, the evidence that you have your house in order, makes clients take paying you promptly more seriously.

Tips for freelancers on how to invoice properly.

Charging 50% up front and 50% on completion.

This a standard enough practise that most clients should be familiar with and open to it. If you’re working with a business for the first time it can be a sensible way to spread the risk and avoid being exploited. Don’t be afraid to ask for these terms. And, in fact, insist on them if you’re unsure. Trust your instincts.  

Organising a retainer.

If you’re working with a client frequently and producing similar work every time you do, you could consider introducing a monthly fee for your services. As long as everyone benefits, this can work very well. A client may find it helpful to budget your services into their monthly overheads while you feel a sense of security from the regular work. 


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