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Can we talk about whether flat fees or hourly rates actually work better for client relationships?
I was at a coffee shop in Nashville last Tuesday and overheard two agency owners arguing about this. One guy was saying flat fees always lead to scope creep and he lost $3,000 on a single project last quarter because of it. The other guy said hourly rates make clients watch the clock and question every tiny change. I run a small shop with 4 people and we've been doing hourly for 2 years. But I'm wondering if we're leaving money on the table or if switching would just cause headaches. What do you all think gets better results without ruining the trust with clients?
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ross.jessica4d ago
Okay but that's not exactly right about the hourly thing. I've done both and the real issue with hourly isn't clients watching the clock, it's that you end up eating time on tiny admin tasks and questions because you feel bad billing for 5 minute emails. I had a client last year where I let 20 of those little things slide and suddenly I'd given away probably 8 hours of my month. Flat fees work if you're really tight with your scope and have a change order process that clients actually sign off on before you do extra work. But if you're doing hourly and losing money on small stuff, just get better at tracking everything down to the minute and billing for it, no apologies.
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