Figuring out the right billing model for your interior design business is never easy. Should you stick with hourly? Switch to fixed fee? Or consider a hybrid?

In this rebroadcast of one of our most popular episodes, Rebecca Hay shares her personal journey through all three models and the lessons she learned along the way. Whether you’re craving the predictability of fixed fee billing or want to avoid costly mistakes, this episode will help you evaluate which model is best for you and your clients. Listen in and decide if fixed fee billing is right for your business.

Episode Highlights

  1. Why she transitioned from hourly billing to fixed fee (and the mistakes she made)

  2. The pros and cons of hourly, fixed fee, and hybrid billing models

  3. The hidden pitfalls of discounting, underestimating hours, and scope creep

  4. How to know if you’re truly making money on your projects

  5. Practical steps for reviewing past projects and tracking hours to price with confidence

 

Episode Resource

Read the Full Transcript ⬇️

 

00;00;00;00 – 00;00;27;08
Rebecca Hay
If you’re looking to move from an hourly to a fixed fee model, I highly recommend that you do have some experience under your belt. Otherwise you do risk losing money if you’re not careful. All right. I’m Rebecca Hay, and I’ve built a successful interior design business by trial and error, podcasts, online courses, and so many freaking books over the last decade.

00;00;27;09 – 00;00;56;15
Rebecca Hay
I’ve grown from an insecure student to having false starts to careers, and now I’m finally in the place where I want to be. Throughout my journey, it’s been pretty obvious that I’m passionate about business and helping other entrepreneurs do the same. Each week I’ll share tangible takeaways from my own experience and the experiences of other badass women to help you build your confidence and change your business.

00;00;56;17 – 00;01;21;04
Rebecca Hay
Hey hey hey, it’s Rebecca, and you’re listening to Resilient by Design. Today’s episode is all about fixed fee billing and whether or not it is for you. Fixed fee billing is also the same as flat fees. I know a lot of designers crave it. Some are scared of it. So today this is a rebroadcast of an extremely popular episode where I walk you through the pros and cons so you can figure out is it really for you?

00;01;21;10 – 00;01;51;23
Rebecca Hay
Enjoy. Okay, guys. Fixed fees, sexy time. Right? So many designers love the idea of moving from hourly billing structure to a fixed fee billing structure. I know that I did. So today I’m going to walk you through exactly what I went through. And I’m going to share the pros and cons of both types of billing structures and help you to determine if the fixed fee billing structure is right for you.

00;01;52;01 – 00;02;22;06
Rebecca Hay
So my story I started off running my design firm, exactly replicating the model that I had been exposed to from the designer I had worked for, and that was hourly. So essentially, when I worked for this other designer, we would, meet a new client. We’d say, here are the hourly rates and let’s roll. Very rarely did a client ask us to estimate how many hours it would be.

00;02;22;08 – 00;02;40;23
Rebecca Hay
We were very lucky. It was a very high end clientele, and we would simply invoice them. I don’t know, every two weeks, every month for the time that we had built or that, sorry, the time that we had tracked, and this would go on indefinitely. Then there came a time, usually towards the end, when the client was kind of like, what?

00;02;40;24 – 00;03;04;03
Rebecca Hay
Like how many more hours are left? What’s left to do? Because they were getting that billing fatigue. Fast forward to, to me starting my business. Oh. My own. I had worked in television briefly on a couple of TV shows, and that was a fixed fee, and they would pay me a fixed fee per episode. And at the time I thought, oh, this is so great, so much money.

00;03;04;05 – 00;03;26;10
Rebecca Hay
In hindsight, if I had actually tracked my hours, I probably lost money working on those TV shows. So the fixed fee model can be sexy upfront, but unless you really know what you’re doing, you can actually lose a lot of money. So when I was running my own design firm, when I first started it out and I was billing clients hourly, I modeled what I knew.

00;03;26;12 – 00;03;55;06
Rebecca Hay
I said, oh my, my hourly rate is, I don’t know what it was. 125 it started at $995. Then I moved it up to 125. Then I think I was 150, 175. 215 225. Who knows how I came up with the increments I just did. And I would say this is my hourly rate. Well guess what? I didn’t have those super high end clients that didn’t question money.

