Why Design Can’t be Billed by the Hour
Saturday, January 16th, 2010
“But it will only take you an hour or so . . .”
I hear this comment a few times a year — a client is unclear as to why I won’t simply charge them by the hour, sometimes by fifteen-minute increments. I can sympathize. When spending my money, I want to know I am not being gouged and that I am getting what I am paying for. It’s this concept of getting what you are paying for that sometimes needs clarification when discussing design.
My creative process typically involves coffee shops, walking, driving and not sleeping. Taking time away from the creative problem is vital to finding a solution. I will catch myself taking a break from working on an identity only to have a sudden jolt of inspiration. It is often these moments away from my desk, times of incubation that are worth every penny a client is billed.
You really can’t force creativity to happen. There are ways to encourage it and a process is there to help direct it, but in the end it has to just happen. So while a project may only take an hour at a desk, I can assure you more time was spent thinking about it.
I think it’s a better idea and more appropriate for clients to understand they are paying for a solution and not for the time associated. A designers’ job is to solve problems. One of these problems is helping clients understand the creative process, and, in turn, the value behind design.
What has your experience been with hourly billing? What do you say to clients that want to pay for design by the hour? Please share your comments using the form below.
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As someone in the profession Steve I can relate to what you are saying here. The key is ensuring that the client gets value for money. Design is inherently subjective and therefore difficult to place a value on.
In everyday life there are paradigms like paying tradesmen for their time and this by convention is by the hour. I would argue that clients should not only pay hourly rate for time at computer but also for time away from the computer when the designer is in the process of thinking about the design problem. I would also go as far as to say they should be paying for a slice of the 20 years of accumulated experience that ultimately provides them with the quality solution (this can be built into the hourly rate I suppose)
I think it is better all round , for a number of reasons, to charge for the final solution including the whole process and not get bogged down in time spent at the computer.
Selling this to the client is the hard part. Personally I use an approach whereby I can demonstrate a return on their investment using a process of measurement, analytics, a/b testing. Of course my field is web design for which identity design is a small part of a much bigger picture. It would be harder to single out the identity and apportion directly any conversions on a website to that identity alone. When i say conversions I don’t just mean monetary, but any interactions that further the goals created for the website at its induction.
I do not mind billing by the hour because when I work on a concept or design, I am expending my thoughts, energy, imagination, thinking, strategies, and experience into my client’s marketing goals.
However, if they insist on a fee, I will take that as well. I have learned to be flexible in my billing in order to make money for my own business.
This is a great looking site.
Dave,
Great comment.
It is definitely a hard sell for some clients. I think in the case of a tradesmen, they bill for the actual time spent on the project (with some rounding up, travel etc) and you can often oversee them. There is no way for a client to know how much time is actually spent on a design project — I could easily spend half or double the amount of time quoted.
I believe the benefit to both the client and the designer when quoting for a solution rather than in hours is that it removes that ‘number’. As a designer I no longer have to think about accomplishing something in a certain number of hours. As a client I know the designer is going to spend the number of hours necessary to achieve an appropriate solution.
Chris,
Thanks for the comment and I can completely see where you are coming from. I would not refuse to give an hourly rate to a client either. It would really be a meaningless number however to meet the request — and I would focus on the solution and not the hours.
Well said, Steve.
When I started in self-employment, I tried charging by the hour. Looking back, I suppose it helped in small way, allowing me to figure out the minimum cost I should be charging.
What hourly rates don’t account for (on the whole) are the years of experience and education we put in before a client project is started.
A set fee is the most appropriate way to charge for design.
No doubt.
Would you say it was fair to agree on a budget for a project, and then have an hourly figure in mind to gauge how long you feel a project should take?
I find this is an easier way to manage time and budgets. I then remove what I would class as un-billable time at the end of the project.
Appreciate your comments David.
Abbas,
Thanks for sharing your opinion on the subject. Tracking time can be very useful to ensure you are making a profit on your work and to quote appropriately for the future. Since I quote for the creative solution and not hours, the actual time spent has no impact on the bill in a positive or negative way. If I found I was continually going over the time I had anticipated, I would consider raising my pricing as well as look at ways of improving my creative process. Thanks again for taking the time to comment.
