From Eric Miller,
Your Guide to Graphic Design.
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A common decision to be made when starting a graphic design project is whether to charge a flat or an hourly rate. Each method has pros and cons, as well as ways to work towards a fair deal for both you and your client.

Hourly Rates

In general, charging an hourly rate is best for work that is considered “updates,” such as changes to a website after launch or revisions on an existing print design for additional uses. It may also be the right choice for small projects, especially if it is difficult to estimate the number of hours of work necessary to complete the project.

Pros:

• You (the designer) know you will be paid for actual hours worked.
• The client knows they won’t pay more for a guaranteed flat rate.

Cons:

• You are not guaranteed a minimum payment for the project.
• The client doesn’t know exactly what the project will cost them.
• The rate is based on hours, rather than what you may consider the value to be to the client. For example, a logo design may take 15 hours, but its value to the company could be much higher.

Flat Rates

It is common to charge a flat rate for large design projects, and for repeating projects for which the designer can accurately estimate the hours. In some cases, flat rates should be based on an estimate of the amount of hours a project will take to complete, times your hourly rate. In other cases, the value of the project may be higher than just your estimated hours. For example, logo designs are often valued high regardless of actual hours worked, because of their frequent use and visability. Other factors that can affect price include the number of pieces printed, sold, or one-time vs. multiple-use. Depending on the type of project, a percentage can often be added to cover client meetings, unforeseen changes, email correspondence, and other activities that may not be taken into account in your estimate of hours. How much to charge, and how to discuss it with the client, is up to the designer.

Pros:

• The client knows what they are paying from the beginning, unless there are changes to the scope of the project.
• The designer is guaranteed an amount, even if the job is finished quickly.

Cons:

• As the designer, you are taking a risk that the job will not take longer than expected. However, this situation should be covered in your contract.

A Combination of Hourly and Flat Rates

Usually, the best solution is to use a combination of these methods. If you do choose to charge by the hour, the client should be given an estimate of the amount of hours the job will take, at least in a range. For example, you could tell your client, “I charge $XX per hour, and I estimate that the job will take 5-7 hours.” As you work on the project, if you see the estimate is off, you should discuss this with the client before proceeding and tell them why your estimate is changing. The last thing you want to do is slap the client with a surprising bill at the last minute and have to explain yourself then. Often, the estimate will have to change because the project took an unexpected turn or the client asked for many changes. Discuss this with your clients as early as possible. If you cannot provide a small range at the start, provide a wider range (such as 5-10 hours) and explain why.

If you choose to charge a flat rate for a project, this doesn’t mean you are working for your client for an unlimited number of hours until the project is complete. While there may be a little more flexibility than when working by the hour, your contract should lay out the scope and terms of the project. To avoid an endless project, you can:

• Include a detailed outline of the project so you can adjust your rate if the outline changes. For example, if a 2-sided, text-heavy brochure turns into a 4-panel folded piece with custom illustrations, the price should change.
• Clearly spell out how many rounds of changes or edits are included in your flat rate.

When quoting a flat rate, it is still important to include the hourly rate that you will charge if extra work is needed that is beyond the scope of the agreement.

In the end, experience will help you decide how to charge for your projects. Once you have completed a number of jobs, you will be able to more accurately provide flat rates, control your projects through your contracts, and communicate with your clients about budget issues.