I finally switched from hourly billing to flat project fees last quarter

I ran a small agency in Austin for 4 years doing hourly billing for web design clients. Clients were always questioning my time logs or asking for discounts on small tweaks. It got old fast. So in January I moved everything to flat fees based on scope. First project was a $4,500 site rebuild for a local coffee roaster. I estimated 60 hours but finished in 45. Pocketed the difference and the client was happy because they knew the cost upfront. No more arguing over 15 minute increments. The only downside is I have to be real careful with scope creep now. Has anyone else made the switch and seen their profit margins improve?

2 comments

2 Comments

perez.cole3d ago

That $4,500 rebuild on the coffee roaster... how did you handle the scope document? I feel like the whole thing falls apart if you don't write it bulletproof upfront, especially on those smaller sites where every little change eats into your margin. Did you build in a buffer, like a 10 percent overage for minor requests before you start billing for scope creep, or do you just hold the line and say "that's an add-on" for everything?

nathanking2d ago

@perez.cole You're absolutely right, the scope document is everything on these smaller jobs. I had a similar experience on a $3,200 bakery oven controller rebuild. I built in a 10 percent buffer for small changes, and it saved me. The customer ended up asking for three different sensor placements and a new display mount. Since it was inside that 10 percent, I just did it and didn't bill extra. But anything over that, I held the line and called it an add-on. It kept things clean and no hard feelings.