This reminds me of the oft credited/claimed story of the designer who charged thousands of dollars to fix a corporation’s logo. He walks in, looks at the mark, then adds a single stroke to the logo and it’s PERFECT. Of course the client begins to complain that they shouldn’t be billed the full fee as it only took him 5 minutes. The designer informs them that they weren’t paying for the 5 minutes of time to place the line, they were paying for the twenty years of experience to know WHERE to place the line.
Totally agree.
Charge x amount.
When they ask for a break down, say “That’s what I charge to do work like this for clients like you”.
I find what you say very true. However, my clients are usually happy to get a flat fee rather than be billed on an hourly rate.
Thanks for stopping by Chris and Lee, I appreciate you taking the time to comment.
There is a great post “7 Reasons You Shouldn’t Charge by the Hour” on Mirificam Press at http://mirificampress.com/permalink/7_reasons_you_shouldnt_charge_by_the_hour
Hey great topic!
I’m totally into that questioning those days.
Actually it started a bit with school realizing I enjoyed what I did despite the big amount of time I spent on it. Then, it was some abstract problem I delayed for later; I hoped that with more experience I would be more efficient. But it didn’t happened as I expected. I am more and more convinced that each new project bring new challenges. For me it’s like taking a new start each time as you want to go further and try to discover new things.
Now I have to make a living, this is my biggest problem. It’s really hard to fix a minimum fee and I found the only easy way to do it is hourly. Even if you can’t estimate precisely it gives you a kind of guide. And some anxiety when you’re hitting your budget because you haven’t found the idea that makes you feel happy and useful…
Well relax and enjoy without worrying is the best thing. And have comprehensive clients too…
I have gone exclusively to the design by hour price model. I have found that the interactions that I have with all of my clients when I meet them have been far more enjoyable since. Every client that I have charged by the hour has respected my time and work, as well held a higher appreciation of the final product, regardless of quality comparison to by project.
What has been eliminated since I moved from the flat rate customers is the add on this thing too factor. Along with the feeling that they were purchasing something replacable. The flat rate seemed to make design, logos especially, consumable to my customers. It seemed to almost lead to every project feeling like spec work, which as we all know is a very bad direction.
Idealistically I couldn’t agree with you more on the charging for the solution model. I think that it is a wonderful idea, and that is fits the world of design much better than a per hour rate. It just hasn’t worked out for me in the real world with people that don’t already understand what design is and what they’re getting out of it.
For larger projects such as websites where there is a lot of production time, I quote a flat design fee and an hourly production rate. I sometimes financially gain and sometimes lose. The most important thing is arriving at a great solution, and one can never know in advance the toil or ease that will ensue.
I’ve noticed almost the opposite. I started doing fixed-fee the first six or seven years and have switched over to hourly for the last three. I felt trapped that I couldn’t charge more and more as my experience grew in fixed-fee situations.
It’s much easier for me to translate the value of an hour to my experience and skill than to an overall project. I also work towards a budget and manage my time around the investment. So it’s still based on a fixed-fee approach, but is billed hourly.
I also don’t think of the “ideas” as the value I bring. Between the client(s) and I, there’s rarely a lack of ideas, it’s figuring out which ones are worthy and executing them properly.
I don’t do much freelance but when I do I charge by the hour. This post has given me something to think about though, so thanks!
Saint-Lary,
“Enjoy” — Absolutely key to making any process work for a client and for yourself, regardless of how you bill for it. Best of luck and thanks.
Matt,
I appreciate that billing for a solution does not work for all clients or designers. Glad you have found a way that works for you and that makes your customers happy.
Michael,
Thanks for you comment. I think hourly rates for production make far more sense than for design.
Dan Ritz,
Great to hear a different take on the subject. I agree that ideas are never the issue, but rather finding appropriate ideas that solve the creative problem. Thanks Dan.
Soda and Candy,
Thanks, it’s been great to get different opinions on the subject. More articles on similar topics are coming.
***For those that are not aware, I have another site that discusses the creative process through community driven content including case studies, articles and discussions. Processed Identity can be seen here: http://www.processedidentity.com/
If you want to factor in years of experience then just increase your hourly rate. That’s what it’s for.
