Thursday, November 04, 2010

Would You Rather A Fixed Price Or Pay By The Hour?

Interesting post today on Twitter and published to my Daily (which I love by the way, and is a great way to catch up on fantastic content that I missed by my Twitter pals, and also to showcase their fine contributions to my Twitter Experience),  was by copywriter Divine Write on his blog which relates why he chose to switch to hourly after 8 years’ fixed price. He makes a good case study and it is a topic that is one that has been on my mind for a little while now. 

With the difficulties in the economy, it seems that everyone is trying to save money and cutting back on all kinds of things. Not always things that they can afford to cut out. Marketing and help in their business would be an example of where it might be more prudent to spend money to ensure the business develops, but sometimes people look for easy answers and 'a penny saved', or at least not spent, may look like a deal, when nothing else is factored into the equation. 


From  the client point-of-view there is much benefit in a fixed price. It makes it easy to budget for the expense and it means that any time lagging and delay that happens which is your fault, isn't at your expense. This is a definite advantage for a client who is tardy with getting their work done and in a way, an incentive for the business provider working with them, to think about charging for time!

A fixed  monthly sum when averaged out can compare quite favourably with wages of employees who are there all the time and are being paid, when they are being productive and when they are not.

For the freelancer or consultant working with a business, it can perhaps seem more attractive to potential clients for a pay-by-the-hour option. Is it really better from the client point-of-view? I suppose clients will have a variety of views and for some an hourly rate might be better some times and not so at other times, or with particular contractors they hire.

I'm not sure it can ever be a win-lose game to work out. There is no win, if you can't get the help you need to do the things you want to do in your business but don't have the skills in-house to do. And if they have wasted away in diminished circumstances because nobody wants to pay them then they can't help anyone. (NOTE: It is fascinating to me that while some are pinching every penny, they will happily put their hand-in-pocket if there is a rah-rah 'dog and pony show' with all the glitz and puffery and self-congratulatory hoopla;  just to be gouged and left wounded by the affair. But that is perhaps a topic for another day... )

So perhaps I should put it out to you the readers.

Would you rather pay by the hour, or pay on a fixed price?

Would you be more inclined to start work with a someone if you can do it at an hourly rate?

Please share your thoughts and reasoning in the comments section below.

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Lindy Asimus

Lindy Asimus
Business Coach
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