Flat Rate vs Hourly Rate: Which is Better to Choose?

Flat Rate vs Hourly Rate

Whether self-employed or running a small business, billing for your client is a common process. But this process involves various techniques that depend on how you get your job done. Some of the entrepreneurs or small business owners charge their clients on an hourly basis, whereas some charge a flat rate. It is as per the convenience or the job requirement that decides the process of billing.

Charging a flat rate is simpler in which you set a price for a particular task and charge accordingly to your client. But the hourly rate involves calculating the total amount on the number of hours worked. Each pricing technique has its own merits and demerits. In this article, we will discuss more on this. Scroll down!

Before discussing which is the better option to choose, let’s learn first what these are.

What is Flat rate pay?

A flat rate pay is when you charge your clients a set price for a particular work regardless of the number of work to be completed. For a project with finite deliverables charging a flat rate makes the payment process easier. Besides, the project where estimating the hours of work is difficult one can charge flat rates to avoid complication.

For calculating the flat rates one can implement the hourly rate by multiplying this with the number of hours needed for the completion of the project. In other cases, for a particular set of tasks where you know the value of the project you can imply flat rates. Flat rates are also applicable for those projects which are considered more on the services provided than the number of hours worked.

What is Hourly Rate pay?

An hourly fee is something that you can charge your clients on an hourly basis. Track the number of hours worked for a specific project and multiply it with your hourly rates. For this billing procedure, you need to have an efficient time tracker which will monitor the hours spent working for the client.

This process is effective for long-term projects and is also helpful for in-house projects. This is definitely challenging for remote projects but this also makes it easier to account for the variable involved in the project.

Flat Rate Vs Hourly Rate


Flat Rate: For freelancers who are capable of completing work efficiently on time, a flat rate is the most profitable billing process for them. The faster the work gets completed there is more scope of getting new projects. Moreover, this billing method makes it easier for the client to understand how much they have to pay. Besides, this set price for a specific task helps the client to plan their budget and eliminates the stress involved in tracking hours for hourly rates.

Hourly Rate: Accounting variables in projects are easily managed by the hourly rates. Besides, hourly rates are helpful for long-term projects rather than short ones. This billing method eases up your work as well as gives the client a baseline for comparison.


Flat Rate: Charging flat rate is challenging for newcomers as you need to have a proper and accurate estimate. Secondly, some clients insist on hourly rates, and convincing them is difficult in such cases. Moreover, a flat rate opens up the scope for negotiation for clients over the set price. Without a professional portfolio, this becomes tedious to convince your clients that you are worth the rate.

Hourly Rate: Hourly rates could be disastrous for short projects which may result in loss. Designing a logo may take a few minutes but the project is worth a higher price, so in such cases, the hourly rate does not work well. Besides, you don’t get a minimum payment for the project and it becomes difficult to include the general expenses of the project.

Both the billing methods have some advantages and disadvantages. You need to decide on this considering your project type and preferences as to which method should be applied. Hopefully, this article has given you an idea about the basic difference between flat rates and hourly fees so that you can choose the right one for your next project.

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