Well said. I personally have never really understood the idea of charging by the hour. If I were to start charging by the hour, either the client would end up getting ripped off or I would produce a below average design compared to my standards.
Design is something so subjective when it comes to “the time it takes” that on a personal level it does not make sense to charge by the hour.
I think this is very true of initial designs – logos, websites, brochures. But I don’t think it applies to maintenance.
For example, I design and build websites and I charge a fixed rate for the projects. I build in clauses in my contract that limit the number of designs I will present before additional fees will apply but this rarely happens.
But I do charge hourly for updates. Updates generally don’t take nearly as much creativity as creating something from scratch.
For example, if a client needs and additional business card layout for a new employee or an additional section for their website (if they don’t have a CMS), I bill by the hour because there isn’t much creativity involved and I have a pretty good idea how long it will take and I can share that with my client before proceeding.
A great deal of my time as a designer is spent not designing. I think this applies to many of us.
I totally agree, people are essentially paying for ideas and solutions as well as those ideas and solutions being executed.
I do usually charge by the hour when it comes to production type work, or updates to a already established design. Meaning that it will no longer require much of a thought process.
As a photographer and designer I struggle with hourly vs per day rate or project basis. There are supposidly calculations that ‘back’ you into a price structure that accounts for all of your business equipment, experience and profit including bills or cost to maintain equipment, insurance etc.
A guy wants a price on shooting a portion of his product out of his retail store so he can use images on a web site, other materials… He wants a good price- you need the money and client recognition, and don’t want to low ball your own industry.
I offer several options and depending on the consultation I have I ‘encourage’ them to go with one that we both can live with and hope they like me and my work.
I will ONLY bill by the hour for design work. I’ve been screwed too many times when I’ve quoted a price for the entire job, only to have the client keep adding to the job after the fact! I charge by the hour and do a good job estimating how much time I will actually spend in the creative process (including lying awake in bed at night).
You hit it right on the head, Steve. Typically, my design process involves taking in the clients information, my research and any other relevant information and just letting it mush around in my head for a day or two. It’s kind of like when you let some types of recipes sit overnight. It takes time for the flavors to meld until the dish becomes what it is supposed to be. I design the same way. Let all the different ideas meld together in different ways and give me new and additional angles from which to view and solve the problem.
I’d be retired now if I had a dime for every time I heard/read someone telling me how long something should take. I’ve even gotten that from some studio managers and it can burn me up if they catch me at the wrong moment. The mantra must be repeated, “Design is not a commodity that can only be measured on the time/quantity scale. It’s not like we’re twisting nuts on to bolts or installing an appliance which can be measures in that way.
So, the education continues…
Great points. What I’ve come to realize is that I should bill based on the design’s value to the client, rather than the time’s value to me.
If I spend 10 hours on a logo design and charge $50/hr, I’m focusing on what MY time is worth. If I charge a $5000 flat rate, and the logo ends up contributing to making the client’s brand and company a huge success, the logo is worth a lot more than the 10 hours it took me to create it.
This goes back to the idea that we as designers aren’t simply creating beautiful design. We should be giving our clients tools to make them successful and accomplish their goals.
Laurie, that kind of issue can be solved by clearly indicating what you will do for the client on a project and stating that extra charges may apply if the project goes outside the stated parameters. While I usually allow some flexibility, if the client starts asking for a lot of new things, I will let him know that our initial agreement does not cover the new work and I will either issue a revised quote or an addendum that they must agree to before work continues.
Great post and just in time for me. I currently stick with just the development side of the web, and billing by the hour works well, but I plan to branch out into the design field a bit too and was wondering how to best go about pricing it.
Have you ever had the “traditional” sorts of problems with fixed price design such as scope creep? Because there isn’t a specification per se
It is very difficult to put an hourly rate on an idea…even more difficult to put an hourly rate to a solution. There is an old fable about this concept in consulting and it often applies here.
A nuclear power plant suddenly shut down on its own accord. A consultant was urgently called in to figure out what was wrong. The consultant arrived, calmly walked to the center of the plant, walked up to a panel of over 100 buttons–each with a different function for the plant. The consultant hit one button in the middle left side of the panel. The power came on and the consultant handed the plant manager a bill for $100,000. The plant manager said “that is ridiculous, you were only here for 5 minutes.” The consultant ripped up the bill and wrote out a new one. It read $1 for 5 -minute site visit, $99,999 for knowing which button to push.
