Why Design Can’t be Billed by the Hour

As someone in the profession Steve I can relate to what you are saying here. The key is ensuring that the client gets value for money. Design is inherently subjective and therefore difficult to place a value on.

In everyday life there are paradigms like paying tradesmen for their time and this by convention is by the hour. I would argue that clients should not only pay hourly rate for time at computer but also for time away from the computer when the designer is in the process of thinking about the design problem. I would also go as far as to say they should be paying for a slice of the 20 years of accumulated experience that ultimately provides them with the quality solution (this can be built into the hourly rate I suppose)

I think it is better all round , for a number of reasons, to charge for the final solution including the whole process and not get bogged down in time spent at the computer.

Selling this to the client is the hard part. Personally I use an approach whereby I can demonstrate a return on their investment using a process of measurement, analytics, a/b testing. Of course my field is web design for which identity design is a small part of a much bigger picture. It would be harder to single out the identity and apportion directly any conversions on a website to that identity alone. When i say conversions I don’t just mean monetary, but any interactions that further the goals created for the website at its induction.

Dave,
Great comment.

It is definitely a hard sell for some clients. I think in the case of a tradesmen, they bill for the actual time spent on the project (with some rounding up, travel etc) and you can often oversee them. There is no way for a client to know how much time is actually spent on a design project — I could easily spend half or double the amount of time quoted.

I believe the benefit to both the client and the designer when quoting for a solution rather than in hours is that it removes that ‘number’. As a designer I no longer have to think about accomplishing something in a certain number of hours. As a client I know the designer is going to spend the number of hours necessary to achieve an appropriate solution.

Chris,

Thanks for the comment and I can completely see where you are coming from. I would not refuse to give an hourly rate to a client either. It would really be a meaningless number however to meet the request — and I would focus on the solution and not the hours.

Would you say it was fair to agree on a budget for a project, and then have an hourly figure in mind to gauge how long you feel a project should take?

I find this is an easier way to manage time and budgets. I then remove what I would class as un-billable time at the end of the project.

This reminds me of the oft credited/claimed story of the designer who charged thousands of dollars to fix a corporation’s logo. He walks in, looks at the mark, then adds a single stroke to the logo and it’s PERFECT. Of course the client begins to complain that they shouldn’t be billed the full fee as it only took him 5 minutes. The designer informs them that they weren’t paying for the 5 minutes of time to place the line, they were paying for the twenty years of experience to know WHERE to place the line.

I find what you say very true. However, my clients are usually happy to get a flat fee rather than be billed on an hourly rate.

Hey great topic!

I’m totally into that questioning those days.
Actually it started a bit with school realizing I enjoyed what I did despite the big amount of time I spent on it. Then, it was some abstract problem I delayed for later; I hoped that with more experience I would be more efficient. But it didn’t happened as I expected. I am more and more convinced that each new project bring new challenges. For me it’s like taking a new start each time as you want to go further and try to discover new things.

Now I have to make a living, this is my biggest problem. It’s really hard to fix a minimum fee and I found the only easy way to do it is hourly. Even if you can’t estimate precisely it gives you a kind of guide. And some anxiety when you’re hitting your budget because you haven’t found the idea that makes you feel happy and useful…

Well relax and enjoy without worrying is the best thing. And have comprehensive clients too…

For larger projects such as websites where there is a lot of production time, I quote a flat design fee and an hourly production rate. I sometimes financially gain and sometimes lose. The most important thing is arriving at a great solution, and one can never know in advance the toil or ease that will ensue.

I don’t do much freelance but when I do I charge by the hour. This post has given me something to think about though, so thanks!

If you want to factor in years of experience then just increase your hourly rate. That’s what it’s for.

I think this is very true of initial designs – logos, websites, brochures. But I don’t think it applies to maintenance.

For example, I design and build websites and I charge a fixed rate for the projects. I build in clauses in my contract that limit the number of designs I will present before additional fees will apply but this rarely happens.

But I do charge hourly for updates. Updates generally don’t take nearly as much creativity as creating something from scratch.

For example, if a client needs and additional business card layout for a new employee or an additional section for their website (if they don’t have a CMS), I bill by the hour because there isn’t much creativity involved and I have a pretty good idea how long it will take and I can share that with my client before proceeding.

A great deal of my time as a designer is spent not designing. I think this applies to many of us.

