Hourly vs Value-based pricing

As I dive deeper into how to price graphic design work as a freelancer, what are your thoughts on Hourly vs Value-based/flat-rate pricing models? A simple google search and Youtube search almost unanimously comes back with value-based as the best approach. With the reasoning being more money with less time spent.

However, being able to sell a value based price to a client requires a bit of salesmanship and finesse. A salesman, I am not. The hourly model, for the most part, formulaic and easier to arrive at a number.

How have others approached pricing models?
Where you once hourly and changed to value-based?
Is the value-based model built on the foundation of your hourly rate?
Would suggest going with the hourly model for a designer just starting a freelance business?

I know this is no longer the case, and more’s the pity for it, but by the time a designer strikes out on their own as a freelancer, they usually already have a pretty good feel about value basing their projects.
A beginner can’t really charge hourly because they take longer to do the work.

Value based is actually hourly based. You just have to know how many hours it takes to do a specific project task, and you have to know how much money you have to make to cover your overhead costs to run your freelance business. Not every hour in the working day is covered by your design fee.

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Quite right. If a seasoned designer takes 20 hours for a project, while an intermediate level designer takes 30 hours for the same project, and a freshly minted designer takes 40 hours, it it going to work against the more experienced designer if he/she charges by the hour.

On the other hand, the more experienced one becomes, one can more easily estimate what a project involves, and can come up with a reasonable flat fee. A well thought-through contract will address all other variables.

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From the starting only, I have charged on project basis. It kind of gives a little freedom to think, do my research and then work on project. Feedback is given on weekly basis so this way I can handle 2 or more projects at a time. Till now my experience as I was a newbie to experienced is good and hasn’t change to hourly rates.

Client is happy to see the work and value which is added to their project.

I agree.

Yes, but the seasoned designer should be charging quite a bit more per hour than an intermediate or beginning designer.

As PrintDriver alluded, it’s not one or the other but a combination of both since relying on just one or the other results in fees that aren’t based in reality.

As Eriskay mentioned, a new and slower designer charging the same amount per hour as an experienced, faster designer would end up making more money than the experienced designer, which, of course, makes no sense.

Then again, a purely value-based approach suggests that fees should be determined by how much value the work brings to the client. In other words, a mom and pop bakery should only be charged a fraction as much for, say, a logo as a big, successful corporation, even though the work and time spent on both are the same. But this doesn’t make a lot of sense either since it sort of assumes that just because the big corporation will get more total monetary value from the work than the bakery that one can and should raise or lower one’s fees to correspond. Nobody’s going to lower their rates to take on a low-paying bakery job after getting ten times that amount for the same work for a bigger company. Nor does the value model, when used exclusively, seem to factor in what one’s competitors are charging and that if the fees are too high, the work will be lost to them.

This value vs. hourly question doesn’t seem to consider that, realistically, a big successful corporation will likely hire the experienced designer because it can afford an experienced designer’s higher rates, whereas the corner bakery will hire the less experienced designer because it’s what it can afford. In addition, the experienced designer likely won’t take the bakery design job because it won’t pay enough.

Any realistic business model depends on determining how much profit one needs (or wants) to make after expenses are paid. The only way to do this is to figure out how much time a particular job will take, while also considering the client and the value the work brings to them along with whatever else might be necessary to be factored in. I think it’s a mistake to tell clients that your rate is determined by a set hourly fee, but whatever fee one does charge still needs to be based on determining how long a job will take and how much one needs to charge for that time to earn the desired profit one wants to make on the job.