How to Charge for Custom Projects and Bookings

If you’re a freelancer, a consultant, or a small business owner, chances are you’ve struggled with how to charge customers for services. It’s difficult when your work varies in scope, timelines, and deliverables. 

Custom projects and bookings are the hardest to price. You don’t want to charge too much and risk losing clients, or charge too little and end up losing money. The fee should reflect your expertise, the time required, and the complexity of the project, but it can be hard to assess that in a dollar amount.

But setting fees for your business shouldn’t involve any guesswork. Below,  you’ll learn common pricing models for custom projects and bookings, factors that influence rates, and practical methods for calculating fair, sustainable pricing.

Understanding different ways to charge for services

“How much should I charge per hour?” That’s the question most freelancers and consultants ask when they’re starting out. But an hourly rate is just one of many ways to bill for your services. Below are the most common fee structures, and the pros and cons of each.

Time-based pricing

The simplest way to charge for your services, time-based pricing refers to setting an hourly rate. There’s no more straightforward fee structure, since all that’s required is multiplying the number of hours you worked by the rate you and your client agreed on in advance. That’s why it’s the most common way to charge for services.

The majority of freelancers and consultants start out charging by the hour, but many eventually move to another fee structure as they take on more custom projects.

Pros of time-based pricing

• Perfect for unclear projects: When a project’s parameters are undefined, or they’re likely to change before the deadline, time-based pricing ensures that you won’t have to renegotiate your rate. 

• Easy to implement: Charging by the hour doesn’t require any complicated accounting software to track or calculate the total, making it the most popular choice with newcomers. 

• Ensures fair payment: Time-based pricing guarantees that you will be compensated for all your time, even when the client requests extra work.

Cons of time-based pricing

• Limits your daily income: Because your earning potential is determined by the number of hours you can work in a day, time-based pricing caps the amount of money you can make on a project.

• Penalizes efficiency: Consultants who have more experience or can finish a project more quickly end up being paid less for the same amount of work.

Project-based pricing

With a project-based fee structure, you charge a set amount for completing a project, not for the hours you work. Freelancers and consultants like fixed-fee pricing because they can more accurately anticipate their income. Clients prefer them because they know exactly what a project will cost. 

This type of pricing is ideal for many custom projects. You’ll need strong management skills to make this fee structure work, as it requires being able to accurately estimate how much time you’ll need to finish. That’s why many consultants wait until they have more experience before they begin charging by the project.

Pros of project-based pricing

• Higher earning potential: The fee is fixed, but the hours are not. That’s a big advantage for consultants who are able to work more efficiently and take on other work.

• Earns client confidence: Because they know up front how much a project is going to cost, clients focused on the bottom line are more likely to give the go-ahead to fixed-price proposals. 

• Less admin time: You’ll probably be sending out just one invoice, so project-based pricing means spending less time with spreadsheets.

Cons of project-based pricing

• Additional unplanned asks: It’s easy to fall into scope creep when a client adds more deliverables to your initial agreement. This can erode the profitability of a project. 

• More upfront planning: To make sure you see eye-to-eye with your client, every deadline and deliverable needs to be carefully mapped out before you sign on.

Value-based pricing

More experienced freelancers and consultants take advantage of value-based pricing for custom projects. This fee structure isn’t based on hours or projects. Instead, it’s determined by the value a consultant brings to the company. For example, someone who streamlines a payment system might charge a percentage of the company’s return on investment.

Pros of value-based pricing

• Highest potential income: Because your income is based on what you bring in for your client, this is an opportunity to maximize your profits.

• Pricing implies a partnership: This type of agreement ties your work more closely to the company’s success and brings a partner dynamic to both the project and its profits.

Cons of value-based pricing

• Increased expertise: You don’t get to this stage of your career overnight. Most consultants start value-based pricing after years in their industry.

• You are the product: Being a thought leader means constant research and data collection to remain an expert in your field, all of which is unpaid. 

Other types of fee structures

Depending on your industry, there are many other different types of fee structures that could be right for you. 