00;03;55;08 – 00;04;22;27
Rebecca Hay
My clients wanted to know what it was gonna cost, but guess what? I had no frickin clue because to be honest, even though I had been billing hourly for several years, I never looked back at how many hours it took to do a project. And when I would bill the hours, I would often discount. So even if I looked back at all the invoices, it wasn’t an accurate representation of the time I spent.

00;04;22;29 – 00;04;49;01
Rebecca Hay
I never used a time tracking app. I was just going the end of the day, or actually it was more like at the end of two weeks. I’d look back at my calendar and try to remember, recreate the hours that I had put into projects, which meant I was constantly under charging for my time. And yet, even though I under charged for my time, I would look at those invoices and I would have, like sticker shock and panic that it was too much money.

00;04;49;03 – 00;05;10;24
Rebecca Hay
Because to me, $1,000 at that time was a lot of money. And so when I would put together an invoice and it would be like, I don’t know, $2,100 for time, I would panic and I would discount and I would discount behind the scenes. The clients didn’t know I was discounting and well, I probably wasn’t making some good money.

00;05;10;26 – 00;05;31;00
Rebecca Hay
So then I realized I needed to estimate because people were asking. So I’m like, you know, I’m going to do a high low. I had a friend in the city who was doing that. She would estimate her hours, on the low end, and then she would estimate her hours on the high end. And I thought, oh, that’s brilliant, because for sure I’ll be somewhere in the middle.

00;05;31;03 – 00;05;51;27
Rebecca Hay
But because I hadn’t tracked my hours, I really was guessing. I’m like, I’ll probably take five hours to source the fabric for this living room. And okay, maybe another three hours to pick the lights and ten hours for this. 30 hours seems right. I was telling people that it would take 30 hours for me to design and decorate their entire main floor.

00;05;52;00 – 00;06;16;05
Rebecca Hay
Was I on something like that? Is completely unrealistic. I know now, in hindsight, it often takes hundreds of hours. And so I would say 30 hours on the low end, maybe 75 hours on the high end, and the clients would say, okay, I’d like to be somewhere in between that say, sure, absolutely. But guess what? I was never between low and high.

00;06;16;07 – 00;06;38;02
Rebecca Hay
I was always over the high because I had way underestimated how many hours it would take me. And then the problem with that is that then I would have the most uncomfortable conversations with clients, because I hated talking about money. I hated confrontation. The last thing I wanted to do was discuss it so I would just discount because I wanted to avoid the situation altogether.

00;06;38;08 – 00;07;00;25
Rebecca Hay
Hands up. Nod your head if you know what I’m talking about. Clients would say, this is more than we discussed. We want it to be it. Did it or not. Here, they’re like what’s left to build for? And of course, I hadn’t even finished the project. So then what would I do? I would underbid for the remaining hours because I just wanted to keep them happy, and I didn’t want to encounter more difficult conversations.

00;07;00;27 – 00;07;19;12
Rebecca Hay
It was a mess. Then I started having assistants working for me junior designers, assistant designers, and that was a little bit easier for me to build out because they had to build me. And so when I had my first contract employee, she would send me an invoice every two weeks for her hours and I would have to pay it.

00;07;19;13 – 00;07;40;25
Rebecca Hay
So then I would take those hours and any hour I could, I would put in the invoice to my clients. But even then I wouldn’t bill it all because sometimes I felt like, well, we should have been able to do that faster or I don’t really think it’s fair because I did have a team when I was at Clavet and I was talking to our reps, so I won’t count that extra hour or, you know, there was a lot of traffic getting to say.

00;07;40;26 – 00;08;10;00
Rebecca Hay
So it’s not really fair that I charge them for all that time. That’s not their fault. So whose fault is it? I mean, I grossly under charge and undervalued my service. So in that case, for me, the hourly wasn’t working. Now, in hindsight, I know why it wasn’t working is because I wasn’t working. Tracking my hours, valuing my worth, and educating our clients on the real cost of the fees.

00;08;10;02 – 00;08;31;07
Rebecca Hay
But that takes time. So when I encountered the fixed fee system, I was like, this is what I need in my life. It’s going to eliminate all my headaches. I don’t have to track my hours anymore. Falls, by the way. That’s what I thought. It turns out I couldn’t be more wrong, and I’m going to get to that in a minute.

00;08;31;10 – 00;09;00;29
Rebecca Hay
And immediately I started charging more money. So immediately I assumed, wow. We are like killing it. We’re making so much more money. I went from making and I’ve shared this in my in my free live trainings, and I talk a lot about this, how I, I went from billing so little to so much more, but I went from billing like $2,500 for a renovation from that, let’s say 25 to maybe $5,000 for a renovation to like $13,000 plus the first time.

