Every freelancer hits this crossroads.
Do you charge by the hour (track everything, bill for actual time) or by the project (set a fixed price, deliver the outcome)?
The answer isn't "one is always better." It depends on your work, your clients, and how much risk you're willing to absorb.
Here's how to choose.
Hourly Billing: The Good, The Bad, The Reality
The Upside
You get paid for the actual work you do. Client adds three rounds of revisions? You bill for them. Scope changes halfway through? You're covered. No guessing, no surprise losses.
Predictable income (if the work is steady). 40 billable hours this week at $100/hour = $4,000. The math is simple. If you've got consistent work, hourly billing is the most transparent way to turn time into money.
Clients can't abuse you as easily. Every "just one more thing" gets tracked. They see the hours add up. That alone prevents some scope creep.
The Downside
You've got an income ceiling. There are only so many hours in a week. Even at $150/hour, you cap out unless you raise rates or add team members.
Clients scrutinize your time. "Why did that take 3 hours?" becomes a regular question. You're defending your work instead of being valued for expertise.
Efficiency gets punished. You get faster at something? Congrats—you now earn less for the same result. That's backwards.
When Hourly Makes Sense
Use hourly billing when:
- Scope is unclear or likely to change
- It's ongoing work (retainers, support, maintenance)
- The client wants flexibility
- You're new to the type of work and can't estimate accurately yet
Hourly is safe. You won't lose money on a project that spirals. But you also won't make extra for being excellent.
Project-Based Billing: The Upside and the Risk
The Upside
You get paid for results, not time. Finish a 2-week project in 1 week? You still get the full fee. That's the reward for expertise and efficiency.
Clients prefer certainty. Most clients would rather know the total cost upfront than get surprised by an hourly bill. Fixed pricing removes their anxiety (and yours, if you estimate well).
Higher perceived value. When you price by outcome instead of hours, clients see you as a strategic partner—not a contractor they're renting by the hour.
The Downside
Scope creep is your problem now. Client adds revisions, changes direction, or "forgot to mention" a key requirement? You're still on the hook for the fixed price.
Estimation errors hurt. Quote $5,000 for what you think is 40 hours of work. Turns out it's 60. You just worked at $83/hour instead of $125. Ouch.
Cash flow timing. Fixed-fee projects usually pay in milestones (50% upfront, 50% on delivery). That's fine for big projects—but if you're juggling multiple clients, timing gets tricky.
When Project-Based Makes Sense
Use project-based billing when:
- Scope is clearly defined with written deliverables
- You've done similar work before and can estimate accurately
- The client values outcomes over hours
- You want the upside of finishing faster
Project-based billing rewards expertise. But it punishes bad scoping.
The Hybrid Model: Best of Both Worlds?
Some freelancers split the difference.
Retainer + hourly overages. Client pays a monthly retainer for a set number of hours (say, 20 hours at $100/hour = $2,000/month). Anything beyond that is billed hourly.
This works well for ongoing clients where the workload fluctuates. They get predictability. You get protection from scope creep.
Fixed fee + hourly for revisions. Quote a fixed price for the core deliverable. Include 2 rounds of revisions. After that, revisions are billed hourly.
Now the client has cost certainty—and you're protected if they change their mind 47 times.
Hybrid models require clear contracts. But they balance flexibility and fairness better than pure hourly or pure project-based.
The Decision Framework: 5 Questions to Ask
Still not sure? Run through these.
1. Is the scope clearly defined?
- Yes: Project-based is safer.
- No: Stick with hourly until it's locked down.
2. How predictable is the work?
- Highly predictable (you've done this 10 times): Project-based lets you profit from expertise.
- Unpredictable (new client, new type of work): Hourly protects you from unknowns.
3. What's your expertise level in this area?
- Expert: Charge for results, not time.
- Learning: Hourly keeps you honest (and prevents underpricing).
4. What do clients in your industry expect?
- Designers and developers? Often project-based.
- Consultants and strategists? Often hourly or retainer.
- Writers? Both, depending on the project.
Match industry norms unless you've got a strong reason to break them.
5. How much risk can you absorb?
- Low risk tolerance (bills due, cash tight): Hourly keeps income predictable.
- High risk tolerance (savings buffer, confident in your estimates): Project-based offers upside.
Why You Still Need to Track Time (Even on Fixed-Fee Projects)
Here's the thing: even if you're billing by the project, you should still track your time.
Why?
Because it tells you if your pricing is working.
Say you quote $5,000 for a project, thinking it'll take 40 hours. You track your time. Turns out it took 55 hours.
Now you know: you just worked at $90/hour instead of $125/hour. Next time, you price it at $6,000—or you negotiate tighter scope.
Without tracking, you're flying blind. You think you're profitable. You might be working for free.
Learn how time tracking fixes this problem.
When to Switch Billing Models
You're not locked into one model forever.
Switch from hourly to project-based when:
- You've done the same type of work 5+ times and can estimate accurately
- Clients keep asking "how much will this cost?" instead of "what's your rate?"
- You're efficient enough that hourly billing punishes you
Switch from project-based to hourly when:
- Clients keep changing scope midstream
- You're consistently underestimating hours
- The work is exploratory or undefined
And if you're not sure? Try both. Offer hourly to new clients. Offer project-based to repeat clients where scope is clear.
Over time, you'll find the model that fits your work style, your clients, and your revenue goals.
The Real Answer: It Depends on the Project
Hourly isn't better than project-based. Project-based isn't better than hourly.
The right model depends on:
- How well-defined the work is
- How much experience you have
- What the client expects
- How much risk you're comfortable with
Most successful freelancers use both, depending on the situation.
New client with vague requirements? Hourly. Repeat client with a clearly scoped website redesign? Project-based. Ongoing support and maintenance? Retainer with hourly overages.
The key is tracking your time either way—so you know whether your pricing actually works.
Because the worst billing model isn't hourly or project-based.
It's the one where you have no idea if you're making money.
Track your time. Know your numbers. Price with confidence.
Try Chronobill to track time, create invoices, and finally know if your pricing is working.