Recently we switched to hourly based billing for all of our clients. A lot of people will tell you that billing your work on an hourly basis does not work so well for design services, we bought into that logic for quite some time, and billed for interface design work on a per project basis exclusively.

The main argument against hourly based billing for design services is that it’s unfit because a designer can come up with an idea in a moment, and all he can bill for is the hours used for its execution. We agree, that doesn’t make sense, and we think designers doing logos, branding and visual identities can pull off per project billing more to their advantage. However, things are a bit different when it comes to interface design, which produces easily and cheaply measurable results. It’s much easier to evaluate the value of a sign up landing page, than of a logo mark.

As mentioned earlier, we charged on a per project basis exclusively, and used hourly billing only for additional work and sometimes front end coding. So what happened? Why did we make this change?

There are multiple reasons behind the decision:

• We are finally content with the fact that were selling our time. Our clients pay us to spend time making their ideas and products better. That’s the bottom line.
• Interface design is perfected through multiple iterations. While it is possible to have an “a-ha” moment for a site design, it is more likely that you will get to a satisfactory solution through iterations, hard work and trying different stuff out. In another words—it takes time.
• We’re tired of the speculation. Pricing projects on a per project basis takes a hefty amount of guess work, and while we consider ourselves pretty good guessers judging from our experience so far, it never came to us lightly.
• We feel pricing our services on an hourly basis is more fair to our clients. Padding estimates never felt right with us—you do know that all professionals providing services pad their estimates a certain percentage to cover the worst case scenarios, right? However, when it comes to those worst case scenarios, the padding hardly ever covers it, and if it doesn’t get to that—the client ends up paying for it anyway.
• Hourly billing makes things much more transparent. Now when we are asked for an estimate, the client will get an hourly estimate based on a number of iterations per page/screen/design. Being aware of how much time is spent on the project at any milestone during the process, the client can control the amount of iterations we’ll do.

The Context

This is all obviously relevant to our shop and the type of clients we take on (small, usually bootstrapped startups mostly), and within that context we feel that this is a good change that will benefit both us, and them.

Where to go From Here?

This change is certainly leading to something. During these three years Superawesøme has been in operation, we realized we really like working on small, quick projects and helping our clients get off the ground (we love doing MVPs). We’ll admit it, we get bored easily, and this type of work is really up our alley, and charging by the hour helps minimize the amount of prep work we need to do before diving into the project. Another thing we’d like to explore further is daily billing where our clients will be able to pay a day rate where we would focus solely on their project for a short amount of time. Sort of like a “roadblock” feature. We’ll see how it goes.

There is also another thing we’re cooking up that got up to a very warm welcome with our existing clients, and that we hope will be liked by others as well, but more on that when the time comes which is hopefully soon.