As a photographer and designer I struggle with hourly vs per day rate or project basis. There are supposidly calculations that ‘back’ you into a price structure that accounts for all of your business equipment, experience and profit including bills or cost to maintain equipment, insurance etc.

A guy wants a price on shooting a portion of his product out of his retail store so he can use images on a web site, other materials… He wants a good price- you need the money and client recognition, and don’t want to low ball your own industry.

I offer several options and depending on the consultation I have I ‘encourage’ them to go with one that we both can live with and hope they like me and my work.

You hit it right on the head, Steve. Typically, my design process involves taking in the clients information, my research and any other relevant information and just letting it mush around in my head for a day or two. It’s kind of like when you let some types of recipes sit overnight. It takes time for the flavors to meld until the dish becomes what it is supposed to be. I design the same way. Let all the different ideas meld together in different ways and give me new and additional angles from which to view and solve the problem.

I’d be retired now if I had a dime for every time I heard/read someone telling me how long something should take. I’ve even gotten that from some studio managers and it can burn me up if they catch me at the wrong moment. The mantra must be repeated, “Design is not a commodity that can only be measured on the time/quantity scale. It’s not like we’re twisting nuts on to bolts or installing an appliance which can be measures in that way.

So, the education continues…

Laurie, that kind of issue can be solved by clearly indicating what you will do for the client on a project and stating that extra charges may apply if the project goes outside the stated parameters. While I usually allow some flexibility, if the client starts asking for a lot of new things, I will let him know that our initial agreement does not cover the new work and I will either issue a revised quote or an addendum that they must agree to before work continues.

It is very difficult to put an hourly rate on an idea…even more difficult to put an hourly rate to a solution. There is an old fable about this concept in consulting and it often applies here.

A nuclear power plant suddenly shut down on its own accord. A consultant was urgently called in to figure out what was wrong. The consultant arrived, calmly walked to the center of the plant, walked up to a panel of over 100 buttons–each with a different function for the plant. The consultant hit one button in the middle left side of the panel. The power came on and the consultant handed the plant manager a bill for $100,000. The plant manager said “that is ridiculous, you were only here for 5 minutes.” The consultant ripped up the bill and wrote out a new one. It read $1 for 5 -minute site visit, $99,999 for knowing which button to push.

In design our challenge is to demonstrate to clients they pay us to know which buttons to push. The more we know and better we are, the faster we create the solution. So the more experienced you are the less effective hourly rates are.

But it is also important to define the scope of your work and be proactive in managing and re-quoting changes in scope. Nothing keeps scope creep in check better than work order change estimates.

I think it also depends on the kind of clients you are working for. Right now, many of clients are small business or individuals running their one-man business and a lot of them just don’t get that design (I do web design) doesn’t happen magically and on cue.
They are caught in their traditional way of thinking – “If I deliver my specs to the designer today, she can deliver the results tomorrow.”
I personally gave up explaining what you mentioned in your article: that it’s the time away from the desk and computer that also counts and sometimes provides the very solution they were expecting. I got stares and sometimes even unwillingness to pay the bill when I explained the price to them.
So, today, out of sheer necessity I charge by the hour and and list all the tiny steps as accomplished tasks. To someone from inside the design business it might look funny, but to customers who don’t know xxx about design I at least don’t have to justify myself anymore.

After devoting the last twenty years of my life to design in my own studio, boutique shops and large agencies around the globe, I’ve seen both methods implemented.

I’m at a point in my career where I’ve picked up an uncanny skill to be able to figure time required for designs large and small to a high degree of accuracy and know what to charge. Then again, my estimates have been frequently ignored so that a quote will go out lower than needed so that “we can secure the job.” Many times at some cost later to us, I might add.

I now far prefer a set fee for work; but what constitutes the work needs to be clearly defined for a client. There has to be some set boundary at which point a client needs to be charged (hourly) for work above and beyond the scope of the stated/agreed upon brief.

I think for everyone this will be different. Some shops will need to, or want to, meticulously track time spent versus income for every job … we all have seen those places where designers fill in time sheets and are expected to be 70 or 80% “billable.”

Others have a better understanding of what it is we do and allow for creativity and the process to take its course. In the end, as long as the shop remains profitable, can anyone say which is right or wrong?