In design our challenge is to demonstrate to clients they pay us to know which buttons to push. The more we know and better we are, the faster we create the solution. So the more experienced you are the less effective hourly rates are.
But it is also important to define the scope of your work and be proactive in managing and re-quoting changes in scope. Nothing keeps scope creep in check better than work order change estimates.
I like this conversation. I vote for flexibility. I vote for giving an abundance of good design to my clients in return for an abundance of work and money so that I can keep doing what I love to do.
I think it also depends on the kind of clients you are working for. Right now, many of clients are small business or individuals running their one-man business and a lot of them just don’t get that design (I do web design) doesn’t happen magically and on cue.
They are caught in their traditional way of thinking – “If I deliver my specs to the designer today, she can deliver the results tomorrow.”
I personally gave up explaining what you mentioned in your article: that it’s the time away from the desk and computer that also counts and sometimes provides the very solution they were expecting. I got stares and sometimes even unwillingness to pay the bill when I explained the price to them.
So, today, out of sheer necessity I charge by the hour and and list all the tiny steps as accomplished tasks. To someone from inside the design business it might look funny, but to customers who don’t know xxx about design I at least don’t have to justify myself anymore.
I guess it depends on project / nature of work. Also, the logic that you are paying for 25 years of experience also does not cut. There are professionals with 5 years experience who can do much better than people with 20 years experience.
The hourly rate can be varied based on your experience. For example, attorneys charge anywhere from $150 to $700 per hour! Also, you can think of a minimum fee and then charge based on hourly rate if enhancements are required.
This is the reason why (real) consultants go for profit / revenue sharing. Obviously this concept cannot be applied in every scenario.
Another point of view: if your clients knows you and you have established trust in the past, don’t mind charging on hourly basis. Otherwise they would prefer a flat rate.
Think of Hollywood celebrities and technicians. Each carry a price tag not necessarily based on their ‘saleability’ and not by years of experience.
Hence we got to flexible and devise pricing rules mechanism based on the client, nature of work, volume of work, etc. My two cents!
After devoting the last twenty years of my life to design in my own studio, boutique shops and large agencies around the globe, I’ve seen both methods implemented.
I’m at a point in my career where I’ve picked up an uncanny skill to be able to figure time required for designs large and small to a high degree of accuracy and know what to charge. Then again, my estimates have been frequently ignored so that a quote will go out lower than needed so that “we can secure the job.” Many times at some cost later to us, I might add.
I now far prefer a set fee for work; but what constitutes the work needs to be clearly defined for a client. There has to be some set boundary at which point a client needs to be charged (hourly) for work above and beyond the scope of the stated/agreed upon brief.
I think for everyone this will be different. Some shops will need to, or want to, meticulously track time spent versus income for every job … we all have seen those places where designers fill in time sheets and are expected to be 70 or 80% “billable.”
Others have a better understanding of what it is we do and allow for creativity and the process to take its course. In the end, as long as the shop remains profitable, can anyone say which is right or wrong?
It’s hard to swallow here in Malaysia. Mainly because clients still are very uneducated about the value behind good communication design as compared to getting their IT staff to design it for them.
Even in website design, we end having to charge clients a flat-rate which we feel equals to the value we’re delivering to them.
Thanks to everyone for taking the time to leave a comment. I really appreciate seeing your opinions on the subject.
I personally only design visual identities/logos, this means that I have very little production time. Almost the entire creative process from research to design is spent problem solving.
The timeframe for any given identity project is the result of a wide number of factors. The most influential factor is my ability to be creative on any given day. I don’t bill more for days that I am more creative or bill less for the days that I am in a slump. My clients pay me to work at a problem until I develop an appropriate solution. I feel that neither the variance in time nor the reasons behind it, affect the value I provide in the end.
No doubt other ways of billing work for other designers and clients as seen in the above comments. I have billed by the hour in the past and have discovered it doesn’t work as well for me, or the people I choose to work with.
