Home – New Forums Starting your journey Providing estimated hours with hourly rate – isn’t it same as fixed quote?

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  • #987120
    flyer
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    I sometimes have clients who ask for my hourly rate for their projects. Then they want me to provide them the estimated hours. I think there is no difference between this and providing a fixed quote. If I go over the estimated hours, then they might just come back to me and seek clarification. Is it then safe to just provide them the fixed quote and completely ditch the hourly rate concept? How do you guys deal with this?

    #1161240
    Greg_M
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    I always prefer fixed pricing, both when quoting and buying.

    Hourly rates + estimated hours does not imply fixed price to me, and leaves room for arguments ( I do it sometimes with established clients that have a good idea of costs and what to expect).

    As long as you’re clear about the scope and prepared to defend it (or monitor and document variations) I reckon on average you can get a better margin on a fixed price. Occasionally I blow it, but not usually by much.

    As a general rule most clients want to know where the pain will stop, and often pay a little more than risk an overrun.

    #1161241
    John Romaine
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    What business type are you talking about?

    #1161242
    flyer
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    John Romaine, post: 186264 wrote:
    What business type are you talking about?
    Web development
    #1161243
    John Romaine
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    Here’s a video that I shot a while back that show how to charge.

    https://www.youtube.com/watch?v=Li3RpEZTEn8

    #1161244
    flyer
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    John Romaine, post: 186268 wrote:
    Here’s a video that I shot a while back that show how to charge.
    https://www.youtube.com/watch?v=Li3RpEZTEn8

    Nice video there, John.
    Like you have mentioned in the video, I can charge hourly rate for additional work on a project. I think it’s fine to charge hourly rate for redesigning layouts of pages but is it fine to charge hourly or fixed rate for developing a new module?

    It again brings us back to my original question. If I am to charge hourly rate and the client asks for the estimated hours, can I just tell them that it’s just an estimated hours and the hours can go up? Is that the right way to tackle this or is there a better way to say this?

    #1161245
    bluepenguin
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    I usually give an estimated price range. i.e. 3-5 hours @ X per hour.
    That way you have a bit of wiggle room if it takes a little longer than planned, and in most cases your client will be happy, because it didn’t cost the full amount.

    #1161246
    John Romaine
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    flyer, post: 186269 wrote:
    Nice video there, John.
    Like you have mentioned in the video, I can charge hourly rate for additional work on a project. I think it’s fine to charge hourly rate for redesigning layouts of pages but is it fine to charge hourly or fixed rate for developing a new module?

    It again brings us back to my original question. If I am to charge hourly rate and the client asks for the estimated hours, can I just tell them that it’s just an estimated hours and the hours can go up? Is that the right way to tackle this or is there a better way to say this?

    Is it a task or is it a project?

    The video should answer the question, yes?

    #1161247
    flyer
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    bluepenguin, post: 186275 wrote:
    I usually give an estimated price range. i.e. 3-5 hours @ X per hour.
    That way you have a bit of wiggle room if it takes a little longer than planned, and in most cases your client will be happy, because it didn’t cost the full amount.

    Ok. When you given them a range for example, 3-5 hours @ $50/hr, they will calculate the price for the job as $250. How is that different from or does it have any benefit over sending them a fixed price of $250 to begin with?

    I think once we start sending them the estimated hours with an hourly rate, we are indirectly giving them a fixed price. If the job takes more than 5 hours, then can we go back and tell them it’s going to cost them more? I don’t think the clients will like that.

    I was thinking if someone asks for hourly rates with estimated hours, then there is no difference from sending them a fixed price because ultimately that’s what they want to calculate – the fixed price. Correct me if I am looking at it in a wrong way.

    #1161248
    John Romaine
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    I think you’re over thinking this and making it harder than it needs to be.

    You should be able to look at a job and say, “This should take around 10 hours, but to be safe, I’ll set it at 13 hours” (You should always do that anyway, because of change requests and unexpected issues.

    Then you’re at 13 x hourly rate.

    13 x $50 = $650

    Put $650 on your quote, along with an estimated time frame.

    “Estimated completion date/time is blah blah blah”

    Get yourself a system. Don’t let clients dictate your terms.

    #1161249
    Natalie Khoo
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    It can seem a bit of a time-waster or just plain confusing to provide a
    client with an hourly rate AND a project estimate. However I do both and am
    confident this is the best approach because the key is that clients want to
    know what they’re paying for. Give them a breakdown of how many hours it
    takes you to draft concepts, code the site, do QA testing, for example. In
    my case, as a copywriter I always show a client how much time I spent
    researching a business’ competitors, planning, writing, editing (and also a
    set of revisions). I find that often people may not realise the work
    involved and breaking hours down is a great way to justify your pricing.

    #1161250
    TehCamel
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    Generally for a project – estimate how long you think it will take you. then add some fat. Things go pearshaped.
    Then present it to the customer as “estimated XX hours at YY per hour.”

    or “Fixed fee project, estimated XX hours, total cost ZZ” (where ZZ is at least XX*YY*25%)
    you build the 25% additional margin in case things out of your control go out of your control.
    you don’t want to turn up to do the project, to find that they want to change the scope and instead of wanting you to perform 4 tasks, it’s suddenly 88 tasks.

    Also, spec out your project or work properly, especially if you’re doing a fixed-fee. Have a written and agreed project scope. Anything else that’s not pre-agreed on is out of scope and at extra charge, dependent on availability.

    #1161251
    The Copy Chick
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    If you were to estimate 5 hours @ $50 p/hour, it would be reasonable for the client to expect the job would cost around $250, but if you only did it in 3 hours, they would expect to pay only $150, or if it took you 6 hours, they would expect to pay $300.

    If you were to provide a fixed quote of $250 for the project, that would be the cost regardless of how long it took you to do – providing you adhered to the original scope of work. You might make a loss, or you might make a profit. The client need not even know your hourly rate.

    However, as Virtual Lawyer pointed out, you want to make sure that with a fixed rate you have a clearly defined scope of work so you don’t get ‘scope creep’ which can blow out your budget. You should also define how many amendments are included, (if any) and include a provision to quote for any additions to the original scope of work.

    So while estimates can be far more flexible, they can also make cash-flow for both parties more difficult to manage. A fixed fee means no surprises when the bill comes, but you need to ensure the scope of work is very clearly defined.

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