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PHOTO: Ali Yahya

Independent user experience (UX) and creative contractors or agencies have four main ways to bill a project:

1. Hourly: You charge a certain amount per hour or per day. You might have different rates based on what task you or your workers are doing.

2. Retainer: There is an ongoing relationship and you’re paid periodically. You are receiving X amount per time block, often a month, to provide certain services or complete agreed-upon tasks.

3. Commission-based: Your pay is wholly or mostly based on a percentage of something the client does or sells. The deal might include equity or shares in the company. If the company does well, you might cash out at some future point.

4. Flat project fee: You have estimated a detailed and scoped project. You are charging X amount for the entire project no matter how long it takes or how many hours you spend.

Which Method of Billing Is Goal-Oriented?

There is a myth that if you are billing hourly you’re not goal-oriented, but instead are just trading time for money, a hamster on a wheel getting tasks done and turning in a time sheet. None of this really holds any truth: Any unpleasant part of a project can make you feel like a hamster on a wheel no matter how you bill.

However you choose to bill, you should be goal-oriented. Every project should have clear goals and objectives and key results (OKRs), initiatives and key performance indicators (KPIs). Projects might have concrete, measurable goals like, “This new feature should increase revenue by 7%.” Projects can also have goals that are less quantitative such as, “Innovate something that puts us past our competitors and gets everybody talking about us.”

Another fallacy is that those being paid a percentage of the rewards or fruits of labor are goal-oriented, and the rest don’t really care if the project succeeds or not. Any decent UX or creative worker cares about the project. However, caring doesn’t require you to be paid commissions or equity, representing an unknown amount of money in an unknown future. Caring doesn’t require you to be a “partner” in a business over which you have little control.

Related Article: GDPR, From the Gig Economy Perspective

Getting Billing Wrong

Each billing method comes with potential drawbacks.

Billing hourly can make the client feel like the project is an open invoice that might get out of control. You can avoid that by providing detailed proposals giving estimates of how much time each task is likely to take. Hourly billing feels more finite when you tell the client it will take X to Y hours with a cost cap of Z, and you will get approval in writing if any change in scope requires a revision to the estimate.

Retainers can be great if the work is recurring or ongoing, and you’re able to wrangle the client who tries to push the scope outside of what was originally agreed. Freelancers and consultants dealing with scope-creeping projects might feel like, “Well, I’ll just throw this in for free, they’re a good client.” However, you accidentally teach the client that your time might not be worth what you quoted and if they push, they can get free time. Make sure that whenever scope changes, there are extra charges for that time or task.

Commission or shares in something can be great if your contract is amazingly written. Are you due 10% of the profits? With creative accounting, there might not be any profits and you will go unpaid. Are you getting a percentage of revenue? How will you audit what revenue this company really received? Are you getting shares? What are shares worth, when can you sell them, and to whom? This is where a great lawyer is more than worth whatever they charge. A vague contract or bad deal means you will never get paid.

Like a retainer, a flat project fee is excellent if you can control the scope and maintain boundaries. If you are charging $50,000 to do a project with the following details and tasks, no matter how long they take, then make sure you are quoting an additional fee if or when the scope changes.

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Adapt it to Your Style

There is no one right way to bill, but there are some keys to getting paid what you deserve:

  • Excellence in estimating: If you are poor at estimating the amount of work it takes to do something, your hourly billing won’t match your proposal, your commission might feel low for the work you put in, and your retainer or flat project fee will make you question if you lost money on this one. Conversely, if you overestimate, the client might feel overcharged or even scammed.
  • Accounting for all possible project time: Freelancers and consultants, especially earlier in their careers, might bill for “time worked.” But what about all those phone calls, long emails, presentations and research? No matter which method you use, make sure you have accounted for all labor and time going into the project.
  • Adapting to your style: You can charge a monthly retainer for a set or package of services, and then offer an hourly rate for time needed outside of those. These methods can be combined.
  • Adapting to your client: Some clients dislike the uncertainty of hourly billing even if you have provided an estimate. You can adjust for those clients by shifting to a flat fee proposal that uses strong contracts and non-vague language to allow you to bill more if the client changes the scope or timeline.

Related Article: User Experience Design Is a Specialty: Treat it as Such

The Biggest Mistake: Handshake Deals

The main thing you can get wrong is not having a solid contract prepared by a real attorney. Don’t write the contract yourself. Don’t use a boilerplate you found online. Don’t agree now that you will agree on something else later. Do not enter into a business relationship where things are undecided or vague.

The main goal of contracts is to capture the moment in which parties agreed so that you can put in place what happens when you no longer agree. No matter how you choose to bill or how you combine the approaches, have a qualified lawyer draw up a contract appropriate to your business, location and style.