After having read two very interesting articles (linked to by Sarah), I was prompted to consider how I price my projects, and why it is critical to track my time in an effort to better understand the pros and cons between hourly and fixed price contracts.
With Instructional Design projects, determining a fixed priced contract can be quite daunting when the project variables are not so cut and dry. For example, you may need to account for the extra time it takes to figure out functions you don’t typically work with, extra time for functions that just aren’t working the way they typically do (just because applications like to keep us on our toes and all seem to have their ‘isms’), or extra time for increased communication – it’s always great to have communicative clients, but sometimes this can be a hindrance on your work, and needs to be accounted for.
Being unable to accurately account for all variables on a fixed priced contract is chancy as it may result in losing out on income. For example, I once agreed to a transcription job (one of the better ones as far as interests go), grossly underestimating how much time it would take me to transcribe each hour of audio…this led to my summer from hell. Albeit, the client was incredibly understanding, but I promptly swore off transcription jobs when I was finished.
With that being said, I tend to lean more towards hourly contracts within my Instructional Design work. It just seems safer. However, after reading Dara’s Reflections on a Year of Pricing Projects, I’m a lot more interested in collecting the data to better price projects on a fixed price basis, explaining that you should track your time like your life depends on it. Under her recommendation, I’ll be using the TimeKeeper application to track my time for the next few months, and will post my observations.
In the other article, Must Do: Package your Expertise, Kate explains how packaging your expertise will help distinguish yourself within the market, free up time, deliver more value to your clients, and stand out from your competitors. This article only reaffirms Dara’s article, in that moving toward a fixed price model may help streamline your process (by saving you time) and increase your overall value to clients and profitability.
What does this mean for me? This means that I’ll be working hard to iron out a better packaged solution for my service offerings. I can’t hide behind the excuse of “Pricing Instructional Design projects can be tricky!” forever, so while not all of my projects will be fixed price, depending on the needs of my clients, it’s a model I strive to move closer toward. I value my clients, and I want them to get the most bang for their buck, while still being compensated fairly in such a competitive market.
What pricing model works best for you?