One vital step regardless of how you bill, is our responsibility to provide clarity for the client regarding project scope. Changes and additional charges can get out of hand very quickly and knowing upfront what is included is essential for a good relationship. (I happen to have a new article on Processed Identity http://processedidentity.com/article/revisions-redesigns-and-the-creative-process/ about this subject)
I don’t believe one way of billing is right or wrong as long as designers are getting paid appropriately and are focused on delivering the best they can for their clients.
Many thanks to everyone for joining in the discussion.
++ edited comment to include url for article
Valuable advice..
I would have to agree. There are times for hourly rates and time where it isn’t practical. I am sure if we charged by the hour for the “creative process” the price would be through the roof.
However, I tend to charge by the our for updating websites. I do this because updates are do this and that, not really much creativity.
I look forward to your comment on Monday.
Good article with great comments!! This is definitely a tough issue for many design/development firms and one we have wrestled with on several occasions. I agree with many of the comments given and we tend to utilize a hybrid approach with a shift towards full hourly. We give project pricing based on hourly estimates, track our time and ultimately provide final billing based on hours. Luckily, we are very good at estimating most projects, but we do have to eat some stuff every now and then.
Definitely good arguments for both… Let me know when someone figures it out!!
Charging by the hour is a huge problem. I have 12 years of experience and am extremely disciplined and organized. Therefore I work very fast. Which means I am earning less. — That is so unfair.
I’ve so far been charging clients a flat rate, depending on the type of project (logo, web, etc), but I’m thinking of tweaking this into a two-step process:
1) A flat fee for the initial work, plus x number of edits
2) A rather-high hourly-fee for edits after that, to discourage clients from asking for frivolous changes or scenarios like “show me edits A, B, and C and we’ll choose later which one is the final version…”
I just wanted to add that charging by the hour stops me from feeling exasperated with my clients when they start asking me for another thing….and another thing…that was not part of the original brief.
I want to feel that my work is valued by the client and, more importantly, I want to maintain a good relationship with that client. It’s hard to maintain a good relationship with them when you feel taken advantage of at every turn because you are not being paid for the inconvenience of it.
That said, I will offer people a flat fee if they are just looking for something Good Enough and not Perfect. If I know how much I’m going to be paid for a job, then it becomes MY choice whether I want to spend a few more unpaid hours making sure the design is as tight as I want it to be?
Ali
Good point, I never thought about explaining the solution angle.
Great article. I run a small shop with three designers, including myself. Initially, I struggled with how to bill fairly. I realized that me and my designers worked at somewhat different paces and sometimes the creative process just takes longer. I couldn’t risk my clients requesting a favorite designer based on how few hours they billed -whether they were more experienced or just having an “on” kind of day. I settled on a pricing scheme that combines per page rates and per project rates. We only revert to hourly rates when billing edits after the first proof stage. It has worked pretty well.
I usually give estimates that are broken down into sections of hours but this is just a rough ball park. I think that being very open with our clients about our process and how we work will help clients see past hours and numbers.
It depends. If you are a machine operator, and the client is going to pay for the time to sit down with you and create the design alongside you directing it every step of the way.
Then of course. Charge by the hour.
Otherwise, they are paying for project work. How much time you spend creating something is none of their business really.
Same goes for people buying designer label clothing. You don’t pay for the time it took to manufacturer, design and ship. You pay for what you think it’s worth. That could be a bad analogy, but it sort of follows the same line of thought.
Just don’t let people sit down and psh you around like a machine operator if they have already agreed to a fixed price. (Some people will really push it to the limits. It’s hard to figure out who is who. Some won’t reveal who they are until they realize what “they” can do.)
Couldn’t agree more, but clients usually don’t get the design process. If you’re luvky they appreciate the creativity, or it can mean back to the drawing board.
Keeping them in the loop helps.
Remind mr not to pay my carpentrr by the hour too, i like solutions there also
A design firm, I worked before, charged fixed fee after an initial interview with a potential client. However, after the project kicks off, if the client’s demands and requests are beyond the quote, we talk and agreed with the additional fee. I think designers need own working hours estimation to be able to tell them in terms of the client’s requests. That will become a price.