00;09;01;02 – 00;09;31;21
Rebecca Hay
So I’m thinking, I’m rolling in the dough. This is amazing. I don’t need to track my hours for for sure making money, but did I really know? I had no clue. I didn’t really know. So it got worse because then my employees or my contract employees would send me their invoices and I wouldn’t enter them anywhere. I didn’t really need to because I wasn’t billing to my client, so I was not on top of the hours my team was putting in versus how much money our clients paid us.

00;09;31;23 – 00;09;53;01
Rebecca Hay
We were fine. We were in the black. The company wasn’t losing money, but we were never really making a big profit. So today I want to talk talk to you now about the differences between the hourly and the fixed fee billing structure. And then we’ll look at if it’s right for you to switch from hourly to fixed fee.

00;09;53;04 – 00;10;13;16
Rebecca Hay
So my experience I think helps to shine a bit of a light on a lot of the reasons that designers want to move from hourly to fixed fee. And oftentimes designers are concerned because they don’t know how much to charge. Hourly seems a lot more straightforward, right? Because everyone talks about what’s your hourly rate. What’s your hourly rate?

00;10;13;19 – 00;10;36;23
Rebecca Hay
If you’re looking to move from an hourly to a fixed fee model, I highly recommend that you do have some experience under your belt. Otherwise you do risk losing money if you’re not careful. Over a year ago, I was feeling like we were doing pretty well. We’d had some successful years and I had somebody come in actually was merely my operations manager.

00;10;36;23 – 00;10;56;07
Rebecca Hay
Now, she came in and said, well, what’s your project profitability? And I said, well, what do you mean? Like, I don’t know, like like I don’t know how to calculate that. Like that’s kind of impossible to calculate. Actually, you can’t do that because in my industry it’s not like other industries. And you totally can’t do that. And she’s like, well, I’m think you totally can.

00;10;56;09 – 00;11;11;17
Rebecca Hay
And so we started to look into it and she’s like, well, where are you tracking your hours and your team’s hours? And I said, well, I mean, like sometimes when we used to track them in design arcs, but then was so cumbersome and it was so time consuming, I had to be on top of everyone. They weren’t entering their hours.

00;11;11;19 – 00;11;31;16
Rebecca Hay
And it just like I just felt like, you know, I don’t need to know that as long as I know over the year, the course of the year that we’re profitable, that’s enough, right? She’s like, no, absolutely not. You need to track your hours. And so we started to track the hours diligently. It’s taken us over a year to get into a really good habit and system.

00;11;31;16 – 00;11;50;06
Rebecca Hay
And even then, sometimes we, you know, we fall off. And I have to remind our team to make sure your hours are updated in design docs at the end of the week so that Alberto, our office manager, can pull those hours and we can use those hours to see where we’re at against the total hours we estimated for the project.

00;11;50;08 – 00;12;26;07
Rebecca Hay
And what we found last year is 2 or 3 decent sized projects. We actually lost money on our fees. Yep, we lost money, meaning the company had to pay out of pocket to its employees to service a client because the client did not pay us enough money. And that was because our hours were way out of whack. And some of the reasons were our own, and some were client driven and some were contractor driven.

00;12;26;14 – 00;12;51;22
Rebecca Hay
But it made us realize if we were going to charge a fixed fee, two things have to happen. One, we absolutely have to track our hours, and two, we need to ensure that we are charging enough money up front to cover the hours, because if you’re not charging hourly, it’s not like you can recoup that. Yeah, I know right?

00;12;51;25 – 00;13;21;20
Rebecca Hay
Pretty fricking discouraging. So I want to just talk about the pricing models that exist. So in my the way I see it, members of my team, there are three pricing models. So grab a pen. If you’re not driving or if you’re not walking or running or, you know, operating heavy machinery. There is one the hourly pricing model, two, the fixed fee pricing model, and three, the hybrid pricing model.

00;13;21;23 – 00;13;43;07
Rebecca Hay
So I’m going to walk you through the pros and cons of each. And I just want you to listen absorb. You can write these down, but I want you to just think about this and see if these are pros and cons that you have witnessed. And if not there might be some new ones. So hourly fees there realistically is a low risk of losing money.

