Ask 1099Mom: Should I Bill Hourly or by the Project?
One question that I get more than any other from moms who are first starting out with their business is "how much should I charge?" That same question inevitably turns into this next question:
"Do I charge by the hour?"
For many service jobs, especially those that can be done from home and online, a potential client will ask you to quote a price based on hourly service. For many, this makes sense. For the true work at home mom, however, I try to discourage it. Let's explore why...
Supposed to go into your local mechanic, and need to have a service performed. For this example, let's say you will be having a new alternator put into your Land Rover. By looking online at a site like RepairPal.com, you can easily find out a reasonable price range for the service (based on a billable hour model), along with a static cost for parts. In this case, let's assume that the mechanic tells you the cost will be $545:
$135 for 1.5 hours of labor, plus $410 for parts
Now, suppose that the mechanic finishes your car in a little less than an hour. You would be ecstatic, right? You wouldn't demand that he take the car back and find something to do with that additional half-hour of time. You would assume that your mechanic was smart, efficient, and able to do repairs much faster than the competitor, and you would be happy to have your car back in your possession. You would also NOT ask to get a discount on the labor portion of the cost. That would be ridiculous.
Now, let's assume that we are talking about a service such as social media management. A potential client comes to you and asks how much you charge for maintaining a Twitter and Facebook feed. You could tell them that you think the job should take around five hours a week, at a rate of $50 an hour. By doing this, you are telling the potential client two things:
1) You charge $50 an hour for your services. If someone were to come along later offering to do the same job for $40 an hour, they have the option of replacing you.
2) You need the entire five hours a week to do this job. If for some reason you become more efficient as the process goes on, or activity is a little light during a particular week, you will have free time that needs to be filled. (This can be translated to mean GIVE ME MORE WORK FOR NO ADDITIONAL PAY.)
The savvy work at home mom might do the following:
Tell the client that you only take on new work on a project basis. You have time for the new project, and, based on your calculations of how many hours it should take, you think you can do the job for $100 per week. For $100, the client will get X number of postings, regular maintenance, and whatever you feel should be included for the service. If, for some reason,they get insanely popular, and the project takes more time, you have the right to renegotiate the project fee at that time. This method tells the potential client two things:
1) You are an expert. They are paying you not only for your time to perform certain duties, but for your years of expertise, your connections, and your competency. Should you be lightning fast and finish everything in an efficient manner, this is only a testament to how good you are. They should be thrilled to have you on board.
2) If they find that they like your services so much that they would like to hire you to do additional duties, that can be arranged. The project fee can be adjusted up to accommodate new responsibilities. If they come across someone who claims to be able to do the job for less money, and they choose to explore new talent based solely on price, they are not the client for you.
What problems have you run into when quoting a per-hour price to a client?