Why Should You Choose Hourly Pricing Model For Your Project?

Updated on Jun 6th, 2022

Why Should You Choose Hourly Pricing Model For Your Project

Pricing your creativity and design services effectively and efficiently is challenging and is a tricky business at the same time, you know that right? Once you have calculated the shop rate, you will have a precise baseline number for all of your pricing calculations. And with the help of this number, you can have a crystal clear picture of what it takes to complete a project.  If you’re a freelancer or a large organization, there is no single or right way to price your services; instead, you should look for an “ideal way” to price. 

Let’s Know more about Hourly Pricing Approach

Hourly Pricing Model

Hourly pricing is a simple model. The elements you would need for a successful hourly pricing approach are documentation, communication, and discipline. It requires scrutiny of the process, but often it happens that it doesn’t foster the client’s trust. This specific price model is best suitable for those who are working with the client indirectly. For instance, a freelancer for an ad agency. It also ideal for any work involved in sophisticated technology such as app development, where things often go wrong. Under this method, at times, it happens that we often underestimate the effort required, and then we end up with excessive changes or unexpected hazards. This implies that a loss in profit or an awkward request for a budget increase. Project-based pricing is profitable and would take you to value-based pricing and higher profit levels. 

Advantages of Hourly Pricing Model

The hourly pricing model is helpful for you in ways like procuring skilled and experienced people who dedicatedly work on your project or ideas without you facing the issues or any queries of having permanent employees on your payroll.   

1. Several hours worked

The worker in the hourly pricing model is paid for the hours he worked. For instance, if a worker works for 9 hours a day, then he will be paid for a complete 9 hours, and if he works overtime, then he will be paid extra for the same. 

2. Fluctuations in the salary

In case the employees are working on an hourly rate bases paid a higher rate at some other place, then they can relocate at some other site and earn extra income. This is an advantage because any contracts don’t bind them, in short, they can relocate themselves quickly to that other place, where they can earn extra by working the same number of hours. 

3. Extra pay for overtime

At times the companies are required to meet their deadline in a short period. So, in such cases, the employees who are working on a salaried basis will be only paid the amount on which both the employer and the employee have agreed upon. But the workers who are working on the hourly wage rate will get additional income in case they are asked to work for more hours to meet the deadline. Additionally, the workers who are on an hourly rate can demand extra overtime wages as well from the employers. 

4. Wage-earners maintain quality of products

The quality of the products is kept as wage earners manufacture the products, and their supervisors ensure the quality of the product. However, the employees working on an hourly basis are paid according to the time they’ve spent at the workplace, and they try to maintain quality, although the quantity can be less. But, the employees who are working on a salaried basis are under pressure to meet the deadlines, so they try to maintain the quantity rather than the quality of the products and services they provide. 

5. Hourly wages are less responsible than salaried wages

Employees who get a salary are not only professionally qualified but are also responsible for the growth and development of the company. On the contrary, if anything is not going well with the work process of the company, the employees who are working on an hourly basis are, in general, not held responsible. 

Disadvantages of Hourly Pricing Model

Regardless of the advantages, the hourly wage model also has some disadvantages to the employers and employees and the following are mentioned below

1. Several hours worked by the employees

The hourly pricing approach says an employee is paid according to the number of hours he has worked in the workplace. Salary employees have a fixed salary, and it doesn’t depend on their hours of working. But, workers on an hourly rate basis have to work for extra time to earn that income. 

2. No guaranteed salary per month

Employees do not have any fixed salary when they are working with an hourly rate approach. As said, the employees have to work extra to earn extra income. Also, in case these employees have an unexpected or extra expense to meet, they will have to spend extra hours at the workplace to meet their needs. 

3. A lesser amount of extra work time

Employees are paid extra when they work overtime. And employees working on an hourly wage rate are also paid the extra money, but they do not get salary equal to the salaried employees. The salaried employees get more salary as they are qualified than the employees working under an hourly rate model. 

4. Wages are lost when an employee is absent due to medical reasons

Well, an individual can face an emergency anytime. Employees working on the hourly rates are when absent, the wages earned by them are lost as well as their monthly income schedule is lost. And such employees neglect their health issues if they have any in case they are much in need of money. 

5. Hour rate wage earners cannot determine their monthly payroll

The employees who are working under the hourly rate approach can not decide on their monthly payment to know how much they can spend daily, weekly, monthly, or yearly. This stops the employees from making any significant investments if they wish to do so. 

When to use Hourly Pricing Model?

1.  At times, hourly rates are best suitable for unfamiliar projects you haven’t previously worked on and working new clients, as they offer a level of protection. 

2. You can’t be confident of the total task involved or the level of communication and involvement the client desires if you’ve never worked with them, and you don’t want to fix a fee when you are not sure if the project will be profitable. 

3. Always opt for hourly rates when working on non-standard, unstructured projects which haven’t been fully scoped by the client or require a lot of subjective back and forth.

4. Hourly rates are the go-to choice for those who are new to freelancing. 

5. Hourly rates also allow you to learn how long different tasks and projects take, which you can later use to decide profitable fixed fees for the same work.



Use your instincts and a bit of psychology when considering a fixed price for a job. Your client may be concerned with the notion of paying a high hourly rate to a freelancer, and at times, the fixed price project often sounds cheaper. Matellio, with its years of expertise, can help you forge a project, based on your requirements, we provide you not only, robust and scalable solutions but also stand firmly in the competitive arena.

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