Margin

Fixed Price vs Hourly

Quote the project, not the hope.

Every article says “it depends.” It doesn’t — it’s arithmetic. Build a quote that survives a real overrun, and see exactly where fixed stops beating hourly.

Free · No signup · Nothing leaves your browser · Every number explained below

The project

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What an hour of yours sells for anyway — the benchmark every scenario is judged against.

The estimate you’d give with a straight face — before revisions and before reality.

Name the number in the contract. “Reasonable revisions” is how quotes die.

What a round really takes — the call, the changes, the re-export.

The risk you’re absorbing

Not the disaster — the ordinary slip nobody logs. Creative and software work routinely runs 25–50% over.

The plausible worst: the client who “just has a few thoughts,” the integration that fights back.

Fixed pricing sells the client certainty. Certainty has a price, and you’re the one underwriting it — 10–20% is normal.

The same quote, three futures

A fixed price doesn’t have one hourly rate — it has one for every way the project can go.

The fixed quote's effective hourly rate and its advantage over hourly billing across three overrun scenarios.
Scenario Your real rate Hourly would bill Fixed vs hourly

Finish efficiently and the fixed quote pays above your rate — that upside is yours alone, and it’s the honest argument for fixed pricing. The table just makes sure you’ve also priced the other column.

Judge a client’s budget

Same math, run backwards

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The budget they named before you said anything.

Is the hourly rate itself right?

Every number here leans on it — worth building it from your real costs first.

Freelance Rate Calculator →

How this works

No black box. The numbers below are your numbers and update as you change the inputs.

  1. Step 1

    Scope the honest hours

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  2. Step 2

    Price the overrun you expect

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  3. Step 3

    Charge for carrying the risk

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  4. Step 4

    Find the break-even

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Assumptions worth knowing: the overrun and premium defaults are editorial, not statutory — set them from your own project history, which beats any survey. The comparison treats hourly billing as fully paid, which assumes a client who accepts overrun invoices; if yours won’t, hourly was never really hourly. Payment terms, kill fees, and deposits are contract matters this page doesn’t price. A planning tool, not advice.

Questions freelancers actually ask

Should I charge a fixed price or hourly as a freelancer?

It depends on one number: how much overrun your fixed price can absorb before it pays less than billing hourly would have. Quote fixed when the scope is well-defined and your price carries a realistic overrun plus a premium for holding that risk — you keep the upside of working efficiently. Bill hourly when the scope is fuzzy, the client keeps changing direction, or they won't pay a price that survives an ordinary slip. Fixed pricing isn't braver, it's just a different owner for the same risk.

How do I price a fixed-price project?

Scope the honest hours — the estimate plus the revision rounds you know are coming — then multiply by the overrun this kind of project actually runs (25% is ordinary, not pessimistic), then by your hourly rate, then add a risk premium of 10–20% because you are the one absorbing the uncertainty. Rate × estimate with nothing added isn't a fixed price; it's a discount you haven't noticed giving.

What buffer should I add for scope creep on a fixed price?

Price for the overrun you expect and check the quote survives the overrun you fear. Creative and software projects routinely run 25–50% past their estimates, so a quote that only absorbs 10% is underwater in an ordinary week. The buffer belongs in the price, and the boundary belongs in the contract: a defined scope, a named number of revision rounds, and a written rate for work beyond them.

The client has a fixed budget — how do I know if it's enough?

Divide their number by your honest hours, not your hopeful ones. A budget that looks fine at the scoped hours can pay well under your rate once a typical overrun lands — the test is how much overrun it absorbs before it drops below what you'd accept hourly. If the answer is close to zero, either the scope shrinks to fit the budget, or the risk stays with the client via hourly billing.

Is hourly with a price cap a good compromise?

It is the worst of both structures for the freelancer: the client keeps the upside (if you finish fast, they pay less) while you keep the downside (if it runs over, the cap stops your billing). A cap is a fixed price with extra steps — so if a client insists on one, price the cap the way you would price a fixed quote, overrun and premium included, not as rate × estimated hours.

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