Hiring Freelancers: Hourly or Fixed Rate?

by Amelia Winkle

hiring freelancersHiring freelancers for the first time may make you nervous. Will the freelancer I choose do the job right? Will this person work well with me and other members of my team? These are some of the same questions you ask when hiring employees for your business, and they definitely should be asked. But, you also need to consider payment. If you already have employees, you may want to keep freelancers on the same hourly structure as your other employees. Is that the right thing to do, though?

There are many articles online discussing whether you should hire freelancers on an hourly or fixed rate. The problem is that there are so many opinions. If the writer of the article prefers hourly, that’s the slant taken in the article. That might not be right for your business, though, or the freelancer you choose. So the answer to this question is really…it depends.

Choosing the Right Rate Structure

When you decide how to pay freelancers, there are a lot of factors to consider:

  • Is this an ongoing or one-time project, and what type of project is it?
  • Do you know how long the project will take?
  • How much do you trust the freelancer?
  • How flexible is your budget?

What’s the Type of Project?

Many companies hire freelancers for one-time tasks, like writing the copy for a web page or designing a logo. If you need a one-off project like those, you may want to consider using a fixed-rate payment. This is one project, and your relationship with the freelancer will only continue afterward if you both like their work, and you have another project that needs to be done.

But if you want to hire a freelancer as a virtual assistant, that might be different. Presumably, the virtual assistant will work for you indefinitely. Would you want to pay $500 a week, but find that you have nothing for that assistant to do at least one week a month? No, you wouldn’t. An ongoing relationship with the assistant means that you may want to use an hourly rate unless you know exactly how much work you’ll need to be completed each week.

How Long Will the Project Take?

If you can estimate the time of the project, it may make your choice easier. If you know the project takes about 10 hours, you can easily determine whether a freelancer is charging you an unusually low or high fixed rate.

Why does that matter? If you pay too little for the project, the quality may suffer, and then you may have to rework the project or pay someone else to fix it. On the other hand, you don’t want to pay too much. If you know that the project will take about an hour, and the hourly rate for employees in that field is $25, you probably don’t want to pay someone $300 to complete the project.

If you don’t know how long the project will take, try to do some research, or ask the freelancer how long the project should take before you hire. This does two things: For fixed-rate projects, you know when to expect the work back. For hourly projects, it helps with your budget. If the freelancer doesn’t have a clue, you probably want to dig deeper in your interview of the freelancer, and you almost definitely want to pay on an hourly basis.

Do You Trust the Freelancer?

Whether you trust the freelancer is one of the most important questions. For a fixed-rate project, the quality of the work and the timeliness will tell you that they put in the time and effort to do the project correctly. Most freelancers include a certain number of revisions in their estimate, and you should always be clear on what is included before you start a fixed-price contract.

For an hourly project, however, you need to be able to trust that the freelancer is working when they say they are. There are time tracker tools available – some that take screenshots of the freelancer’s computer screen as they work – and those are helpful. If you require the freelancer to be on-site when working, you can see what they’re doing. But keep in mind that many freelancers are self-employed, at least in part, because they want to call their own shots. They don’t want to feel that someone’s over their shoulder watching 24/7, and they are ethical about their work. So, you can also usually tell if a freelancer on an hourly rate is working just by the results; you will get projects on time.

If you hire a new freelancer for an ongoing relationship, and you’re concerned about work ethic, you may want to start with an hourly rate. This helps you see how long the job takes and ensure that you get your money’s worth.

Is Your Budget Flexible?

For most businesses, the budget is a concern. Let’s say you need an ebook edited. You think it will take five hours, and your budget is $100. You have a choice of hiring two freelancers, both equally qualified. Freelancer A wants to charge $20 an hour, and Freelancer B quotes a rate of $75. Which do you choose?

The $20/hour rate might be great if it takes Freelancer A only three hours to edit the ebook. But what if her computer crashes when she’s almost finished, and she has to do more than half the editing again? Then, it might take 8 hours. In that case, you’re going to pay $160, which is over budget. That’s the risk.

If Freelancer B takes the project, you pay $75 whether she takes 2 hours or 20 to edit the book. For all you know, it takes an hour, and you just paid $75/hour. That’s another risk. But, if you get what you need and don’t go over budget, does that matter?

I once had a potential client who offered $15/hour for blog writing, which is much lower than my normal rate. Instead of politely refusing, I asked about a fixed rate. It turns out, he was hiring entry-level writers who took four hours to write a 500-word blog post. I was happy to accept a $60 fixed rate, and he was happy to pay it. Why? Because he got a higher-quality article with a quicker turnaround, and for the same rate he was paying less experienced writers.

What Are You and Your Freelancer Comfortable With?

But do you know the most important question when deciding whether to use an hourly or fixed rate? After reading the options, and scenarios when using each, it all comes down to this: what do you and the freelancer agree on? If you and your freelancer are both comfortable with an hourly rate, but not a fixed rate, then pay him hourly. If you prefer paying by the hour, but you find an amazing freelancer who only works on fixed-rate projects, then you need to decide whether the right freelancer is worth changing your opinion. You need to find the right freelancer to work with you, and then work out a payment system with that person. Consider your budget, the results, and the pay with your freelancer, and you’ll have a more productive working relationship.

About Amelia Winkle

About Amelia WinkleAmelia has more than 20 years of experience in writing and editing for businesses. As the former customer training manager at a software company aimed at professionals, she brings years of expertise in research, instructional design, and business-to-business communication to any project. In 2015, Amelia completed a degree in Journalism and Media Studies, along with a minor in Creative Writing, to supplement her experience. Since then, she has worked with many businesses as a freelancer to meet their writing, editing, and instructional design goals.
You can contact her at https://amwordsga.com/contact/

 

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