Freelance Pricing Strategies: Hourly vs. Project vs. Value-Based Fees
When we charge by the hour, we're rewarded for taking our sweet time. When we charge by the project, we risk doing far more work for the same pay. So how do successful freelancers price their services in a way that works for everyone?
This guide covers the three pricing models freelancers use most (hourly, project-based and value-based), when each one fits, and where to go next for in-depth guides on each.
The Three Freelance Pricing Models at a Glance
| Model | You charge for | Best for | Main risk |
|---|---|---|---|
| Hourly | Time worked | Open-ended work, ongoing to-do lists, unclear scope | Your income is capped by your hours |
| Project-based | A defined result at a fixed price | Work you've done many times and can scope tightly | Scope creep eats your margin |
| Value-based | The business impact you create | Work with a measurable payoff and a client who thinks in ROI | Mispricing when the value is hard to measure |
How Successful Freelancers Price Their Services
We asked a handful of the most successful freelancers we know (and some small agencies) how they price their services. They work with small businesses as well as national brands, and they all make a good living, so we were curious what they actually practice.
They fell into three groups:
- Hourly-based fee
- Project-based fee
- Value-based fee
Hourly-Based Fees
For those who bill hourly, the main reason was convenience for both the client and the freelancer. The freelancer never has to worry about working and not getting paid, and the client is free to ask for more work whenever they like.
For a lot of projects, this makes sense. It doesn't mean you have to settle for a small amount, either. One of the freelancers we asked charges a $200/hour flat rate for all of their projects. It can be a great way to run your business, but it's not the only way.
Go deeper: The pros and cons of cost-based (hourly) pricing, including fixed estimates vs. billing actual hours. Not sure what your rate should be? Start from your yearly revenue goal.
Project-Based Fees
Some clients don't like the unknown final total that comes with hourly pricing, so they respond better to project-based fees. You agree to deliver a specific result for a set amount. This can be great for the freelancer, because it rewards getting the work done quickly. The biggest trick is to scope the project's outcomes as specifically as possible, so you don't get stuck doing far more than you planned.
Go deeper: The hybrid approach to pricing, which combines a fixed project fee with an hourly rate for changes, and how to handle scope creep.
Value-Based Fees
Like a project fee, a value-based fee is a total project price, but it's based on the value you bring to the table. For example, if you can spend one day on a service that will make a client $50,000 more this year, is it fair to charge $5,000 for it? Yes.
Value-based pricing is a win-win: the freelancer earns a great rate, but only because they're delivering a benefit that more than justifies the price. To make it work, you need to clearly show your value to the client, ideally with a track record of similar results.
Go deeper: The pros and cons of value-based pricing, with four example offer structures for designers, copywriters and photographers.
Which Pricing Model Should You Use?
You don't have to choose just one. Decide project by project:
- The work is open-ended or keeps growing? Charge hourly.
- You've done it many times and can scope it tightly? Charge by the project.
- The client can measure what the result is worth, and it's a lot? Price on value.
- The client needs you every month? Consider a retainer.
Whichever model you pick, present it well: offering three options with price bracketing moves the conversation from "should we do this?" to "which version?"
More Freelance Pricing Guides
- How to use price bracketing to win clients at higher rates
- The hybrid approach: hourly vs. project-based pricing
- The pros and cons of value-based pricing (with examples)
- The pros and cons of cost-based pricing
- The pros and cons of client retainers
- How to respond to "your price is too high", with email scripts
- How to successfully raise your freelance rates
Whatever model you choose, track your time anyway. It's how you find out your real effective rate on fixed and value-based projects. Harpoon's time tracking does this even when you don't bill by the hour.
What's next? This is part of our freelancing mistakes series. In Mistake #4, we look at why it's a bad idea to compete on price, and how we regularly won projects by being the most expensive option.