00;13;43;13 – 00;14;14;19
Rebecca Hay
Now I say that with one caveat. That is only true if you’re charging for every hour, right? You won’t likely lose money as you ideally charge for every hour that you work on a project, but you must collect a retainer. I highly recommend up front so you don’t have any clients that you need to chase for payment. Not going to get into that today, but I have had that happen to me where clients disappeared at the end and I had to chase them to get any final payment.

00;14;14;22 – 00;14;35;16
Rebecca Hay
I even had someone just never pay it. So that is a pro. You won’t lose money if you’re charging for every single hour you work in your team work. There’s no question that you’re working for free, unless you’re working for free and you’re not charging. The second pro is transparency. Your client knows exactly where their money goes. It’s very clear it’s a traditional model.

00;14;35;16 – 00;14;55;07
Rebecca Hay
A lot of people understand the hourly model. Number three no stress scope creep. So there won’t be an awkward conversation about billing for something that’s out of scope because every hour is billed anyways. So if you’re in the middle of implementation for a project and your client’s like, oh, hey, do you think you can just come and help me?

00;14;55;09 – 00;15;12;23
Rebecca Hay
I’ve got a couple light fixtures that I really can’t decide between for my daughter’s room. I know we didn’t. I know you guys aren’t doing that, but, like, can I borrow your ear for half an hour? Absolutely. I’m just going to bill for an extra half hour from being on site. So there’s none of that awkward, like, well, they didn’t pay for this time, so how am I going to be extra?

00;15;12;23 – 00;15;37;15
Rebecca Hay
I need to make sure I send them my otoscope agreement, because this is an out of scope. I’m going to have to charge them for it. I have to keep track of that separately. So big pro, no stress, scope creep and four no upfront sticker shock. So the client most of the times is not expected to pay a large lump sum of money because for example, in my fixed fee we required the payment 100% upfront.

00;15;37;17 – 00;15;56;29
Rebecca Hay
So as a result, there’s less it’s less scary. You’re probably not going to scare them away. Sure, you might need a retainer, or you definitely need a retainer at the beginning, but it’s not the same thing, so there’s no upfront sticker shock. Here are the cons to hourly billing. We have a tendency to discount our hours. You need to ensure you’re billing for every hour you work.

00;15;56;29 – 00;16;18;21
Rebecca Hay
Otherwise you run the risk of under billing for your time. I talked about this. This is my example for this was the example I followed for many years. I under billed or discounted my hours. I talked about discounting hours in my podcast episode with Katie Rispetto, who’s from the Bay area, and she talked about how she said, you learn from somebody wants.

00;16;18;21 – 00;16;36;01
Rebecca Hay
If you are going to discount your hours, you need to make sure you don’t hide that and you let the client know they’re getting a discount, which I think is really great advice. You guys can go listen to her episode, Katie Perfetto. But, but in general, we do have a tendency to discount our hours when it’s hourly because we have our own sticker shock.

00;16;36;03 – 00;16;59;16
Rebecca Hay
Second con is that the client may object to hours spent. So if you’re specific and detailed in your invoices, you risk clients disputing your time, and you may end up discounting hours to make them happy. Number three, there’s no clear total cost for the client to budget for upfront. To me, this is a big one unless you’re estimating how many hours it takes.

00;16;59;18 – 00;17;15;08
Rebecca Hay
It’s really hard for clients to budget how much money they need to set aside for your fees. And we get this a lot where clients are calling and they’re just doing exploratory work because they know they want to work with us, so they want to know how much money they need to save up in order to work with us.

00;17;15;10 – 00;17;33;09
Rebecca Hay
If I just say, I don’t know, we charge to 25 an hour, that’s not very helpful. And then the last con I would say, is the invoicing fatigue. What I mentioned happened when I used to work for the other designer towards the end of the project. You know, over time it can get kind of tiring, especially if you’re invoicing regularly.

00;17;33;09 – 00;17;50;23
Rebecca Hay
So whether it’s bi weekly or monthly invoicing, you can start to feel time consuming on both sides. It’s time consuming on your end and on the client’s end, and sometimes it feels like it will never end. And the clients can sometimes become fatigued, right? And they could walk away before the project is done or decide, you know what?

00;17;50;23 – 00;18;15;02
Rebecca Hay
I don’t need you to help with their last remaining bits. I’ve got this. And then you don’t get that final finished product. Okay. That’s hourly. If I could ask you a question right now, it would be. Would you agree? And what have I missed? But because of the podcast and I can’t see your faces like I can’t in my courses, then I’m just gonna keep moving on.