Thanks to everyone for taking the time to leave a comment. I really appreciate seeing your opinions on the subject.

I personally only design visual identities/logos, this means that I have very little production time. Almost the entire creative process from research to design is spent problem solving.

The timeframe for any given identity project is the result of a wide number of factors. The most influential factor is my ability to be creative on any given day. I don’t bill more for days that I am more creative or bill less for the days that I am in a slump. My clients pay me to work at a problem until I develop an appropriate solution. I feel that neither the variance in time nor the reasons behind it, affect the value I provide in the end.

No doubt other ways of billing work for other designers and clients as seen in the above comments. I have billed by the hour in the past and have discovered it doesn’t work as well for me, or the people I choose to work with.

One vital step regardless of how you bill, is our responsibility to provide clarity for the client regarding project scope. Changes and additional charges can get out of hand very quickly and knowing upfront what is included is essential for a good relationship. (I happen to have a new article on Processed Identity http://processedidentity.com/article/revisions-redesigns-and-the-creative-process/ about this subject)

I don’t believe one way of billing is right or wrong as long as designers are getting paid appropriately and are focused on delivering the best they can for their clients.

Many thanks to everyone for joining in the discussion.

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I would have to agree. There are times for hourly rates and time where it isn’t practical. I am sure if we charged by the hour for the “creative process” the price would be through the roof.

However, I tend to charge by the our for updating websites. I do this because updates are do this and that, not really much creativity.

I look forward to your comment on Monday.

Charging by the hour is a huge problem. I have 12 years of experience and am extremely disciplined and organized. Therefore I work very fast. Which means I am earning less. — That is so unfair.

I just wanted to add that charging by the hour stops me from feeling exasperated with my clients when they start asking me for another thing….and another thing…that was not part of the original brief.

I want to feel that my work is valued by the client and, more importantly, I want to maintain a good relationship with that client. It’s hard to maintain a good relationship with them when you feel taken advantage of at every turn because you are not being paid for the inconvenience of it.

That said, I will offer people a flat fee if they are just looking for something Good Enough and not Perfect. If I know how much I’m going to be paid for a job, then it becomes MY choice whether I want to spend a few more unpaid hours making sure the design is as tight as I want it to be?

Ali

Great article. I run a small shop with three designers, including myself. Initially, I struggled with how to bill fairly. I realized that me and my designers worked at somewhat different paces and sometimes the creative process just takes longer. I couldn’t risk my clients requesting a favorite designer based on how few hours they billed -whether they were more experienced or just having an “on” kind of day. I settled on a pricing scheme that combines per page rates and per project rates. We only revert to hourly rates when billing edits after the first proof stage. It has worked pretty well.

It depends. If you are a machine operator, and the client is going to pay for the time to sit down with you and create the design alongside you directing it every step of the way.

Then of course. Charge by the hour.

Otherwise, they are paying for project work. How much time you spend creating something is none of their business really.

Same goes for people buying designer label clothing. You don’t pay for the time it took to manufacturer, design and ship. You pay for what you think it’s worth. That could be a bad analogy, but it sort of follows the same line of thought.

Just don’t let people sit down and psh you around like a machine operator if they have already agreed to a fixed price. (Some people will really push it to the limits. It’s hard to figure out who is who. Some won’t reveal who they are until they realize what “they” can do.)

A design firm, I worked before, charged fixed fee after an initial interview with a potential client. However, after the project kicks off, if the client’s demands and requests are beyond the quote, we talk and agreed with the additional fee. I think designers need own working hours estimation to be able to tell them in terms of the client’s requests. That will become a price.

Now I have been working in overseas. In here, every client asks my hourly rate. I was surprised the first time. They ask me before they tell me what they want. I think they can judge by the rate not by the quality.

If I were a client side, I would have a budget for the project. I wouldn’t be able to afford to pay designers and programmers who takes time where ever they work for my project. More importantly, I have to trust them.

Last time, I had to ask a programmer to do some work. I told my budget and he estimated his work then he accepted it. This means I feel safe.

None of client has unlimited budget for asking you to work. At least you have to tell them your work estimation time and explain the process of the project to the client. There should be some kinds of agreement in both side to sign and be honest each other to communicate.

If you know the deadline and what to do, you know how much you should charge them.