Now I have been working in overseas. In here, every client asks my hourly rate. I was surprised the first time. They ask me before they tell me what they want. I think they can judge by the rate not by the quality.
If I were a client side, I would have a budget for the project. I wouldn’t be able to afford to pay designers and programmers who takes time where ever they work for my project. More importantly, I have to trust them.
Last time, I had to ask a programmer to do some work. I told my budget and he estimated his work then he accepted it. This means I feel safe.
None of client has unlimited budget for asking you to work. At least you have to tell them your work estimation time and explain the process of the project to the client. There should be some kinds of agreement in both side to sign and be honest each other to communicate.
If you know the deadline and what to do, you know how much you should charge them.
Hi folks and Steve,
you may be interested to read my PhD research on this very topic! Yes, someone wrote a dissertation on billing by the hour! Me!
Check out the blog and and scholarly articles:
http://agencytime.wordpress.com
http://tas.sagepub.com/cgi/content/abstract/18/2-3/284
http://www.cjc-online.ca/index.php/journal/article/view/1981
The long and short of my research is this: creative work cannot be sliced and diced by the hour, much less by the minute because that is not the way time is cognitively experienced (not news to anyone). The REAL reason larger interactive design agencies (my area of study) do this kind of tracking is to imbue a sense of “time thrift” among employees.
People who are rated on “utilization rates” are often told that they must have a minimum amount of their labour sold to a client. This, after they’ve already sold their labour to their employer. In this sense, billing by the hour is super-commodification of labour.
In short, I don’t recommend it, mostly because the technology used to track time is so crazy FrankenTime that it makes real life and real creativity disappear.
Check out the blog for more easy-to-digest info.
So true. It also really depends on what the client ‘is use to’. When we have clients who are familiar with design and creative processes its easier to explain how you use your time. If the client is really conservative it can be difficult, but –as a designer– I use my creativity to solve that problem. I try to take the client by the hand and explain him/her what I do and what my steps are in a creative process. Mostly it is build on trust.
Teresa, Felix,
I agree and the bigger concern is that speed becomes valued over our ability to solve creative problems.
Niki,
Thanks. Being open and transparent in how/why you price the way you do is a great way to build trust with a client. Not only do they begin to understand the process, but their trust fosters better results.
BottleHed,
I do charge for additional time that is outside of the project scope. If it is production work it is usually billed by the hour and is always approved before doing the work. You may like my article on the subject here: http://processedidentity.com/article/revisions-redesigns-and-the-creative-process/
Alison,
Thanks. I understand how projects can go off track and result in the designer feeling they are being taken advantage of. It can be difficult in the middle of the project to try and correct this and so it is essential to set expectations at the beginning regardless of how we bill. Another plug for my article above.
James, TZcreative, M, Thanks for contributing — it is appreciated.
William,
Thanks, Great comment. I think it is sometime felt by designers that clients should come to us with a better understanding of what we do. There are plenty of professions that I would not know what to expect the first time engaging in their services. I feel (like you) that it is a part of each project I accept, to gain the understanding and trust necessary to do the job. Building understanding and trust can sometimes be insurmountable and those are the clients I turn away.
Sam,
I really enjoyed your take and unique perspective on the subject and for pointing me towards your blog. http://agencytime.wordpress.com/ (I updated the link in your post as there was a small typo).
I tend to do a mix of both – I quote a flat fee, but convert it roughly to ‘hours’ for the client and for my own time management.
I’ve found that putting a specific number of hours next to a project stage helps the client judge its value, rather than the price I’m asking. x hours on Information Architecture is a lot easier to stomach than £x; after all which client would want to skimp on important parts of their project?
I’m just a student doing freelance work though; I’m sure this will change as I grow my confidence in dealing with clients.
I do web design & development, and do not apply hourly charges on either side of the project. I’ve done it before, and it simply backfires.
With design work this is easier to visualize. With development there is also a lot of time put into it that clients tend to not understand. Writing good JavaScript or good PHP takes some clever thinking as well, and you will often find yourself at a coffee shop daydreaming in script.
Good article, I rarely use by the hour pricing, because I tend to work very fast, especially when it comes to the xhtml css part or wordpress integrating, charging by the hour wouldnt make me anywhere near as much, because my hourly productivity would be very high.