When you’re switching from full-time employee, should you bill hourly or jump straight to fixed prices?
The easy way is to price yourself hourly. You can take your annual salary and divide by the working hours to obtain an hourly rate. And most new freelancers use this approach.
Once you start down this path however, it’s harder to later switch to fixed prices. Moving clients from hourly to fixed is nearly impossible. Usually you need to end those projects and find new clients. Not fun.
In addition, the language you use to talk to your clients would need to reverse. Conversations with hourly pricing usually start with what tasks you’ll complete, what’s the statement of work, and your estimate of how long you believe it’ll take you.
Conversations with fixed pricing usually start with what business problem is your client trying to solve and how valuable is it to solve that problem. It’s a completely different script.
So while it’s easier for you in the short term, it causes more pain in the middle term.
The takeaway
It’s much better to start your new freelancing career with fixed pricing. This allows you to
- create outcome-oriented scripts
- focus on value, not price
- shift your mindset from giving advice to diagnosing a problem