hourly estimate vs flat rate estimate
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Multiple times a week, people ask me for estimates on web design/development work. There are three major types of estimate model/billing methods I use. In many cases, I see where there is an attempt to combine these types that will unfavorably impact me as a web developer. I will list out each category of billing as I see them.

Hourly Rate Estimate Model

The amount of time spent is the same as the amount of time billed with the hourly estimate model. However, these quotes do not have any padding for “worst-case scenarios, or any extreme unknowns. In addition, since there are no additional hours padded to the bill, the model ends up being more cost effective for the client.

I am currently looking at an email thread where I have stated this “could be 5 hours or so“. This specific quote is related to a 3rd party software (plugin) connection to a web site I did not build. Later in the thread, I see the following coming from the client “You have your approval on 5 hours to get this thing solved“. I am 95%+ certain that my “could be” statement was interpreted as “I promise”. This is something I will need to clarify before proceeding.

Project Rate/Flat Rate Estimate Model

A project/flat rate quote is a “best faith” estimate based on all the information provided. It is important to factor in enough padding to ensure that the actual project hours absolutely do not go over. The ability to accurately provide a project / flat rate quote will depend on the complexity of the project or task. This quoting model ends up being more expensive on the more complex tasks that are difficult to estimate.

I’ve stated “could be 5 hours or so” in the example above and the client response was “You have your approval on 5 hours to get this thing solved”. I am interpreting as an hourly ESTIMATE that has been perceived as a project/flat rate quote. However, given the circumstances of the issue being related to a 3rd party software connected to a website I did not build, I would double or triple the estimate to make sure I would not be working for free.

Reoccurring / Maintenance Estimate Model

A project that is on a reoccurring / maintenance payment model pays based on a designated amount of time. In most cases, this is based on the monthly billing cycle. The agreement will define this. In addition, the client or end client (in the case of an agency) agrees to pay so much per year/month for a well-defined expectation of services.

The reoccurring/maintenance payment model assures you of a stable amount of income per month, quarter or year. However, the disadvantage is that the work may exceed the expectations in a given period. The contract should define the agreement upfront.

Summary

Picking the right billing/contract model depends on a number of factors. The type of client and type of project may dictate that a particular model is used. In conclusion, all billing options must be presented with details on the differences between an educated guess or an estimate based on experience, against that same estimate that is well padded for the unknown.

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