00;18;15;02 – 00;18;40;21
Rebecca Hay
But that would be a question I would ask, so feel free to share that information inside Designers meetup. Okay. Fix fees. Pros no billing fatigue. They pay once, maybe twice, maybe three times. Number two, there’s a certainty of cost, right. So this pro speaks directly to the con of hourly where clients know exactly what it’s going to cost them upfront and they can budget for it ahead of time.

00;18;40;23 – 00;19;05;03
Rebecca Hay
Another pro you only talk about money once. This was probably the main reason that I switched to fixed fee billing. I really felt uncomfortable having money conversations, so you can get that awkward conversation about money over with early and focus on what you do best, and then less administration time is required. That’s the last pro that I have here listed.

00;19;05;10 – 00;19;23;12
Rebecca Hay
Less admin time required. Holy heck, I can’t tell you how many hours were spent back and forth back and forth, trying to figure out, oh, you know that invoice? Oh, God, it’s kind of high. Do you think, you know, maybe we don’t charge four hours, for sourcing those lights? Can we just charge maybe three and a half?

00;19;23;14 – 00;19;44;23
Rebecca Hay
And, I think we should change the description here. Just add more values. So really understand what it was that we did, like. Oh, my lord, so much admin time. If you collect your design fees upfront or at least partially with a set schedule in a fixed fee, you don’t have to regularly send invoices and follow up on payments.

00;19;44;25 – 00;20;05;04
Rebecca Hay
Send reminders. This frees you up like a lot of time to focus on the actual design and not the administration. Okay, so sounds perfect, right? Let’s all do fixed fee billing. Well, there are cons, so.

00;20;05;06 – 00;20;33;26
Rebecca Hay
Here we go. The first con there is a high very high risk that you will lose money if you’re not accurately pricing your services because people can take advantage when it is a fixed fee. You need to be super accurate about what’s included and what is not, so that you don’t find yourself working overtime for the same amount of money.

00;20;33;28 – 00;20;53;15
Rebecca Hay
This leads into the next con, which is that you must, and I say this is a con because I personally have never enjoyed it, and I don’t know many designers who are good at it or enjoy it. If you’re not one of those designers, then heck, you’ve got your life figured out. But I would say the con is that you have to diligently track your hours.

00;20;53;17 – 00;21;29;15
Rebecca Hay
Okay, so there can be a tendency to want to stop tracking your hours like I did. But the only way to know if you’re profitable is if you track hours against a fixed fee. We had a project, no exaggeration, where we noticed that the fixed fee we collected when we divided that, by our hourly rate, it should have been, I think we said 300 hours and the hours that were tracked by the entire team were like five, 75, 600 hours.

00;21;29;17 – 00;21;52;14
Rebecca Hay
Shoot, that’s almost double. So then that basically means you’re working at half your hourly rate and does not even cover your staff. So you have to diligently track your hours. You do in both, but there’s a tendency in a fixed fee because you don’t have to do it to get paid to not do it. Whereas with hourly you have to do it to get paid.

00;21;52;17 – 00;22;12;16
Rebecca Hay
The third con would be scope creep, because I know a lot of designers feel uncomfortable in these situations when things are added on how to handle it, what to do. So scope creep can happen and potentially, just potentially could lead to the loss of money if it’s not handled correctly. So when you charge a fixed fee, scope creep can cause stress.

00;22;12;18 – 00;22;39;09
Rebecca Hay
You need a system to build extra for out of scope work. To me, this isn’t really a con, because once you get a system, it’s set and you go, but there is until you kind of get in that habit and you have a system that works for scope creep. Actually, maybe that’ll be a good podcast. You it can be stressful and you can lose money because what we’ve done in the past, I feel like I’ve made all the mistakes.

00;22;39;10 – 00;23;03;01
Rebecca Hay
What is wrong with me? Maybe I just made all these mistakes so that I could be here today to share with you that my glass is half full analogy of my life. It’s got to be for something, right? Lord, we had a project on the beaches in Toronto. Lovely project. Beautiful. We didn’t end up photographing it because they ended up furnishing it themselves, you know?