So true. It also really depends on what the client ‘is use to’. When we have clients who are familiar with design and creative processes its easier to explain how you use your time. If the client is really conservative it can be difficult, but –as a designer– I use my creativity to solve that problem. I try to take the client by the hand and explain him/her what I do and what my steps are in a creative process. Mostly it is build on trust.

This is an issue that I struggled with a great deal and I do agree with the theory behind what all the flat raters are advocating. 100% in agreement with the theory – but I’ve found loop-holes in the application of that theory.

You’ve all had that client, that you quote a flat rate for, complete the work as per their instructions, make the minor changes after reviews and then inevitably the completely alter the concept because they had an epiphany or a cousin of their’s suggested it. Now they want the project redone based on their new concept and they’re not willing to pay anything more than the flat rate you quoted.

There are numerous other types of scenarios where you have people trying to take advantage of the flat rate concept… …like the client who doesn’t know exactly what they want and revise and add as the project goes, so you end up with something far larger in scope than you had ever imagined.

Now, don’t get me wrong – the client’s aren’t right here and you’re fully entitled to argue with them, struggle with them and fight hard to ensure you’re getting paid. But, that’s not what I got into this business for. I am not a designer and developer because what I wanted to do was debate with clients about costs.

So here is the solution I propose to all of you – factor in the times you do feel creative. (For me, and a lot of others, driving inspires and solves a lot of dilemmas… …but also, the shower. Early morning showers are code havens for me and I solve a large number of code related issues while showering. Weird I know.) Once I factored that into my daily routine, I was able to justify a rate increase to myself. I essentially add $10 to $15 per hour to what I think I should be charging to cover for all those “off the clock hours” where I find inspiration, ideas and solutions. And to me, it works out fairly well and I find myself content.

I also find that it is much easier to explain this to clients and it prevents them from trying to take advantage of me by under-stating the scope of a project or design.

If they inquire about the hourly rate, I explain that I’ve invested 10+ years of my time learning the best possible ways to give them exactly what they want, to the best of my ability and as expeditiously as possible. They have a hard time arguing with it.

Hope my perspective is useful to some of you.

Thanks for all the comments and opinions. Really great to have so many people share how they deal with this subject. There are too many comments for me to reply to each individually without repeating what I have already said but Amy’s comments brought up a question:

If you are choosing to bill by the hour in part so can recover any extra time spent beyond the quote, do you offer your client a discount if you are able to complete the project in less time? If not then would you agree that you are still billing for a solution — you are just putting a cap on the amount of time you will spend. I think here is where I differ in that I would not change any extra to develop an appropriate solution, regardless of the time it takes. I think we all have some idea of the value we provide and none of us would bill a few hours for a logo even if by some stroke of fortune we could complete it in that timeframe as it is the solution we are offering not the time to get there.

Really great comments and lots to think about — thanks so much.

(Visit my other site — Processed Identity for Case Studies, Discussions and Articles about the creative process. In particular, the recent articles “Revisions, Redesigns and the Creative Process” (http://processedidentity.com/article/revisions-redesigns-and-the-creative-process/) and “My Clients are Paying for the Process First and the Logo Second” (http://processedidentity.com/article/my-clients-are-paying-for-the-process-first-and-a-logo-second/) address some of the issues that have been brought up in this thread.

Amy,

Absolutely agree with you that design time is only one factor in pricing and can often be a fraction of the actual time spent. My personal process certainly tends to see more hours go into research than design. (https://idapostle.com/visual_brand_identity_creative_process/)

I brought up the “logo in a few hours” idea because I was recently approached through Processed Identity (my other site) by a very talented designer about a logo she designed in an hour or two. I think she would agree that in addition to the design time, the logo would still need to go through all the process check points to make sure it is the right solution for her client.

I don’t believe reduced hours equals a reduction in the value of her solution, just as having to put in more hours due to a rough couple of non-creative days increases the value. The value of the solution is independent of the time spent.

How to determine value? I don’t know of any good designers that share their pricing — including me. My pricing is determined by my experience and abilities, the project specifics and what the market can handle. I think you are correct in saying location plays a factor in what clients will pay as well.

Thanks again Amy!

Very interesting discussion, thanks for sharing everyone.

