How should one convince the client to switch from hourly pay to fixed cost?

Question

I often see great requests for proposals which are provided with preferred hourly rate range. Sometimes the hourly rate itself isn't comfortable for me (honestly, far too low), despite the project is great and I have similar prior experience (say, I perceive myself as a top 10% match). How should I ask a client to switch the project from one that is paid hourly to one that has fixed both scope and cost? What I want to benefit from that is a) time flexibility, b) having it unnecessary to cheat on time to get the hourly rate I think I should (let's pretend I really love the project but not this much to work for almost free).

Answer 1

There are a few solutions to this dilemma.

1 - If your platform allows it, you can answer to the client without specifying an amount in your answer. This way, you avoid being discarded on price only and it gives you a chance to prove your skills and communication abilities to the client.

2 - I found that if the client is looking for really low hourly rates, it's most of the time not worth looking at the project. You'll be worth nothing to the client and he'll treat you as such. Some people are very condescending and will expect you to be eternally thankful for these 3 to 5$/hour they so generously give you... There's always a next project, so don't feel bad discarding an interesting job on price only.

3 - And lastly, be careful of switching the project to fixed price. If the client has set this really low hourly rate, it means that he doesn't really care how many hours it will take, he just needs someone on hand to do whatever he wants. You may be able to switch to a fixed price, but you won't switch the client's expectations, and you'll end up doing many many hours, until you realize that your hourly rate has fallen dramatically.

So I suggest that you write a really nice answer to the client, showing your worth and explaining why you feel like you're in the top 10% for the job, as well as showing a lot of interest and care. Disclose your hourly rate inside the answer, but do not make it definitive (see point 1). A few clients will realize that your offer is far better that the dozens of cheap replies they have, and you'll get the job. Most of the time, these clients will be the ones who already had bad experiences hiring low-rates devs.

Hope this helps, and good luck in your career!

Answer 2

There are multiple approaches to this.

1) You start working at lower hourly rate, then after some time, you talk to the client and tell him that you would like to increase your hourly rate since you've proved yourself. The risk here is that he will refuse it and you will have to finish the project with small rate. This is true if you work via rating systems like odesk/elance and you want to avoid negative comment.

2) You propose the client task-based system where you estimate each task in work hours, but you are paid in milestones. For example, milestone 1 is 40 work hours which is 1 week. On Friday you show the client that you finished tasks worth 40 work hours, and he pays you. Downside of this is a lot of administration.

3)You tell the client frankly: my hourly rate is XY but for the first 40 hours I will work at your proposed hourly rate. If you like my work after 40 hours, we will switch to my hourly rate. Downside of this is that you may have to finish the project after 1 week and client may not be happy, thou he said yes at the beginning.

But you should never, never and never cheat on your client. Only one client is enough to write a review saying that you are cheating with hours, and your career will decline 90%.

If you really think that you are worth certain hourly rate and being offered small hourly rate, you can make a video proving why you are worth your hourly rate. For example, a guy was a Symphony coder and he made a 5-min video showing how someone will need 1 hour to finish the task he can do in 10min. And the other rate was 50% his rate. This way the client was able to see that guy A will cost him 3 times more that guy B who at first has double rate.

No matter what, stand behind your hourly rate and have quality as well. I was approached by $50/h guys who had qualities lower than $10/h guys.

Answer 3

There are several advantages to using a fixed cost project that you've mentioned. For example, reduced risk on the client's part, since they know they will only be spending $x. The only real thing you can do is present this to the client as an option and see what they say.

As for how to apply, it is possible on some platforms to receive a fixed-price payment even on an hourly contract*. I've received fixed price payments through odesk in this way. Additionally, some rating systems only rate after some kind of payment is made on a contract**. So if you put in a bogus hourly value, the feedback won't count unless payment has gone through in any case.

So:

1) Make it very clear you want a fixed price payment.

2) Don't do any hourly work on the contract, even if you can.

3) The client feedback doesn't count on a contract that's been paid less than $1 net, so if everything falls though, your rating shouldn't be affected.

References:

* Fixed price payment on hourly contract: Odesk Support, Elance Support

** Rating only counts after payment: Odesk Support, Elance Support

(Odesk links require login)