00;23;03;04 – 00;23;21;17
Rebecca Hay
But, it was a beautiful home. And actually, we did, like, a couple pieces of furniture anyways, wasn’t it? Wasn’t worth photographing, but our loveliest clients. But they decided to take the furniture out like we designed everything. They paid for the design and they were like, you know what? We’re just going to furnish it ourselves. We’re just going to hire you to implement in the renovation.

00;23;21;21 – 00;23;43;05
Rebecca Hay
Fine. No problem. Every time my intermediate designer was at the house, she would get bombarded by the client with questions. The client would bring her iPad and say, I was looking at this couch on Queenborough. What do you think about this? And do you think this table’s going to work? If I do this table and this would lit match the sideboard and like and so my designer would come back to the office, she was like, oh my God, Rebecca.

00;23;43;05 – 00;24;02;08
Rebecca Hay
Like every time I go she has like a million questions for me. And she’s sending me emails and this isn’t and we’re not even supplying the stuff to her that finally it was taking extra hours of my designer’s time that was not built because we had a fixed fee. So we that we really pushed us to develop a system.

00;24;02;10 – 00;24;22;20
Rebecca Hay
And I can tell you that just saying that we’re going to send you are out of scope agreement for any additional, like if you want help with any of these additional, we’ll be happy to help. You will just send will have the office send you are out of scope agreement it shut her up. The client stopped asking questions because clients will sometimes push and try to take advantage even the best their best intentions.

00;24;22;20 – 00;24;46;10
Rebecca Hay
But we all do it, right? Well, you’re just here now. Like it’s not going to take a second. So scope creep can happen. And then the last con, which is a pretty big one I would say is sticker shock. And to me, I would say that this would be one of the bigger cons because oftentimes the fixed fees are look higher because you’re collecting them all or you’re telling them what the total cost is.

00;24;46;12 – 00;25;10;12
Rebecca Hay
That sticker shock of one lump sum can sometimes scare off some clients. It also can scare you off and cause you to then discount that fee, because it seems like so much, and it can make you want to reduce the price, which I’ve done. I’ve done a, I’ve calculated the fee and I’m like, oh, shoot, that seems high.

00;25;10;13 – 00;25;31;05
Rebecca Hay
I mean, that’s crazy. Who’s going to pay? I don’t know, $50,000 for us to design that. There is no way I’m going to reduce that to 42. Even that feels high. Should it be 39? Oh yeah. In the 30s feels about right. Does anyone ever done that fixed fee billing? Yeah, that’s a messy place to be. So our sticker shock tends to sometimes be different than our clients.

00;25;31;05 – 00;25;47;23
Rebecca Hay
So we have to remember that. Okay, then the last who. Let’s take a breath. I’m taking your breath, because that was a lot pros and cons of. So how do you feel if I was with you in person, I would say, does that still appeal to you? Do you want to do fixed fee billing? Because it still appeals to me.

00;25;47;26 – 00;25;53;23
Rebecca Hay
However, there’s another option and that is the hybrid approach.

00;25;53;25 – 00;26;16;16
Rebecca Hay
Can I have to say I’m a really big fan of this, especially for those people looking to transition to fixed fee until they really know their numbers and really have the clients that are willing to invest in that lump sum payment. It’s a hybrid. So a pro to hybrid hybrid would be partially fixed fee for maybe a phase and then maybe hourly for another phase.

00;26;16;18 – 00;26;36;12
Rebecca Hay
So it to me the pro of this is it’s the best of both worlds. You can minimize the regular billing of the mode, perhaps in the most creative part of your service offering, like during your design phase, if you charge a fixed fee for design and maybe hourly for implementation. And the other pro to this, as you can decide when you build hourly and when a fixed fee is more suitable.

00;26;36;14 – 00;27;00;20
Rebecca Hay
So if you feel comfortable charging fixed fee for design, that’s great because you can control those parameters. The client’s not involved. You don’t have a contractor to deal with. There are less hidden variables than maybe you do hourly for him from implementation, till you really start to get a sense of what things cost, because, you know, with implementation or project management or whatever you want to call it, you are possibly running around meeting someone last minute.

00;27;00;20 – 00;27;24;28
Rebecca Hay
It’s hard to anticipate those hours. Let’s say this is a popular model. The con to this model, though, is that it could be confusing. So confusion is possible with your client because if you make your your pricing model too confusing, you might lose a client who doesn’t fully understand. I know I’ve been in a situation where I thought I was super clear on how we priced our services, and the client’s like, sorry, can you just repeat?

