Charge hourly when you can't see the end of the job. Charge a flat fee when you can, and build in a buffer of about 20 percent for the hours you didn't plan. The mistake most people make with flat fees is quoting the hours they expect instead of the hours the job tends to take.
There's a second reason to care, and it's about winning work. Customers are afraid of a bill with no ceiling. A flat price takes that fear away, so it often closes faster than the same money quoted hourly. The rest of this page covers when each model fits, the arithmetic for converting one to the other, and the exact sentences that make a flat fee sound safe to the person paying it.
What each model rewards
Hourly pay rewards time spent. If you're slow, you earn more on the job, and if you're fast, you earn less, which is odd for someone who's good at their work. It also puts the customer in the role of watching the clock.
A flat fee rewards speed and clear scope. If you finish early, the savings are yours. If the job drags, so does your hourly income. The customer gets certainty and you get the risk. That trade is fine when you know what you're doing and expensive when you don't.
When hourly is the right call
Use hourly when the scope is a guess. Diagnosing a problem you haven't seen is a guess. So is ongoing support with no fixed list of tasks, work for a client who changes their mind weekly, and emergency jobs where speed matters more than the quote. In each case a flat fee would force you to price the worst case, which makes your number scary, or the best case, which makes you the one paying for surprises.
When a flat fee is right
Use a flat fee when the end product is something you can describe in a sentence and you've done it before. A customer asking for "a fresh install of a five-person office network" gives you a finish line. You also want a flat fee when the customer keeps asking "how much will it be?" because they have a budget approved. The productised service idea takes this to the end: the same job, the same price, every time.
Converting hourly to flat, with a buffer
Leona sets up small-office networks and charges $90 an hour. A job looks like six hours: run cable, configure the router, set up Wi-Fi, test, and hand over. Here is how she turns it into a flat quote.
- Start from your honest hours. Six, based on the last few similar jobs.
- Add the buffer. 20 percent of 6 is 1.2, so 7.2 hours.
- Multiply by your rate. 7.2 hours at $90 is $648.
- Round to a number a person would say. $650.
- Write down what's included and what isn't.
Now watch what the $650 does across four possible outcomes:
| Hours it takes | Billed hourly | Billed flat | Your hourly income on flat |
|---|---|---|---|
| 5 | $450 | $650 | $130 |
| 6 | $540 | $650 | $108 |
| 7.2 | $648 | $650 | $90 |
| 9 | $810 | $650 | $72 |
The flat quote breaks even with her hourly rate at 7.2 hours. Below that she earns more than $90 an hour, above it less. The buffer isn't padding. It's the cost of taking on the risk.
Three sentences that sell the flat fee
Customers don't hear "flat fee" as a benefit unless you say what it protects them from. Three lines carry most of the weight:
"You'll know the total before I start, and that's what you'll pay."
"If it takes me longer than I planned, that's my cost, not yours."
"If something comes up that isn't on this list, I'll tell you and give you a price before I do anything."
The first removes the fear of a runaway bill, the second shows you're confident, and the third makes clear the flat price has a fence around it. Say the number plainly and stop talking afterward. The piece on saying the number and stopping explains why you shouldn't explain it away.
When the customer insists on hourly
Some buyers, especially ones who've been burned by a flat quote that grew, want to pay for time. Don't fight it. Offer hourly with a not-to-exceed number: "I bill $90 an hour and I won't go past $720 without asking you first. I'll message you when I've used 80 percent of it." Eight hours is the ceiling, 80 percent is 6.4 hours, and the customer has the same protection a flat fee gives without you absorbing the risk. If the job comes in at six hours, you bill $540 and they feel they got a deal. That keeps the sale moving, which matters more than winning the argument about models.
A hybrid: flat fee plus change orders
Most good flat-fee jobs end up here. The base job is fixed. Anything outside the written list becomes a change order: a short email with the extra work, the price, and a yes from the customer before you do it. For example: "The closet where the router was meant to go has no power. Adding an outlet would be $140. Reply yes and I'll do it Thursday." That sentence takes ten seconds to write, and it protects the 7.2-hour buffer for the surprises that really are yours.
Review the numbers after five jobs
Don't guess at the buffer. Keep a note of estimated and actual hours on your next five flat-fee jobs. Say Leona's estimates were 6, 4, 8, 5 and 10 hours, a total of 33, and the jobs took 7, 4, 11, 5 and 12, a total of 39. The ratio is 39 divided by 33, about 1.18, so a 20 percent buffer fits. It would still have lost on the third job (11 hours against 9.6 budgeted), and that's normal. A buffer works on average, not every time. If your ratio comes out at 1.4, your estimates are the problem and the fix is better scoping, not a bigger buffer.
The same logic applies to larger engagements; how much to charge for consulting turns a target income into a day rate, and how to price your services covers where the $90 itself comes from. If you're chasing quotes after you send them, how to follow up on a quote picks up where this leaves off.
A flat price is only an advantage if enough buyers see it. Rocketship finds the buyers, emails them from your own Gmail, follows up, and books the meeting on its own. Plans that get you customers start at $24.99 a month (Launch), and every monthly plan starts with a 7-day free trial, card required.