Booking-based pricing

Consider booking-based pricing if you’re scheduling appointments, offering sessions, or teaching online courses. Vendors love it because automation takes care of tasks like scheduling. It’s convenient for customers, because they can book whenever they want. But the downside is demand can be unpredictable.

Retainers

For most freelancers, a retainer means agreeing to a set monthly or quarterly payment in exchange for working a set amount of time (like providing help desk support for a tech company) or to provide a certain set of deliverables (such as writing daily social media posts). The fee might be less than if you billed by the hour or by the job, but the tradeoff is steady income. For lawyers and more experienced consultants, a retainer works a little differently. It’s an upfront fee that serves as an advance for future services or to guarantee their availability.

Day rates

The advantage of day rates is that they are generally higher than an hourly rate, increasing your bottom line. This fee structure is perfect for professionals who take on projects that require their focus for an entire day, such as a graphic designer knocking out a project for an agency or a camera operator on a film set.

How much should I charge for my services? 

How much to charge clients for custom projects depends on a number of factors, starting with your background, education, and experience. But that’s just where you’ll start calculating what to bill for custom projects.

Experience and specialization

Your experience in the industry makes you more valuable to customers because you have already encountered the problems they are trying to solve. If you specialize in a field that’s in high demand, that also increases demand for your services. 

Time investment

Don’t sell yourself short by only considering the amount of time that you will be working on a project. You should also factor in the time you’ll spend on research and planning, as well as the hours that go into administrative tasks like replying to emails or Slack messages.

Market rates vs. value delivered

While you should research industry standards as you set your fee, you should also focus on the value you deliver for a customer. If your custom project increases revenues or cuts costs for a business, your fee should reflect that.

Client type and project complexity

Larger companies are paying for your expertise, so they’re willing to pay higher rates. When a custom project has a lot of moving parts, it requires a higher level of experience. That should be part of your calculation.

How to calculate your rates

Deciding how much to charge for your services isn’t a guessing game. It’s a fairly simple equation that adds together your total annual business expenses and the salary that you want and divides them by your total billable hours. The formula looks like this:

Business expenses + desired salary ÷ billable hours = hourly rate

Here’s how to come up with the figures to plug into this formula:

• Annual expenses: This figure should include your products, equipment, software, rent, marketing, and taxes. Don’t forget about office expenses.

• Desired salary: Research similar staff positions in your area to determine the salary you should shoot for. Factor in things like health insurance costs.

• Billable hours: For this calculation, most freelancers and consultants assume they will be billing an average of 20 or 25 hours a week. The rest of the time is things like administrative tasks that aren’t charged to clients.

If your custom project is a rush job, the total should be 1.5 times or twice your usual rate.

Translating hourly thinking into project pricing

Knowing your hourly rate makes it easier for you to move from time-based pricing to project-based pricing. There’s a formula for this as well: 

Estimated hours + buffer x hourly rate = project total

The buffer is important to account for unexpected things like scope creep. It varies, but might be somewhere between 20% and 30% for new clients, less for more established ones.  

Custom projects vs. repeatable services

Custom projects can require a steep learning curve, monopolize more of your time, and have to be tailored to individual clients. The payout can be substantial, but they can take over your schedule so much that you can’t take on other projects.

Repeatable services, on the other hand, use skills you already have, are easily done alongside other jobs, and can be used for all your customers. The fees are smaller for each job, but all together they can add up to a predictable cash flow. 

Which type of projects should you prioritize? Experts recommend the 80/20 rule. About 80% of your projects should be standardized services offered to many different clients. The remaining 20% should be custom projects that let you pick up new skills or build out your portfolio with one-of-a-kind work. 

Adding “starting at” prices

If you decide to put together a pricing page on your website, make sure to note that your services “start at” a certain amount. That way you’ll hear from customers whose budgets align with your fees. This wording also makes it clear that you can provide custom projects at a higher price.

Pricing as an evolving practice

When it comes to custom projects and bookings, pricing isn’t a one-and-done proposition. You should review and refine your fee structure regularly, updating your pricing page to reflect changes in your rates and updates to the services that you provide.

Intentional pricing is one of the best ways to build a sustainable business. If you need help getting started, Squarespace has tools for scheduling appointments, sending invoices, or accepting payments.