00;27;24;28 – 00;27;53;28
Rebecca Hay
I’m I’m not fully understanding A, B, or C, and then the other con is that you are shifting gears internally, which means it can be hard to sometimes remember where you are at on a given project and who is on what billing plan. So if you were doing some projects on hourly billing so or fixed fee, it starts to get confusing and I think there can be more time spent making things clear than needs to be.

00;27;54;06 – 00;28;15;22
Rebecca Hay
Also, you might forget that. Oh yeah, we’re now in the oh shoot, you know, the fixed fee portion of this project’s done. I should be billing hourly. So although you’ll be tracking it. Right. Okay. Whoa. Those are the pros and cons of all three of the models. Here’s what I’m going to tell you to. How you can decide if fixed fee billing is right for you.

00;28;15;22 – 00;28;40;11
Rebecca Hay
Because I know it is very popular and a lot of people want to do it. First of all, I hope that just seeing the or hearing the pros and cons was helpful. But second of all, you do need to understand your process. So and this is something that I walk designers through inside power of process is how to establish the process that works for you.

00;28;40;13 – 00;29;06;13
Rebecca Hay
Because a billing structure and a process need to be aligned. And what I love about our fixed fee billing is that it aligns with our three phase process really nicely. So it’s super clear and easy to communicate, and it feels, a lot less time consuming on an administration perspective for us. But then I’m going to tell you, you need to review your hours.

00;29;06;16 – 00;29;33;26
Rebecca Hay
So if you have any experience running a design project, look back. And if you don’t use an app to track your hours and maybe you’re just tracking them through your invoices like I used to do, that’s okay. Pull up. And this is going to take a little bit of homework, but pull up all the invoices from past projects, group them together and look at how many hours you charged for that project, and then look at what the project entailed.

00;29;33;28 – 00;30;01;25
Rebecca Hay
And then start to think, if I had charged a fixed fee for this, what would that Phoebe remember? Okay, well then saying that spreadsheets are your friend, I sound like somebody else when I say that. It’s so true. However, when you have a spreadsheet, you can start plugging in like put project A how many hours and if you can do it based on type of task, even better, project B and start tracking.

00;30;01;25 – 00;30;19;18
Rebecca Hay
You have it for reference so you can look back and see, you know, that there’s there’s so much information in our past that we can use to help us be better in the future. That’s something I never used to do. So I don’t love doing that aspect. But I do have to do those reviews. Let’s look back at the project.

00;30;19;18 – 00;30;38;15
Rebecca Hay
Let’s have a post. Project review. How many hours were spent? How many did we anticipate spending? How does this compare to the last project that was a similar size? Because you want to continually be growing, you want to be able to slowly start charging more money, of course, but you have to make money. So if you want to move to billing, you really need to know your numbers.

00;30;38;18 – 00;31;07;24
Rebecca Hay
You need to know your hours. Some people follow a square footage. That’s how they calculate their fixed fee based on square footage. Some people calculates our fixed fee simply by doing that. Looking back at past project hours and pulling the fee based on the hours they project for the next new project. I know some designers that do their hourly pricing based on square footage, and then they double check or reference it against the hours that they think it’s going to take.

00;31;07;29 – 00;31;26;25
Rebecca Hay
I’ve done that before where I had a square footage price and I got a certain number, but then my design team said, no, it’s going to be more like this many hours. So then I found somewhere in between for the fee. So you need to make sure that you’re doing that due diligence. So the last thing I want is for you to lose money.

00;31;26;27 – 00;31;51;17
Rebecca Hay
We are in business to make money. This is a business, not a hobby. And I’m here to support you as this business grows, as you start to make more money for yourself so that you can survive this recession, whatever it looks like and be, and come through the other side stronger and a much more confident business owner. Let me know how you like this episode.

00;31;51;19 – 00;32;10;28
Rebecca Hay
Please leave me a review. I would love an iTunes review or wherever you listen to these podcasts. If you could give me a little five stars, you know, let me know what part of it you like. Why do you listen to my podcast and share it with your friends? Screenshot it, put it on social media, let others know you’re listening and that there’s value here.

00;32;11;00 – 00;32;32;13
Rebecca Hay
So we can help more designers charge more money. Because the more designers that charge more money, it’s going to be a lot easier for us to charge it to. Okay, have a great day. I’ll see you soon.