Hourly billing is a good fit when there isn’t certainty about a specific timeline or scope going into a project. If you are an efficient worker and can complete your tasks on time, hourly billing may be the right choice. Hourly billing is best fitted for projects without detailed scopes. You may only list hours spent per general line item and offer more detail if requested or include that detail in the invoice. You send an invoice based on your contractual agreement. When you bill a client hourly, you track your time (with tasks completed in those time chunks). To determine which type of billing rate is right for you, check out our comprehensive bill rate guide. Once you’ve chosen which method you want to go with, you’ll also need to factor in your overall costs (labor, taxes, benefits, and overheads), your billable time (how many hours you are actually available to work), and profits and losses. It can be a very profitable billing method, but you must be able to back up the proposed value you sell. A value-based rate reflects the value you provide to your client and the return on investment in your services. A market-based rate is based on supply and demand and considers your competition. Three basic methods for deciding on a billing rate are cost-based, market-based, and value-based.Ĭost-based rates consider the total cost of your services, including variable costs like labor and taxes and benefits and fixed costs-your overhead.
#Pricing hourly rate it how to#
Once you calculate your billing rate, you need to decide how to bill-that is, by the hour, by the project, or by a hybrid of those two. Ideally, you will arrive at an amount at the intersection of the income you need, the market value of your services, and the value you provide a client. Figuring out your billing rate can greatly impact the ability to build your business.
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