I just told a client that I would be charging a fixed fee for the design of a website and then an hourly rate for the development, and then I came across this post!

i spent a lot of time in front of my mac to have an idea (i’m a graphic designer) but usually the idea arrives when i’m driving my motorbike..but i forget it when i’m at home :o)

I haven’t gotten to the point where I charge for my designs but your point is very clear and I think should be used with all designers including my-self. I sit at my desk all the time but sitting at your desk just make you more aggravated that you can’t get an idea but just sitting and watching the game will spark and idea in you and in-turn help you create a smoother, clearer design that most people like and will want to use.

If I drew out the image at the top, mine would have a whole lot more Dark Grey and a whole lot less red.

I usually try to get clients to appreciate the benefit of a quote rather than time estimate.

Once, a new big client asked for a price which I estimated at around $10,000. He was so surprised he asked me to do it at an hourly basis. The job came in at $23,000, mostly due to all his changes. And changes. And changes. So I now have mixed feelings about hourly vs. quote.

I definitely generate a lot of ideas for clients while thinking of ideas for personal project. All the time I spent in the Starbucks of Barnes & Nobles, flipping through a stack of design magazines and books taller than I am, looking for ideas for me, but jotting down ideas for them. Or vice verse. I wouldn’t know where to begin trying to figure out how to charge that hourly.

Great discussion here. One way around the flat rate fee and the creep in scope is to give clients a fork in pricing. So first outline the scope, including deliverables and number/types of revisions + what the hourly rate is for additional revision, then specify a bottom number and a top number for your fat rate (say $10-12,000).

Most of us are not very good at accurately estimating the number of hours required to get a project completed to everyone’s satisfaction. Making the client aware of the variables at the outset (such as the number of time changes come one at a time instead of grouped in a single email), allows them to feel comfortable with the numbers whilst giving you some leeway in the hours spent/remuneration ratio. It’s not infallible but it helps.

yes yes yes.

Isabelle, you suggest a very fair and transparent approach that should work for most designers and clients. Thanks — no doubt many readers will adopt this.

Mark, like Isabelle, your approach is based on consideration and fairness to both parties. Nice of you to share it.

Danielle, Yes!

Benjamin, Thanks for the kind words.

Thanks to everyone else for all the great comments. This post has become a great source for opinions on the subject of costing projects, with the comments providing even more value than my original post. Keep the opinions coming.

Thanks for stopping by Tyler. Glad you enjoyed the post.

So Glad to read this post & i hope most of us working in creative industry would agree to this.

On first interaction, i generally tell clients about the possible range, for e.g.1500-2000 USD. Once, they brief me detail, i create a requirement & project scope document along with exact quote & expected dates for project milestones. For e.g. Concept drafts, refinements, development, delivery etc.

Getting asked for a hourly rate makes me feel like a design slut sometimes.

If a designer does a thing in two hours, and more experienced in one hour, why should the latter charge only half of the price?

Great post. I think the heart of the problem lies in understanding that you ultimately aren’t buying a hard product. In a sense, what clients pay for is the expertise, strategy and experience of the designer. It can be very confusing especially with logo design, because the item a client seems to be purchasing is simple in appearance. I try to educate prospects by explaining that what you’re buying longevity, flexibility and professional expertise. None of these concepts can be billed by the hour nor would you want to.

This is a great article. I couldn’t have said it better myself. I like to charge based on my skill level and the complexity of the design.

I bill by the project, but in the past have had to bill hourly on occasion for certain projects. These projects have always been problematic. The clients have a certain budget in mind, but don’t reveal it and then when the hours add up in the end they are shocked. This is even after I’ve keep them aware of where we are at hourly throughout the project because I hate the sticker shock reaction the hourly pricing gets in the end. I find that billing per project is so much better, the client is aware of all costs up front and you can both work on the project without the client being stressed or pressured about the hours accumulating. That’s just not how design works, we are not on a time clock to create.

You make an excellent point. I’m a new designer and have been billing by the hour, but I have found that it’s difficult explaining to a client why 10 billable hours take me two weeks to do. It’s all that idea-percolating time that I don’t know how to (or feel comfortable in) charging for.

Billing by the project instead makes so much better sense because I’d be factoring in that time spent on a walk when the inspiration just comes to me without having to figure out how to bill a client for a walk I took. It’s true that creativity can’t be rushed or forced, and it’s been difficult for me to wrap my head around how to accurately bill for that nebulous percolating time, but I think you’ve hit it spot on. Thank you for the tip!