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How to price freelance work: The advantages of outcome-based pricing

Time and expense based or outcome-based pricing? This article looks at pricing strategies in more detail and examines why fixed rates might be the best option for both freelancers and clients alike.
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Whether you provide freelance services or outsourcing work to other freelancers, pricing is one of the most important considerations.

For example: How should you price your project accurately when you are paying for contract work? 

And, how should freelancers charge reasonable rates for the high-quality work they provide?

One of the options to consider is outcome-based pricing.

This article looks at pricing strategies in more detail and examines why fixed rates might be the best option for both freelancers and clients alike.

Charging Hourly Rates

Many freelancers start by charging an hourly rate. The logic of this pricing strategy is obvious: by assigning a set hourly rate; they know they will never end up working for less than they are worth.

However, it is not as simple as that. 

Here are some of the advantages and disadvantages of using an hourly rate:

Pros and Cons

From the freelancer’s perspective, a minimum hourly rate for freelance projects means they will always get paid at their chosen price for the time they are working.

That means any extra tasks that come up, including edits and revisions, will all be paid for fairly.

In other words, with an hourly rate, freelancers are paid for every second they work for a client. 

Moreover, an hourly rate is also a convenient choice for businesses. If the project becomes unexpectedly large, they do not need to renegotiate the employment contract. They allow the freelancer to continue charging hourly for any extra work.

However, when it comes to an hourly rate, one of the major disadvantages for clients is not always obvious how much the project will cost.

Simply put, if the contractor ends up requiring more hours, this will make the project much more expensive. 

In addition, the hourly rate also places a cap on earnings for freelancers. Their earnings are limited by how many hours they work, and because there is only a certain amount of time available in the day, they are essentially putting a cap on their income. 

When to Use Hourly Rates

Using an hourly fee for freelance tasks can be a great starting point when working on unfamiliar projects and where the project scope is not clear from the start. Additionally, flat rates can also be useful for ongoing projects where having an hourly rate agreed in advance means there is no need to continue negotiating the employment agreement. 

For freelancers, hourly pricing is advantageous when providing a new service, and they are unsure how much to charge. 

Charging Fixed Rates

Now that we have looked at the pros and cons of charging an hourly rate, it is prime time to take a closer look at setting a fixed price. Again, there are advantages and disadvantages of this pricing strategy.

Pros and Cons

Using a fixed price is simple for both parties, and there are no surprises. The freelancer knows what they will earn, and the client knows what they will pay for a specific outcome.

Having a fixed project rate also increases earnings for freelancers, helping them reach their desired income. But why is that? Because the freelancer does not have to limit their profits to specific working hours, since there is no cap on earnings, which, in turn, directly impacts how much money they can earn.

Furthermore, freelancers are also rewarded for their efficiency. If they have a quick turnaround, they may earn a bonus or move to the next client project faster than anticipated. 

Bear in mind that there is the risk that the freelancer might charge too little for a fixed-price project, ending up out of pocket. However, this is more likely to happen to inexperienced freelancers than seasoned ones. 

And with a fixed rate, both parties must agree on a price for every project, which, quite frankly, can become a hassle.

When to Use Flat Rates

Flat rates are great for standard jobs a freelancer regularly carries out for a client. In fact, the freelancer has a very clear idea of how long it will take to complete it and how much value the project will provide, so more often than not, a flat rate is the best choice.

Using flat freelance rates is great for clients, too, especially when they have a fixed budget that they don’t want to go over.

Transitioning From Hourly to Fixed Rate Contracts

If you are a company that works on hourly contracts with freelancers, or a freelancer who charges hourly freelance rates, there can be many benefits in switching to fixed-rate contracts.

So how can you make the transition?

How Fixed Rates are More Beneficial For Your Customers

When you switch to fixed freelance rates, the focus is shifted to value.

It really becomes less about the amount of time the freelancer puts into the project but more about the overall value for the client.

As expected, clients also consider the value they receive for the price they pay for the work, which is great for freelancers to keep in the back of their minds. 

How to Optimize to an Outcomes-Based Work Culture

Shifting to outcomes-based work culture is reasonably straightforward. The first step is to move away from the input mentality.

Inputs, like meetings and reports, focus on the time spent on a task than the outcome. When you start thinking in terms of the outcomes and what can improve them, you begin removing unnecessary inputs.

An outcome-based culture involves switching to a complete focus on results. The same holds true for freelancers.

Here is how to move to an outcomes-based strategy in a few easy-to-implement steps: 

1. Determining a Schedule

Working to a schedule is essential when it comes to outcomes-based projects.

Clients and freelancers should develop agile statements of work (SOWs) that set out the deliverables. As expected, that is even more important for large projects that span weeks or months.

2. Focusing on the Goal

With outcomes-based projects, the focus for both clients and freelancers should always be on the goal.

If you are a freelancer, ensure you consider your service’s value and how it can help your client realize their ambitions. As a client, think about the result you are getting and what the delivered work will achieve.

Determine which activities are not directly contributing to your goals, and get rid of them.

a. The Eisenhower Matrix

The Eisenhower Matrix, named after the 34th US President,  Dwight D. Eisenhower, is a simple way to organize your daily tasks.

Simply create a to-do list, as usual, then define the items in the list in one of the following four ways:

  • Urgent-Important
  • Urgent-Not Important
  • Not Urgent-Important
  • Not Urgent-Not Important

Use the Eisenhower Matrix to determine which items to cross off first, which to delegate, and which to ignore completely.

b. Time blocking

Time blocking is another excellent tactic for freelancers. It concerns blocking out periods to focus on specific tasks.

By dedicating yourself to a specific task for a particular time, you can save time deciding which task you should be focusing on, helping you become more productive.

3. Finding the Right Tools

You will need the right tools to switch to more outcome-oriented work culture.

One of the things to do first is using a time tracker to work out how long tasks take over weeks and months. After, you can determine how long a specific task you do frequently will take you to complete it and price it accordingly.

Saving time and becoming more productive will not hurt a freelancer’s earnings by charging hourly rates. So freelancers should look for ways to speed up repetitive tasks via automation.

They could even consider outsourcing part of their repetitive tasks to another contractor at a lower rate.

If you run an agency and work with contractors, the most important tool will be the one you use to outsource work.

At Vicoland, you can quickly find contractors to work on outcome-based projects. The skilled freelancers on the platform charge fixed rates, helping you to shift to a winning outcome-based culture.

How to Determine Pricing

Consider: How to determine the price when working on a fixed-rate basis?

The answer is not straightforward since there are different pricing strategies. That said, for clients, having an idea of what the work involves and its value for your organization seems pivotal. Hence, if the deliverable brings significant value, do price it accordingly.

As a freelancer, you need to know how long each project will take you.

Experiment with hourly tasks if you wish to find what works best for you. Soon, you should be able to determine what you need to charge for the value you provide.


There is no right and wrong way for freelancers and agencies to price freelance work, but knowing their differences is essential, including the potential advantages and disadvantages.

Outcome-based pricing often works out as more beneficial for both parties. So if you currently source work on an hourly basis, consider switching to a fixed-rate model instead.

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